By Ted Gaines
State Board of Equalization
Proposition 19, The Act to Protect Seniors, Disabled People, Families, and Victims of Forest Fires or Natural Disasters, passed by voters last November and resulted in significant changes to California’s property tax law. A provision of the measure – the one regarding the exclusions of “parent-child” and “grandparent-grandchildren” – triggered a massive increase in property tax, which came into effect on February 16.
Unfortunately for homeowners, the law in its current state is a confusing mess. As a member of the State Board of Equalization and a dedicated taxpayer advocate, I continue to work closely with state lawmakers and county assessors to clarify and answer as many questions as possible for taxpayers affected by these regulations.
While Proposition 19 has some serious shortcomings – the increase in taxes on tens of thousands of California families, and the difficulty and cost of passing property and family businesses on to your children and grandchildren – it offers notable tax benefits to homeowners who are nearing retirement. Severely disabled or victims of natural disasters. Starting April 1, 2021, qualifying homeowners will be able to roll over their base tax base year value of Proposition 13 to a replacement home of any value in any of California’s 58 counties. Homeowners looking to downsize, get closer to the family, or move for some other reason can mix the taxable value of their old home with the purchase price of a new and potentially more expensive home, reducing the property tax burden they would otherwise face.
When the voters overwhelmingly passed Proposition 13 in 1978, property tax rates, which had gotten out of hand, were supposed to be curbed as district governments routinely raised property taxes and, in many cases, evicted families from their homes. The pioneering election initiative put limits on how much a homeowner’s taxable value could increase each year, even if a homeowner’s market value increased significantly.
California voters later passed Proposals 60, 90, and 110, which extended Proposition 13 protection to homeowners 55 and over and people with severe disabilities by giving them a one-time option to keep their Proposition 13 tax base if they did Moved into an equal house or a lower value within the same county or one of the 10 counties with an intercounty agreement.
Proposition 19 further expands the benefits of Proposition 13 by allowing eligible homeowners to carry over their base year value up to three times. It also gives property owners whose homes have been damaged or destroyed by a devastating fire or other natural disaster the option to transfer their annual base value for Proposition 13 to a new home. These provisions of Proposition 19 go into effect April 1, 2021, giving homeowners two years to roll over their base year value to a replacement home in any county.
I support the Proposition 19 base year transfer rules because they allow more homeowners to take advantage of the Proposition 13 protections, which California voters continue to support widely. While some provisions of Proposition 19 harm California taxpayers at a time when they need most economic security, it’s always nice to have a silver lining.
Visit my website at boe.ca.gov/gaines for more information on Proposition 19. I encourage all homeowners to check with their county assessor for specific county regulations, guidelines, and records related to base year transfers.
Senator Ted Gaines (retired) was elected in November 2018 to represent the first district of the Compensation Committee. He is a leading taxpayer attorney, committed to representing nearly ten million constituents in 30 counties in northern, eastern and southern California with confidence and transparency.