Homeowners benefit from potential tax savings with Proposition 19!

Proposition 19 is a California ballot proposition that was passed in November 2020. It provides potential tax benefits to homeowners by allowing them to transfer their property tax base to a new home under certain conditions.

Here is an example of how Proposition 19 could provide a tax benefit for a homeowner:

Let’s say a senior citizen owns a home in California that they have lived in for many years. The house has a very low property tax base, meaning the senior citizen pays little yearly property taxes.

Under Proposition 19, seniors could sell their homes and purchase new ones while transferring their low property tax base to the new house. This means the new home would also have a low property tax base, and the senior citizens would continue to pay very little in property taxes.

Another example is a person who inherited property from his parents and had high property taxes. The person wants to move to another property, but they want to keep the low property taxes. So they can sell the inherited property, buy another one, and transfer the low property taxes to the new one.

It is important to note that there are some restrictions and limitations on who can transfer their property tax base and to what property. For example, the new property must be located in the same county as the old property, and the value of the latest property must be equal to or less than the old property. Some exclusions exist, such as properties used for business or rentals.

It’s also important to check with your local county assessor to see if it has implemented the changes and for more information about the specifics of the law.

Here are some frequently asked questions and answers regarding Proposition 19

To learn more details, let’s talk with Amar REALTOR®

What is Proposition 19?

Who can transfer their property tax base under Proposition 19?

Proposition 19 allows homeowners 55 or older, severely disabled, or victims of natural disasters to transfer their property tax base to a new home under certain conditions.

What are the conditions for transferring the property tax base?

The new property must be located in the same county as the old property, and the value of the latest property must be equal to or less than the old property. Some exclusions exist, such as properties used for business or rentals.

How many times can I transfer my property tax base?

Homeowners can transfer their property tax base once every three years.

What happens to my property tax base if I inherit a property?

If a property is inherited, the tax base will be adjusted to the fair market value at the time of inheritance. Proposition 19 allows the inheriting owner to transfer the base-year value to a replacement property.

Do I have to pay fees when transferring my property tax base?

Some fees, such as a recording fee, may be associated with transferring your property tax base. You should check with your local county assessor for more information.

Is there a deadline to transfer my property tax base?

The law allows a one-year window starting February 16, 2021.

It’s important to note that these are general answers. It’s best to check with your local county assessor for specific information about Proposition 19 and how it applies to your situation.

What does Prop 19 mean for inherited property?

Proposition 19, also known as the “Property Tax Transfers, Exemptions, and Revenue for Wildfire Agencies and Counties Amendment,” passed in November 2020, has a specific provision for inherited property.

When a property is inherited, the tax base is usually adjusted to its fair market value. This can result in a significant increase in property taxes for the inheriting owner. Proposition 19 allows the inheriting owner to transfer the base-year value to a replacement property. This means that instead of having the property tax base adjusted to the fair market value, the inheriting owner can transfer the lower base-year value to a new property, potentially resulting in lower property taxes for the inheriting owner.

However, restrictions and limitations exist on who can transfer the base-year value to what property. For example, the new property must be located in the same county as the old property, and the value of the latest property must be equal to or less than the old property. Some exclusions exist, such as properties used for business or rentals.

It’s also important to note that Proposition 19 has a one-year window starting February 16, 2021, to execute the transfer.

It’s important to consult with your local county assessor for more information about the specifics of the law and how it applies to your specific inherited property situation.

What triggers Prop 19 reassessment?

Under Proposition 19, when a property is transferred to a new owner, the tax base will be adjusted to the fair market value at the transfer time instead of retaining the old base year value as before. This can result in a significant increase in property taxes for the new owner. However, there are some exceptions to this rule:
-If the property is transferred to a child or grandchild of the original owner, the base-year value will be retained, and no reassessment will occur.
Suppose the property is transferred to a person 55 years or older, severely disabled, or a victim of a natural disaster. The new property is of equal or lesser value than the previous one. In that case, the base-year value will be transferred to the new property.
-If the property is transferred to a person using it as their primary residence, the base-year value will be retained, and no reassessment will occur.

It’s important to note that there are some restrictions and limitations on who can transfer the base-year value and to what property. For example, the new property must be located in the same county as the old property, and the value of the latest property must be equal to or less than the old property. Some exclusions exist, such as properties used for business or rentals.

How does Prop 19 affect family transfers?

Under Proposition 19, when a property is transferred to a child or grandchild of the original owner, the base-year value will be retained, and no reassessment will occur. This means the new owner will continue to pay property taxes based on the base-year value rather than the fair market value at the transfer time, which can result in significant savings for the new owner.
However, it’s important to note that there are some restrictions and limitations on who can transfer the base-year value and to what property. For example, the new property must be located in the same county as the old property, and the value of the latest property must be equal to or less than the old property. Some exclusions exist, such as properties used for business or rentals.

Additionally, a one-year window starts on February 16, 2021, to execute the transfer. Family transfers must meet the law’s requirements, such as the child or grandchild using the property as their primary residence within one year after the transfer.

