Tax Savings Programs

(Adopted by California voters in 2021)

Inheriting Property

Proposition 19, or the Home Protection for Seniors, Severely Disabled, Families and Victims of Wildfire or Natural Disasters Act, is a Constitutional Amendment that imposes new limits on property tax benefits for inherited family property. Under Proposition 19, a child or children may keep the lower property tax base of the parent(s) ONLY if the property is the principal residence of the parent(s) and the child or children make it their principal residence within one year.

Transfer of Property Tax Base

The other component of Proposition 19 allows homeowners who are over 55 years of age, disabled, or victims of a wildfire or natural disaster, to transfer their lower assessed property value of their primary home to a newly purchased or newly constructed replacement principal residence up to three times (or once per disaster). The tax base may be transferred to a property located anywhere in the state.

Parent-Child Transfers & Grandparent-Grandchild Transfers

Prop. 58 & Prop. 193, allowed a parent(s), and in certain cases grandparent(s), to transfer their existing property assessments of a principal residence of any value without triggering a reassessment, which is generally required upon a change in ownership – even if the child uses the property as a rental property.

Prop. 58 & Prop. 193 also allowed for the inheritance of property assessments for up to $1 million in additional real estate, whether residential or commercial.

Under Proposition 19, in order to inherit the lower property assessment of the parent(s) or grandparent(s), the following conditions must be met:

The property must be the principal residence of the parent(s) or grandparent(s)
The property must become the principal residence of the child or grandchild within one year Only the principal residence of a parent(s) or grandparent(s) qualifies for a base year value transfer. Other properties, residential or commercial do not qualify for this benefit.

Senior Citizen Tax Base Transfers

Propositions 60/90 and 110 allowed persons over 55 or severely and permanently disabled persons to transfer the taxable value of their existing home to their new replacement home, so long as the market value of the new home is equal to or less than the existing home’s value and located in Los Angeles County or one of nine other participating counties in California. Proposition 19 allows eligible homeowners to transfer the taxable value of their existing home to their new replacement home of any value subject to conditions, anywhere within the state, up to three times (rather than once as provided under current law).

Disaster Relief Tax Base Transfers

Prop. 50 provided that the base year value of a property that is substantially damaged or destroyed by a disaster, as declared by the Governor may be transferred to comparable property within the same county. Prop. 171 allows the transfer of the base year value of a principal residence to a county that has adopted the ordinance. Prop. 19 allows homeowners to purchase a replacement home of greater value than their original home and transfer their tax base with an adjustment to account for the value difference in cases of homes destroyed by wildfires or other natural disasters.

The information presented is intended to provide general and summary information about Proposition 19. It is not intended to be a legal interpretation or official guidance or relied upon for any purpose, but is instead a presentation of summary information. If there is a conflict between the information presented and the text of the proposition or its implementation, the text of the proposition or legal interpretation will prevail. It is highly encouraged that you consult an attorney for advice specific to your situation.

Information source:

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Lisa Ashkins, MA – Broker Associate, DRE#01764182 – First Team Real Estate