California's Prop 19
Real Estate Kristen Deschino March 11, 2025
Real Estate Kristen Deschino March 11, 2025
What is Proposition 19 and Who is Eligible?
Proposition 19, approved by California voters in November 2020, introduced significant changes to property tax regulations. It allows homeowners aged 55 and older, individuals with severe disabilities, and victims of natural disasters to transfer the taxable value of their primary residence to a new home anywhere in the state, even if the replacement property is of greater value. This transfer can be utilized up to three times for eligible homeowners, with no limit for those affected by natural disasters. Additionally, Proposition 19 modifies the parent-to-child and grandparent-to-grandchild property tax reassessment exclusions, primarily affecting inherited properties not used as principal residences.
Calculating New Property Taxes Under Proposition 19
When an eligible homeowner purchases a replacement property of equal or lesser value than their original residence, the taxable value remains the same. If the new home is of greater value, the new taxable value is calculated by adding the difference in market value between the original and replacement properties to the original taxable value. For example, if the original home's market value is $600,000 with a taxable value of $300,000, and the new home costs $800,000, the difference of $200,000 is added to the original taxable value, resulting in a new taxable value of $500,000.
Key Considerations for Consumers Regarding Proposition 19
Consumers should be aware of the following important aspects of Proposition 19:
Eligibility Criteria: The proposition benefits homeowners aged 55 and older, individuals with severe disabilities, and victims of natural disasters, allowing them to transfer their property's taxable value to a new residence anywhere in California.
Inheritance Provisions: The measure limits property tax benefits for inherited properties not used as principal residences, potentially resulting in higher property taxes for heirs.
Transfer Frequency: Eligible homeowners can transfer their taxable value up to three times, while there is no limit for victims of natural disasters.
Ensuring a Smooth Title and Escrow Process When Transferring Tax Basis
To facilitate a seamless title and escrow process when transferring a property's tax basis under Proposition 19, principals should:
Consult Professionals: Engage with real estate agents, tax advisors, and legal professionals experienced in Proposition 19 transactions to navigate the process effectively.
Prepare Documentation: Gather all necessary documents, including proof of age or disability, evidence of primary residence status, and details of the original and replacement properties.
Timely Filing: Submit the required forms to the county assessor's office promptly to ensure the tax basis transfer is processed without delays.
By understanding Proposition 19's provisions and collaborating with knowledgeable professionals, homeowners can effectively manage their property tax obligations during transitions.
Resources:
Who you choose to represent your interests in real estate matters. The brokerage with whom you partner with guides you through the sale or acquisition of a subject property, while advocating on your behalf, and serving as a fiduciary and trusted asset advisor. With distinct standards and dynamic experience, the 35 Oaks team provides exclusive listing services for home and land sellers, and buyer representation for those seeking to purchase real property or vacant land.