Does Prop 19 affect family trusts?

When a property is transferred to a trust, the property tax base will be adjusted to the fair market value at the transfer time instead of retaining the old base-year value as it was before. This can result in a significant increase in property taxes for the trust.

However, Proposition 19 does provide some exceptions for family trusts in certain cases:

-If the trust is created for the benefit of a child or grandchild of the original owner, the base-year value will be retained, and no reassessment will occur.

Suppose the trust is created for a person 55 years or older, severely disabled, or a victim of a natural disaster, and the new property is of equal or lesser value than the previous one. In that case, the base-year value will be transferred to the new property.
-If the trust is created for a person using it as their primary residence, the base-year value will be retained, and no reassessment will occur.

It’s important to note that there are some restrictions and limitations on who can transfer the base-year value and to what property. For example, the new property must be located in the same county as the old property, and the value of the latest property must be equal to or less than the old property. Additionally, some exclusions include properties used for business or rentals.

How do you avoid property reassessment in Prop 19?

To avoid property reassessment under Proposition 19, there are several ways:

Transfer the property to a child or grandchild of the original owner: In this case, the base-year value will be retained, and no reassessment will occur.
Transfer the property to a person 55 years of age or older, severely disabled, or a victim of a natural disaster: In this case, if the new property is of equal or lesser value than the previous one, the base-year value will be transferred to the new property.
Transfer the property to a person using it as their primary residence: In this case, the base-year value will be retained, and no reassessment will occur.

It’s important to note that there are some restrictions and limitations on who can transfer the base-year value and to what property. For example, the new property must be located in the same county as the old property, and the value of the latest property must be equal to or less than the old property. Additionally, some exclusions include properties used for business or rentals.

Can you avoid Prop 19 with trust?

Proposition 19, also known as the “Property Tax Transfers, Exemptions, and Revenue for Wildfire Agencies and Counties Amendment,” passed in November 2020, triggers a reassessment of an inherited property when it is transferred unless it meets certain exceptions. Using a trust can be a way to avoid reassessment under Prop 19, but it depends on the specific terms of the trust agreement and how the trust is created and used.

However, Proposition 19 does provide some exceptions for family trusts in certain cases:

If the trust is created for the benefit of a child or grandchild of the original owner, the base-year value will be retained, and no reassessment will occur.
Suppose the trust is created for a person 55 years or older, severely disabled, or a victim of a natural disaster, and the new property is of equal or lesser value than the previous one. In that case, the base-year value will be transferred to the new property.
If the trust is created for a person using it as their primary residence, the base-year value will be retained, and no reassessment will occur.

It’s important to note that there are some restrictions and limitations on who can transfer the base-year value and to what property. For example, the new property must be located in the same county as the old property, and the value of the latest property must be equal to or less than the old property. Additionally, some exclusions include properties used for business or rentals.

How does Prop 19 affect seniors?

Proposition 19, also known as the “Property Tax Transfers, Exemptions, and Revenue for Wildfire Agencies and Counties Amendment,” passed in November 2020, affects seniors in several ways.

Under certain conditions, senior homeowners who are 55 years or older can transfer their property tax base to a new home. This means that if senior citizen owns a home in California that they have lived in for many years, and the house has a very low property tax base, they could sell their home and purchase a new one while transferring their low property tax base to the new house. This means the new home would also have a low property tax base, and the senior citizen would continue to pay very little in property taxes.
Senior homeowners who inherit property from their parents can transfer the base-year value to a replacement property. This means that instead of adjusting the property tax base to the fair market value, the inheriting senior can move the lower base-year value to a new property, potentially resulting in lower property taxes for the senior.
Proposition 19 allows seniors 55 years or older, severely disabled, or victims of natural disasters to transfer their property tax base to a new home under certain conditions.
Seniors 55 or older can transfer their property tax base once every three years.

It’s important to note that there are some restrictions and limitations on who can transfer the base-year value and to what property. For example, the new property must be located in the same county as the old property, and the value of the latest property must be equal to or less than the old property. Additionally, some exclusions include properties used for business or rentals.

How do you take advantage of Prop 19?

Proposition 19, also known as the “Property Tax Transfers, Exemptions, and Revenue for Wildfire Agencies and Counties Amendment,” passed in November 2020, provides potential tax benefits to homeowners by allowing them to transfer their property tax base to a new home, under certain conditions. Here are some steps you can take to take advantage of Prop 19:

Understand the law’s requirements: Make sure you understand the conditions and limitations of Prop 19, such as the new property must be located in the same county as the old property, and the value of the latest property must be equal to or less than the old property. Additionally, some exclusions include properties used for business or rentals.
Identify your eligibility: Determine if you qualify to transfer your property tax base under Prop 19; if you are 55 years or older, severely disabled, or a victim of a natural disaster, you are eligible.
Check with your county assessor: Contact your local county assessor for more information about the law’s specifics and how it applies to your situation. They can provide the necessary forms and instructions to complete the transfer.
Review the value of your property: Review your current property and compare it to the value of the new property you’re considering purchasing. Ensure that the value of the new property is equal to or less than the value of the old property.
Seek professional advice: Consult with a tax and legal professional to understand how Proposition 19 applies to your situation and ensure you comply with all the law requirements.
Take advantage of the one-year window: Remember that Proposition 19 has a one-year window starting February 16, 2021, to execute the transfer, so make sure you take advantage of this window if you qualify and decide to move forward.

