Understanding California’s Proposition 19: What You Need to Know

Understanding California’s Proposition 19: What You Need to Know

California’s Proposition 19, passed by voters in November 2020, brings two significant changes to property tax rules. If you’re a homeowner aged 55 or older, a person with severe disabilities, or a victim of a natural disaster, you’ll want to know how these changes could affect your future property taxes.

Key Provisions of Proposition 19:

1. Expanded Property Tax Transfer for Homeowners 55+:
   Homeowners who are 55 and older, severely disabled, or victims of natural disasters can now transfer the taxable value of their primary residence to a new home anywhere in California. Previously, this benefit was restricted to certain counties and could only be used once. With Proposition 19, you can take advantage of this property tax transfer up to three times, allowing you to carry over your lower tax base even if you’re relocating or downsizing.

2. Changes to Inherited Property Rules:
   If you plan to pass your property to your heirs, this part of Proposition 19 is critical. Under the new law, inherited properties not used as primary residences will be reassessed at market value. This means that if your children or grandchildren inherit a second home, rental, or vacation property, they may face significantly higher property taxes unless they make it their primary residence.

How Proposition 19 Improves on Propositions 60/90:

Before Proposition 19, homeowners 55 or older could transfer their tax base only within specific counties and could only do so once. These earlier rules, under Propositions 60 and 90, were more restrictive. Proposition 19 improves flexibility by allowing:

• Transfers of your tax base anywhere in the state.
• Up to three transfers, instead of just one.
• Extensions of this benefit to natural disaster victims and individuals with severe disabilities.

Why Does Proposition 19 Matter to You?

• If you’ve owned your home for a long time and are considering relocating, Proposition 19 could offer considerable tax savings. Carrying over your lower tax base when purchasing a new home could result in substantial property tax reductions.
• If you’re planning to pass property to your heirs, it’s important to understand how this new law might increase their tax liabilities, particularly for non-primary residences.

If you’re curious about how Proposition 19 could impact your future real estate decisions, we’re here to help. Whether you're planning to buy, sell, or transfer property to your family, feel free to reach out to discuss how these changes might affect you.