BACKGROUND

In November 2020, California voters passed Proposition 19, which makes changes to property tax benefits for families, seniors, severely disabled persons, and victims of natural disaster. These changes will become effective in February and April 2021, depending on the component of the measure.

"The implementation dates for Proposition 19 are fast approaching and my Office is working hard to inform the public about the changes that will occur. While there is still uncertainty about many components of the measure, this informational brochure will try and answer some of the basic elements of Proposition 19."

Jeff Prang, Assessor


Assessor Resource Webinar: A Guide to Inheritance (PowerPoint Slides)

PARENT-CHILD & GRANDPARENT-GRANDCHILD EXCLUSION

CURRENT LAW PROPOSITION 19
Principal Residence
  • Principal residence of transferor
  • No value limit
  • Residence and homesite (excess land may be excluded as "other property")
  • Principal residence of transferor and transferee
  • Value limit of current taxable value plus $1,000,000 (as annually adjusted)
  • Family homes and farms
Other Real Property Transferor lifetime limit of $1,000,000 of factored base year value Eliminates exclusion for other real property other than the principal residence
Grandparent-Grandchild Middle Generation Limit Parent(s) of grandchild, who qualifies as child(ren) of grandparent, must be deceased on date of transfer
Filing Period File claim within 3 years or before transfer to third party File for homeowners' exemption within 1 year of transfer
Implementing Statute Revenue & Taxation Code section 63.1 (implements Prop. 58/193) To be determined
Important Dates Through February 15, 2021 Effective February 16, 2021
Principal Residence
Current Law
  • Principal residence of transferor
  • No value limit
  • Residence and homesite (excess land may be excluded as "other property")
Proposition 19
  • Principal residence of transferor and transferee
  • Value limit of current taxable value plus $1,000,000 (as annually adjusted)
  • Family homes and farms
Other Real Property
Current Law Transferor lifetime limit of $1,000,000 of factored base year value
Proposition 19 Eliminates exclusion for other real property other than the principal residence
Grandparent-Grandchild Middle Generation Limit
Current Law Parent(s) of grandchild, who qualifies as child(ren) of grandparent, must be deceased on date of transfer
Proposition 19 Parent(s) of grandchild, who qualifies as child(ren) of grandparent, must be deceased on date of transfer
Filing Period
Current Law File claim within 3 years or before transfer to third party
Proposition 19 File for homeowners' exemption within 1 year of transfer
Implementing Statute
Current Law Revenue & Taxation Code section 63.1 (implements Prop. 58/193)
Proposition 19 To be determined
Important Dates
Current Law Through February 15, 2021
Proposition 19 Effective February 16, 2021

BASE YEAR VALUE TRANSFER-PERSONS AT LEAST AGE 55/DISABLED

CURRENT LAW PROPOSITION 19
Type of Property Principal residence
Timing Purchase or newly construct residence within 2 years of sale
Location of Replacement Home
  • Same county
  • County with intercounty ordinance (10 counties)
Anywhere in California
Value Limit
  • Equal or lesser value
    • 100% if replacement purchased/new construction prior to sale
    • 105% if replacement purchased/new construction in first year after sale
    • 110% if replacement purchased/new construction in second year after sale
  • Any value
  • Amount above 100% is added to transferred value
How many tranfsers?
  • One time
  • Exception: After using once for age, second time for subsequent disability
Three times
Implementing Statute Revenue & Taxation Code section 69.5 (implements Propositions 60/90/110) To be determined
Important Dates Through March 31,2021 Effective April 1, 2021
Type of Property
Current Law Principal residence
Proposition 19 Principal residence
Timing
Current Law Purchase or newly construct residence within 2 years of sale
Proposition 19 Purchase or newly construct residence within 2 years of sale
Location of Replacement Home
Limit
Current Law
  • Same county
  • County with intercounty ordinance (10 counties)
Proposition 19 Anywhere in California
Value Limit
Current Law
  • Equal or lesser value
    • 100% if replacement purchased/new construction prior to sale
    • 105% if replacement purchased/new construction in first year after sale
    • 110% if replacement purchased/new construction in second year after sale
Proposition 19
  • Any value
  • Amount above 100% is added to transferred value
How Many Transfers?
Current Law
  • One time
  • Exception: After using once for age, second time for subsequent disability
Proposition 19 Three times
Implementing Statute
Current Law Revenue & Taxation Code section 69.5 (implements Propositions 60/90/110)
Proposition 19 To be determined
Important Dates
Current Law Through March 31, 2021
Proposition 19 Effective April 1, 2021