It’s important to remember that Prop 19 may not always result in a lower property tax bill, and it’s important to review your situation and consult with professionals before making any decision.

How does Prop 19 affect vacation homes?

Proposition 19, also known as the “Property Tax Transfers, Exemptions, and Revenue for Wildfire Agencies and Counties Amendment,” passed in November 2020, affects vacation homes by limiting the transfer of the property tax base to primary residences.

Under Prop 19, properties not considered primary residences cannot transfer the property tax base to a new home. This includes parcels used as vacation homes, rental properties, or properties used for business.
Therefore, if you own a vacation home and you’re considering selling it and purchasing a new primary residence, you won’t be able to transfer the property tax base of the vacation home to the new primary residence. The new primary residence will be reassessed at fair market value, and the property taxes will be based on that value.
It’s important to remember that the vacation home may still be eligible for certain tax benefits, such as the mortgage interest deduction or depreciation deductions, if used as a rental property. However, the property tax base transfer is not allowed in this case.

It’s important to consult with a tax and legal professional to understand how Proposition 19 applies to your situation and to ensure you comply with all the law requirements.

Does Proposition 19 increase property taxes?

Proposition 19, also known as the “Property Tax Transfers, Exemptions, and Revenue for Wildfire Agencies and Counties Amendment,” passed in November 2020, can impact property taxes depending on the situation.

Under Prop 19, when a property is transferred to a new owner, the property tax base will be adjusted to the fair market value at the time of transfer instead of retaining the old base-year value as it was before. This can result in a significant increase in property taxes for the new owner, particularly those who inherit property and those who own properties that are not considered primary residences.

However, Prop 19 does provide some exceptions for certain cases, such as:

If the property is transferred to a child or grandchild of the original owner, the base-year value will be retained, and no reassessment will occur.
Suppose the property is transferred to a person 55 years or older, severely disabled, or a victim of a natural disaster. The new property is of equal or lesser value than the previous one. In that case, the base-year value will be transferred to the new property.
If the property is transferred to a person using it as their primary residence, the base-year value will be retained, and no reassessment will occur.

It’s important to note that there are some restrictions and limitations on who can transfer the base-year value and to what property. For example, the new property must be located in the same county as the old property, and the value of the latest property must be equal to or less than the old property. Additionally, some exclusions include properties used for business or rentals.

Does Prop 19 affect capital gains?

Proposition 19, also known as the “Property Tax Transfers, Exemptions, and Revenue for Wildfire Agencies and Counties Amendment,” passed in November 2020, primarily affects property taxes and doesn’t directly impact capital gains.

When selling a property, the capital gains tax is calculated based on the difference between the sales price and the property’s cost basis, which includes the purchase price and any improvements made to the property. Prop 19 does not change the cost basis calculation for capital gains purposes.

However, Prop 19 could affect the seller’s property tax bill. If the property taxes are higher than what the seller is used to paying, it could reduce the net proceeds from the sale and, therefore, the amount of the capital gain.

It’s important to note that the sale of a primary residence may be eligible to exclude up to $250,000 of capital gains tax for single taxpayers and up to $500,000 for married taxpayers. This exclusion applies to gain from selling a primary residence owned and used as the primary residence for at least two out of the last five years before the sale.

It’s important to consult with a tax and legal professional to understand how Proposition 19 applies to your situation and how it can affect your property taxes and capital gains tax.

How is property tax calculated under Prop 19?

Proposition 19, also known as the “Property Tax Transfers, Exemptions, and Revenue for Wildfire Agencies and Counties Amendment,” passed in November 2020, affects the calculation of property taxes for certain situations.

Under Prop 19, the calculation of property taxes depends on the specific scenario:

For properties transferred to a child or grandchild of the original owner, the base-year value will be retained, and no reassessment will occur. In this case, property taxes will continue to be calculated based on the base-year value rather than the fair market value at the transfer time.
For properties that are transferred to a person 55 years or older, severely disabled, or a victim of a natural disaster, and the new property is of equal or lesser value than the previous one, the base-year value will be transferred to the new property. In this case, the property taxes will continue to be calculated based on the base-year value rather than the fair market value at the transfer time.
For properties that are transferred to a person who will use it as their primary residence, the base-year value will be retained, and no reassessment will occur. In this case, the property taxes will continue to be calculated based on the base-year value rather than the fair market value at the transfer time.
For properties not eligible for the above exceptions, property taxes will be calculated based on the fair market value at the transfer time. This means the property will be reassessed, and the property taxes will be based on the new value.

It’s important to note that there are some restrictions and limitations on who can transfer the base-year value and to what property. For example, the new property must be in the same county as the old one.