If you are a homeowner in California, you may have heard about Proposition 19, a ballot measure that was passed in November 2020. Proposition 19 brings significant changes to property tax assessment transfers and inheritance rules for eligible homeowners. In this blog post, we will explore what Proposition 19 is and how you can use it to your advantage.
What is Proposition 19?
Proposition 19 is a California ballot measure that changes the rules for property tax assessment transfers and inheritance rules for homeowners aged 55 and older, the severely disabled, and wildfire/disaster victims. The measure was passed in November 2020 with 51.1% of the vote.
Under Proposition 19, eligible homeowners can transfer the taxable value of their primary residence to a replacement home anywhere in California, regardless of the market value of the replacement home. This can be done up to three times, and the transfer is not limited to once per lifetime. Additionally, the measure changes the rules for inheriting property from a parent or grandparent. If the property is used as a second home or rental property, it will be reassessed at market value.
How can homeowners use Proposition 19 to their advantage?
If you are 55 or older or qualify as a severely disabled person, you may be able to sell your current home and transfer its taxable value to a replacement home anywhere in California. This could potentially save you thousands of dollars in property taxes, especially if the value of your current home has appreciated significantly since you bought it.
For example, let's say you bought a home in California 20 years ago for $300,000. Today, the home is worth $1 million, and you are paying property taxes based on the $300,000 value. If you sell your current home and buy a replacement home for $1 million, your property taxes will be based on the new value, resulting in a significant increase in your property tax bill. However, under Proposition 19, you can transfer the taxable value of your current home to the replacement home, potentially saving you thousands of dollars in property taxes.
Additionally, if you are inheriting a home from a parent or grandparent, you may be able to keep the existing property tax assessment if you use the home as your primary residence. This can also save you a significant amount of money in property taxes compared to if the property was reassessed at market value.
It's important to note that Proposition 19 has eligibility requirements and limitations, and it's essential to consult with a tax professional or attorney to understand how the measure may specifically impact your situation.
Conclusion
Proposition 19 brings significant changes to property tax assessment transfers and inheritance rules for eligible California homeowners. If you are 55 or older, severely disabled, or a wildfire/disaster victim, you may be able to take advantage of the new rules and transfer the taxable value of your current home to a replacement home anywhere in California. Additionally, if you are inheriting a home from a parent or grandparent, you may be able to keep the existing property tax assessment if you use the home as your primary residence. It's important to consult with a tax professional or attorney to understand how Proposition 19 may specifically impact your situation and ensure you are taking full advantage of the measure.