Proposition 19

Proposition 19 is a new law that was approved by California voters in November 2020. It allows homeowners who are 55 or older, disabled, or victims of natural disasters to transfer their property tax base to a new home of equal or lesser value anywhere in the state. This can result in significant tax savings for eligible homeowners who want to move to a different location or downsize their living space.

We will explain how Proposition 19 works, what are the benefits and drawbacks of using it, and how to apply for it. We will also answer some frequently asked questions about this law and provide some resources for further information.

How does Proposition 19 work?

Proposition 19 replaces the previous rules that allowed homeowners to transfer their property tax base only within the same county or to a participating county, and only once in their lifetime. Under Proposition 19, homeowners can transfer their property tax base up to three times, and to any county in California. The new home must be purchased or newly constructed within two years of selling the original home.

The amount of the property tax base transfer depends on the value of the new home compared to the old one. If the new home is of equal or lesser value than the old one, the property tax base will be transferred in full. If the new home is of greater value than the old one, the property tax base will be adjusted upward by the difference in value.

For example, if a homeowner sells their old home for $500,000 and buys a new one for $600,000, and their property tax base is $200,000, then their new property tax base will be $200,000 + ($600,000 - $500,000) = $300,000.

Proposition 19 also changes the rules for inherited properties. Previously, children or grandchildren who inherited a primary residence from their parents or grandparents could keep the low property tax base of the original owner, regardless of whether they lived in the home or not. Under Proposition 19, inherited properties will be reassessed at market value unless the heirs use them as their primary residence within one year of inheritance.

What are the benefits and drawbacks of Proposition 19?

The main benefit of Proposition 19 is that it gives more flexibility and affordability to homeowners who want to relocate within California. It can help seniors, disabled people, and disaster victims to find a more suitable home for their needs and preferences, without facing a huge increase in their property taxes. It can also encourage more mobility and turnover in the housing market, which can increase the supply and availability of homes for sale.

The main drawback of Proposition 19 is that it reduces the tax benefits for inherited properties. It can make it more difficult and expensive for heirs to keep their family homes or use them as rental properties. It can also result in higher property taxes for some homeowners who move to more expensive areas or buy more expensive homes.

How to apply for Proposition 19?

To take advantage of Proposition 19, homeowners must file a claim with the county assessor where their new home is located within three years of purchasing or completing construction of the new home. They must also provide proof of age, disability, or disaster victim status, as well as proof of residency in both the old and new homes. The county assessor will then determine the eligibility and amount of the property tax base transfer.

Homeowners can find more information and forms on the website of the California State Board of Equalization (BOE), which oversees the administration of Proposition 19. The BOE also provides a list of county assessors' offices and contact information.

Frequently asked questions about Proposition 19

Question Answer
When does Proposition 19 take effect? Proposition 19 took effect on April 1, 2021 for transfers of primary residences by seniors, disabled people, and disaster victims. It took effect on February 16, 2021 for transfers of inherited properties.
Can I transfer my property tax base to a new home in another state? No, Proposition 19 only applies to transfers within California.
Can I transfer my property tax base to a new home that is more than one unit? Yes, as long as you use one of the units as your primary residence and the other units are not rented out.
Can I transfer my property tax base to a new home that is a mobile home or a houseboat? Yes, as long as it is subject to local property taxation.
Can I transfer my property tax base more than once? Yes, you can transfer your property tax base up to three times under Proposition 19. However, you cannot transfer it back to a previous home.
How does Proposition 19 affect my capital gains taxes? Proposition 19 does not affect your federal or state capital gains taxes. You may still qualify for an exclusion or deferral of capital gains taxes when you sell your primary residence, depending on your income, filing status, and length of ownership and occupancy. You should consult a tax professional for more details.

Resources for further information

If you have more questions or need more guidance about Proposition 19, you can visit the following websites or contact the following organizations: