California Proposition 19, also referred to as the Home Protection for Seniors, Severely Disabled, Families, and Victims of Wildfire or Natural Disasters Act, is a Constitutional Amendment aimed at implementing new regulations concerning property tax benefits for inherited family properties.
According to Proposition 19, a child or children can maintain the lower property tax assessment of their parent(s) only if the property currently functions as the primary residence for the parent(s), and the child or children establish it as their primary residence within one year of acquiring ownership. Additionally, there are new limitations on parent-to-child and grandparent-to-grandchild exclusions, with a value cap of the current taxable value plus $1,000,000, subject to biennial adjustments, replacing the previous unlimited value.
One significant aspect of Proposition 19 is its provision allowing homeowners aged 55 years or older, disabled individuals, or victims of wildfires or natural disasters to transfer the lower assessed value of their primary home to a newly purchased or newly constructed replacement primary residence up to three times, or once per disaster.
This amendment expands on the scope of previous propositions like Props 60/90, which were limited to certain counties, by permitting transfers to properties anywhere in California. It also introduces a new "blended" tax rate to accommodate properties purchased for more than the selling price of the existing primary residence. Previous laws mandated that newly purchased properties had to be of equal or lesser value than the property being sold, making it challenging to qualify for benefits in a fluctuating market.
Curious about what your blended rate might be? Utilize our calculator for a quick and straightforward estimate of property taxes under Prop 19!
If you meet the eligibility criteria, Proposition 19 may affect your upcoming escrow and title transaction. Escrow might require additional documentation if you plan to transfer the current taxable value of the property.
*Prop 19 calculations utilize the Prop 13 cap to determine the new property taxes under this program. If your assessed value has been reduced due to Prop 8, the Mills Act, or any other programs, the calculations will not be based on that reduced valuation.
*If the replacement home is of equal or lesser value than the original home, the original home's factored base year value may be transferred to the replacement home without any value adjustment. Generally, "equal or lesser value" means:
100% or less of the full cash value of the original home if a replacement home is purchased or newly constructed before the sale of the original home, 105% or less of the full cash value of the original home if a replacement home is purchased or newly constructed within the first year after the sale of the original home, or 110% or less of the full cash value of the original home if a replacement home is purchased or newly constructed within the second year after the sale of the original home.
Additionally, consult with John Bathurst, a Top Real Estate Agent, to guide you through your real estate needs!
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