California Proposition 19, Property Tax Transfers, Exemptions, and Revenue for Wildfire Agencies and Counties Amendment (2020)
How would the ballot measure change the rules governing tax assessment transfers?
The ballot measure would change the rules for tax assessment transfers. In California, eligible homeowners can transfer their tax assessments to a different home of the same or lesser market value, which allows them to move without paying higher taxes. Homeowners who are eligible for tax assessment transfers are persons over 55 years old, persons with severe disabilities, and victims of natural disasters and hazardous waste contamination.
The ballot measure would allow eligible homeowners to transfer their tax assessments anywhere within the state and allow tax assessments to be transferred to a more expensive home with an upward adjustment. The number of times that a tax assessment can be transferred would increase from one to three for persons over 55 years old or with severe disabilities (disaster and contamination victims would continue to be allowed one transfer).
How would the ballot measure affect inherited properties?
In California, parents or grandparents can transfer primary residential properties to their children or grandchildren without the property’s tax assessment resetting to market value. Other types of properties, such as vacation homes and business properties, can also be transferred from parent to child or grandparent to grandchild with the first $1 million exempt from re-assessment when transferred.
The ballot measure would eliminate the parent-to-child and grandparent-to-grandchild exemption in cases where the child or grandchild does not use the inherited property as their principal residence, such as using a property a rental house or a second home. When the inherited property is used as the recipient’s principal residence but has a market value above $1 million, an upward adjustment in assessed value would occur. The ballot measure would also apply these rules to certain farms. Beginning on February 16, 2023, the taxable value of an inherited principal residential property would be adjusted each year at a rate equal to the change in the California House Price Index.
What would the ballot measure do with changes in revenue?
The ballot measure would create the California Fire Response Fund (CFRF) and County Revenue Protection Fund (CRPF). The ballot measure would require the California Director of Finance to calculate additional revenues and net savings resulting from the ballot measure. The California State Controller would be required to deposit 75 percent of the calculated revenue to the Fire Response Fund and 15 percent to the County Revenue Protection Fund. The County Revenue Protection Fund would be used to reimburse counties for revenue losses related to the measure’s property tax changes. The Fire Response Fund would be used to fund fire suppression staffing and full-time station-based personnel.
The Orange County Register Editorial Board: “But Prop. 19 is best understood for what it is: an attempt by real estate interests to accomplish what they couldn’t accomplish two years ago by pandering to the state’s firefighters union. This is a special-interest measure that seeks to raise hundreds of millions of new tax revenues to appease yet another special interest. Prop. 19 has one good feature — portability. Counties ought to enable it forthwith, as a few already have done. But Prop. 19 is a cash grab, not tax reform; it’s not fair to property heirs, and it buys off a union so it has a better chance of passing. Vote it down.” [Source]
Mercury News & East Bay Times Editorial Boards: “Prop. 19 merely plugs one hole in the state’s porous property tax laws while creating another. It’s time for holistic reform that simplifies the system and makes it more equitable. This isn’t it. […] The longer a person had owned their current home, and already benefited from inordinately low tax bills due to Prop. 13, the greater the tax break on the new property. And those who downsize would often be competing with first-time buyers for more-affordable smaller homes. The real reform would be to abolish the tax-transfer program, not expand it. Vote no on Prop. 19.” [Source]
WHAT DOES NO MEAN?
A “no” vote opposes this constitutional amendment, therefore continuing to:
* allow eligible homeowners to transfer their tax assessments within counties and to homes of equal or lesser market value;
* keep the number of times that persons over 55 years old or with severe disabilities can transfer their tax assessments at one;
* allow the tax assessments on inherited homes, including those not used as principal residences, to be transferred from parent to child or grandparent to grandchild.
WHAT DOES YES MEAN?
A “yes” vote supports this constitutional amendment to:
* allow eligible homeowners to transfer their tax assessments anywhere within the state and allow tax assessments to be transferred to a more expensive home with an upward adjustment;
* increase the number of times that persons over 55 years old or with severe disabilities can transfer their tax assessments from one to three;
* require that inherited homes that are not used as principal residences, such as second homes or rentals, be reassessed at market value when transferred; and
* allocate additional revenue or net savings resulting from the ballot measure to wildfire agencies and counties.