California Proposition 19
California voters approved Proposition 19, Changes to Certain Property Tax Rules, with 51.1% of the vote (results to be certified by December 11, 2020). Highlights of the approved measure are as follows:
Transfer of Base Year Value
- Homeowners who are over the age of 55, disabled, or victims of a wildfire or natural disaster are eligible to transfer their base year value to a new home that is acquired or is newly constructed within two years of the sale of the original primary residence, located anywhere in in the state. Previously, the transfer was restricted to the same county.
- Homeowners who are over 55 or disabled can transfer their base year value up to three times.
- Eligible homeowners could use this special rule for the purchase of a home that is greater in value. Their property tax bill would be calculated as the base year value of the original home plus the difference in value of the replacement home over the original home.
- The above changes will be effective April 1, 2021.
Parent-Child and Grandparent-Grandchild Exclusion
- This new exclusion replaces the existing exclusion for a transfer of a primary residence between parents and children and, under limited circumstances, between grandparents and grandchildren.
- For a transfer from a grandparent to a grandchild, the parents of the grandchild, who qualify as children of the grandparent, must be deceased as of the date of purchase or transfer.
- A partial reassessment is required if the assessed value of the property exceeds the sum of the taxable value plus $1,000,000.
- To receive the benefit, the transferee is required to file a homeowners’ exemption claim within one year of the date of transfer.
- The exclusion applies to only:
- (1) the primary residence of the child or grandchild or
- (2) farms.
- Changes will be effective February 16, 2021.
Sources: Thomson Reuters/Tax & Accounting, Bloomberg Tax, Associated Press, and the California Secretary of State
- Carey M. Heyman, CPA
- Managing Principal of Industry - Real Estate
- CliftonLarsonAllen LLP
- Century City (Los Angeles)
Carey is the Managing Principal of the Real Estate Industry at CLA. He is a trusted advisor with close to 20 years of experience providing accounting, assurance, tax, and consulting services to real estate industry owners, operators, family offices, developers and syndicators. Carey has a strong track record of helping clients build and retain capital by leveraging tax- and cost-saving strategies and employing tax credits and incentives. He also consults with high net worth individuals, large family groups, and owners of closely-held businesses on all aspects of tax planning, estate planning, and retirement planning.
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