BASE YEAR VALUE TRANSFER-INTRACOUNTY DISASTER RELIEF

CURRENT LAW PROPOSITION 19
Type of Property Any type of property Principal residence
Timing Purchase or newly construct property within 5 years of disaster Purchase or newly construct residence within 2 years of sale
Location of Replacement Home Within same county Anywhere in California
Value Limit
  • Any value
  • Amount above 120% is added to transferred value
  • Any value
  • Amount above 100% is added to transferred value
Type of Disaster Disaster for which the Governor proclaims a state of emergency Wildfire, as defined, or natural disaster as declared by the Governor
Implementing Statute Revenue & Taxation Code section 69 (implements Proposition 50) To be determined
Important Dates Through March 31, 2021 Effective April 1, 2021
Type of Property
Current Law Any type of property
Proposition 19 Principal residence
Timing
Current Law Purchase or newly construct property within 5 years of disaster
Proposition 19 Purchase or newly construct residence within 2 years of sale
Location of Replacement Property
Current Law Within same county
Proposition 19 Anywhere in California
Value Limit
Current Law
  • Any value
  • Amount above 120% is added to transferred value
Proposition 19
  • Any value
  • Amount above 100% is added to transferred value
Type of Disaster
Current Law Disaster for which the Governor proclaims a state of emergency
Proposition 19 Wildfire, as defined, or natural disaster as declared by the Governor
Implementing Statute
Current Law Revenue & Taxation Code section 69 (implements Proposition 50)
Proposition 19 To be determined
Important Dates
Current Law Through March 31, 2021
Proposition 19 Effective April 1, 2021

BASE YEAR VALUE TRANSFER – INTERCOUNTY DISASTER RELIEF

Type of Property
Current Law Principal residence
Proposition 19 Principal residence
Timing
Current Law Purchase or newly construct principal residence within 3 years of disaster
Proposition 19 Purchase or newly construct principal residence within 2 years of sale
Location of Replacement Property
Current Law County with intercounty ordinance (13 counties)
Proposition 19 Anywhere in California
Value Limit
Current Law
  • Equal or lesser value
    • 105% if purchased/new construction in first year after disaster
    • 110% if purchased/new construction in second year after disaster
    • 115% if purchased/new construction in third year after disaster
Proposition 19
  • Any value
  • Amount above 100% is added to transferred value
Type of Disaster
Current Law Disaster for which the Governor proclaims a state of emergency
Proposition 19 Wildfire, as defined, or natural disaster as declared by the Governor
Implementing Statute
Current Law Revenue & Taxation Code section 69.3 (implements Proposition 171)
Proposition 19 To be determined
Important Dates
Current Law Through March 31, 2021
Proposition 19 Effective April 1, 2021
CURRENT LAW PROPOSITION 19
Type of Property Principal residence Principal residence
Timing Purchase or newly construct principal residence within 3 years of disaster Purchase or newly construct principal residence within 2 years of sale
Location of Replacement Home County with intercounty ordinance (13 counties) Anywhere in California
Value Limit
  • Equal or lesser value
    • 105% if purchased/new construction in first year after disaster
    • 110% if purchased/new construction in second year after disaster
    • 115% if purchased/new construction in third year after disaster
  • Any value
  • Amount above 100% is added to transferred value
Type of Disaster Disaster for which the Governor proclaims a state of emergency Wildfire, as defined, or natural disaster as declared by the Governor
Implementing Statute Revenue & Taxation Code section 69.3 (implements Proposition 171) To be determined
Important Dates Through March 31, 2021 Effective April 1, 2021

For more information on changes approved by Proposition 19 consult the State Board of Equalization's website: boe.ca.gov/prop19/

WHAT IS PROPOSITION 19?

