I’ve been asked quite a few times lately what the deal is with prop 19. Is it good? Is it bad? How does it affect us living in California? What is prop 19 really about? So, I wanted to give you a little overview of what it is; as well as what to be mindful of! Oh, and to be clear… before making any major decisions consult your tax person on the in’s and out’s!
What is Prop 19?
- Allows eligible homeowners to transfer their tax assessments in CA and allows tax assessments to be transferred to a more expensive home with an upward adjustment.
- Increases the number of times that persons over 55 years old or with severe disabilities can transfer their tax assessments from one to three.
- Requires that inherited homes that are not used as principal residences, such as second homes or rentals, be reassessed at market value when transferred.
- Allocates additional revenue or net savings resulting from the ballot measure to wildfire agencies and counties.
What are some benefits of prop 19?
Prop 19 is extremely helpful to the older generation who has felt tied down to their large house that they’ve owned for 30+ years. They can now take their low property taxes to a new home that is more suitable to their current lifestyle. This also prevents the burden of the major property tax hike they would have incurred.
Another positive is it will create more inventory due to closing the intergenerational tax break. Previously, when a house was inherited so were the low property taxes. What was often happening, is the children who inherited the property weren’t living in it. They maybe already owned a home and used the inherited house as an income property or an airbnb. While this is a good source of income for the inheritors, it has aided in suppressing our housing inventory. SO, in order to inherit your parents or grandparents low property taxes, the inherited property must be your primary residence.
It really depends on what’s important to you & how you look at Prop 19 to determine if you love it or hate it. The new revenue from closing the inheritance tax break could generate billions for schools, local governments & the state with a very large chunk going towards firefighters. You can read more in-depth on prop 19 here.