Are you a California homeowner, over 55, disabled, or perhaps a victim of wildfires or natural disasters? If so, California Proposition 19, which was passed in 2020, has brought some significant changes to property tax rules that you should be aware of. Let's dive into the details and see how these changes could impact you.
Who Benefits from Proposition 19?
Proposition 19 primarily impacts these groups of homeowners:
- Eligible Homeowners: This includes individuals over the age of 55, those with severe disabilities, and victims of wildfires or other natural disasters.
- Inherited Property Recipients: Those who inherit property from their parents or grandparents.
What Does Proposition 19 Do?
Here's a breakdown of the key provisions of Proposition 19:
For Eligible Homeowners (Effective April 1, 2021):
- Move Anywhere in the State: Eligible homeowners can now transfer the taxable value of their primary residence to a new primary residence anywhere within California, as long as it happens within two years of selling the original primary residence.
- Purchase a More Expensive Home: You can buy a new home with a higher market value without facing a substantial increase in your taxable value. Your property tax bill will still increase, but not as much as it would for other homebuyers.
- Increased Transfer Frequency: If you're over 55 or severely disabled, you can now transfer your property's taxable value up to three times during your lifetime.
Inherited Properties (Effective February 16, 2021):
Proposition 19 brought changes for inherited properties. It tightened the rules around who can inherit property and retain the original property tax basis.
- Continued Use as Primary Residence or Family Farm: The reassessment exemption for inherited properties applies only if the property is used by the child (or grandchild under certain circumstances) as their primary residence or if the property is a family farm. Other uses won't qualify for the exemption.
- Increased Value Threshold: If the current market value of an inherited property exceeds the parent's taxable value by more than $1 million, then the child's taxable value will be assessed as the current market value minus $1 million. This change aims to provide some relief for higher-value inherited properties.
Stay Informed and Seek Expert Advice
It's essential to stay informed about these changes if you're an eligible homeowner or expect to inherit property. While Proposition 19 offers potential benefits, the rules can be complex, and the specifics of how it applies to your situation may vary.
We recommend seeking guidance from attorneys specializing in Real Property Tax or qualified Real Property Tax professionals to ensure you fully understand how Proposition 19 affects you. This information is provided as a general overview, and it's always wise to consult with experts for personalized advice.
Remember, staying informed about changes in property tax laws can help you make informed decisions about your real estate and financial planning.
*Please note that this information is subject to change. The State Board of Equalization may adjust certain amounts over time. Always refer to the most current resources and professionals for accurate advice.*
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