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.

Proposition 19 changes two programs currently administered by county assessors:

1. Parent-Child Transfers (Prop. 58)/Grandparent-Grandchild Transfers (Prop. 193), effective February 16, 2021; and

2. Senior Citizen and Disaster Relief Tax Base Transfers (Prop. 60/90 /50/171 ), effective April 1, 2021.

For assistance, please call (213) 974-3441 or email oservices@assessor.lacounty.gov

Parent-Child Transfers & Grandparent-Grandchild Transfers

Current law, Prop. 58 & Prop. 193, allows 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 property is used as rental property by the child.

Current law also allows 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:

1) The property must be the principal residence of the parent(s) or grandparent(s)

2) The property must become the principal residence of the child or grandchild within one year

3) Only the principal residence of a parent(s) or grandparent(s) qualifies for a base year value transfer. Other property, residential or commercial no longer qualify for this benefit

This provision applies to transfers starting Feb. 16, 2021 (since Feb. 15 is a holiday).

Senior Citizen Tax Base Transfers

Under current law, Propositions 60/90 and 110 allows 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*, anywhere within the state, up to three times (rather than once as provided under current law).

* Subject to conditions.

The effective date of implementation is April 1, 2021.

Disaster Relief Tax Base Transfers

Under current law, Prop. 50 provides that the base year value of 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 effective date of implementation is April 1, 2021.

1. What date does Prop. 19 go into effect?

There are two effective dates under Prop. 19:

Parent-Child or Grandparent-Grandchild Transfers

Effective February 16, 2021, Prop. 19 changes the benefits afforded to transfers between parents and children and between grandparents and their grandchildren (change in ownership exclusion).

Tax Base Transfers (Senior, Disabled, Victim of Disaster)

Effective April 1, 2021, homeowners who are over 55 years, severely disabled, or the victim of a disaster can transfer the base year value of their home to a replacement home located anywhere in California that is purchased within 2 years of the sale of their original home.

PARENT-CHILD & GRANDPARENT-GRANDCHILD TRANSFERS

2. What is the new (Prop. 19) parent-child and grandparent-grandchild change in ownership exclusion?

For transfers occurring on or after February 16, 2021, the exclusion is allowed only if the real property is: (1) a family home (or family farm) of the transferor, and (2) the property continues as the family home (or family farm) of the transferee; and,

The exclusion is limited to the first $1 million of value that would be added upon reassessment of a family home (or family farm).

3. Under Prop. 19, will I be eligible for a parent-child exclusion if the value of the family home is greater than $1 million?

Yes, you may be granted up to a $1 million exclusion.

The excluded value limit under Prop. 19 is the sum of the factored base year value of the property plus $1 million. If the market value is equal or lesser than the limit, you get full relief. If the market value exceeds this limit, partial relief is available. The amount exceeding the value limit is added to the factored base year value.

For example, a family home has a factored base year value of $350,000 and a fair market value of $1,500,000. The value test under Prop. 19 would be:

Excluded Amount: $350,000 + $1,000,000 = $1,350,000
Difference                $1,500,000 - $1,350,000 = $ 150,000
New                           $ 350,000 + $ 150,000 = $ 500,000

4. Will the non-principal residence $1 million exclusion allowance still be available after February 16, 2021.

No. Upon implementation of Prop. 19, the non-principal residence $1 million exclusion will no longer be available.

5. Will the parent-child and grandparent-grandchild exclusion still include non-principal residences of the transferors?

No. Prop. 19 eliminates the exclusion for transfers of real property other than the transferor’s principal residence between parents and children and grandparents and grandchildren, such as rental property, second homes, and commercial property.

6. If my parents transfer their non-principal residence to me prior to February 16, 2021, would it still qualify for the parent to child exclusion under previous provisions (Prop. 58)?

