In November, California voters narrowly passed Proposition 19, which makes significant changes to existing real property tax reassessment rules.
EXPANDED SPECIAL RULES FOR ELIGIBLE HOMEOWNERS
Effective April 1, 2021: Homeowners 55 years of age and older, severely disabled, or whose property was extensively destroyed by wildfire or other natural disasters may be eligible to transfer the taxable value of their primary residence to a replacement primary residence:
- Anywhere in California
- Of any value, but with upward adjustments if replacement is of greater value
- Purchased or newly constructed within two years of sale
- Up to three times (previously one time), but without limitation for properties destroyed by fire
TAXATION OF INHERITED PROPERTY TRANSFERS
Effective February 16, 2021: Prop 19 narrows the rules allowing properties to pass from parent to child and grandparent to grandchild without an increase in the property tax bill. The taxable value can be transferred:
- To only those properties used as a primary home or farm by the child or grandchild
- If homeowners’ exemption if filed within one year of transfer
- If the value of the property is less than $1M over the original tax basis. If the property value, at the time of transfer, is more than $1M over the original tax basis, some upward adjustment in assessed value would occur.
Effective after Feb. 15, 2021, Proposition 19 significantly restricts property owners' ability to preserve the current assessed value of California real property transferred between parents and children.
Effective Apr. 1, 2021, eligible homeowners age 55 or older (or who are disabled or displaced by natural disasters) will be able to transfer their current property tax base to a replacement home of any value located anywhere in the state.