Yes, the property would be eligible for exclusion if all other requirements are met. The limitation of family home or family farm only becomes effective for transfers occurring after February 16, 2021.

7. Do I have to claim the homeowners’ exemption to qualify for the parent-child and grandparent-grandchild exclusion?

Yes, in order to receive the property tax benefit of the exclusion, Prop. 19 requires that the transferee claim the homeowners’ exemption or the disabled veterans’ exemption at the time of purchase or transfer of the family home (or family farm) or within one year of the transfer.

8. If the property transfers to three children, do all of the children need to reside in the property in order to qualify for the exclusion?

We expect clarification from the legislature on this issue.

9. My parents transferred the family home to me prior to the effective date of Prop. 19. We have not filed the parent to child exclusion claim yet. If a claim is filed after February 16, 2021, would the property be eligible for exclusion?

Since the transfer occurred prior to the effective date of Prop. 19, the property is eligible for exclusion under Prop. 58, if all the requirements are met.

BASE YEAR VALUE TRANSFERS (SENIORS, DISABLED, VICTIM OF DISASTER)

10. I understand that under Prop. 19, a person can transfer their tax base from an original property to a replacement property anywhere in the State. Is this correct?

Effective April 1, 2021, homeowners who are over 55 years, severely disabled, or the victim of a disaster can transfer the tax base of their home to a replacement home located anywhere in California that is purchased within 2 years of the sale of their original home.

11. Under Prop. 19, can I transfer my tax base more than once?

Yes, Prop. 19 allows homeowners who are over 55 years or disabled to transfer their tax base up to three times. Victims of wildfires or other natural disasters may transfer their tax base once per event.

12. If I have transferred my tax base prior to Prop. 19, am I eligible to transfer my tax base three (3) more times or only two (2)?

The State Board of Equalization’s opinion is that transfers of tax base that occur prior to the implementation of Prop. 19 do not count towards the three transfer maximum.

13. Unfortunately, my home burned down in the Woolsey Fire and had significant, more than 50%, damage in the Bobcat Fire. Will I be able to transfer my tax base again to Northern California?

If someone is unfortunate enough to have lost two homes to wildfires or other Governor-proclaimed disasters, they are able to transfer their tax base more than once.

14. My husband and I have already taken advantage of the Prop. 60/90 senior tax base transfer benefit and the Prop. 110 tax base transfer benefit due to disability. Can we qualify to transfer our tax base a third time under Prop. 19?

Prop. 19 allows a claimant to transfer their tax base up to three times in addition to any transfers of tax base under previous provisions (Propositions 60, 90 and 110). Therefore, you should be eligible to transfer your tax base up to three times.

15. What happens if I buy a replacement home that costs more than my original home and want to transfer my tax base?

If you are over 55 years, severely disabled, or the victim of a disaster, Prop. 19 allows homeowners who purchase a replacement home of greater value than their original home to transfer their tax base with an adjustment to account for the value difference. The portion that is over the value of the original home will be reassessed at current market value.

16. What constitutes a natural disaster for tax base transfer purposes?

Under Prop. 19, “Natural disaster” means the existence, as declared by the Governor, of conditions of disaster or extreme peril to the safety of persons or property within the affected area caused by conditions such as fire, flood, drought, storm, mudslide, earthquake, civil disorder, foreign invasion, or volcanic eruption.

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    Prop. 19 Summary

    On November 3, 2020, California voters approved Proposition 19 (Assembly Constitutional Amendment 11, Stats. 2020, res. ch. 31). Prop. 19 adds sections to the California Constitution which changes the rules on the parent-child and grandparent-grandchild exclusions (known as Prop. 58/193) and adds new provisions for a base year value transfer of a principal residence for persons at least age 55 or severely disabled (known as Prop. 60/90) or for victims of wildfires or natural disasters (known as Prop. 50/171).

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    Family Transfers/Inheritance

    Do you know property owners in California may avoid reassessment to market value if the property transfers from their parents, children or grandparents?

  • Document Page Icon

    Tax Base Transfer for Seniors

    Do you know senior homeowners may transfer their existing property's assessed value to a new residence?