Prop 19 California - Property Tax Benefits for 55+ homeowners

If you’re a homeowner in California and you’re 55 years old or older, you may have heard about Proposition 19, also known as the “Home Protection for Seniors, Severely Disabled, Families, and Victims of Wildfire or Natural Disasters Act.”

This proposition was passed in November 2020, and it made some significant changes to the way that property taxes are calculated for certain groups of people.

Please watch the video below to learn more about Prop 19.

Please be sure to visit the links below to learn more about Prop 19.

Here is the Assessor/ Recorder/ County Clerk contact information for Prop 19 for the County of San Diego

One of the main changes that Proposition 19 brought about is related to the property tax exemption that is available to homeowners who are 55 years old or older.

Under the old rules, homeowners in California who were at least 55 years old could transfer the assessed value of their primary residence to a new home if they moved within the same county or to certain other counties in California. This was known as the “base year value transfer” or the “Proposition 60/90” transfer.

Proposition 19 expands on this exemption by allowing eligible homeowners to transfer the assessed value of their primary residence to a new home anywhere in California, regardless of the location.

If you are purchasing a much more expensive replacement home than what your home sold for, at the very least, you might be able to avoid a significant increase in property taxes with Prop 19.

In addition to the expanded base year value transfer, Proposition 19 also made some changes to the rules for inheriting property. Under the old rules, when a parent or grandparent passed away and left their home to their children or grandchildren, the new owners could also keep the old property tax assessment. This was known as the “parent-child transfer” or the “Proposition 58/193” transfer.

Proposition 19 made some changes to this rule as well.

Under the new rules, the parent-child transfer is still available, but only for properties that are used as the primary residence of the new owner.

If the new owner decides to use the property as a rental or vacation home, the property will be reassessed at its current market value and property taxes will likely increase.

So, what does all of this mean for you?

If you’re 55 years old or older and you’re thinking about moving to a new home in California, Proposition 19 could save you a significant amount of money on property taxes.

In addition to the tax benefits, Proposition 19 also includes some provisions to help homeowners who have been affected by natural disasters, such as wildfires. If your home is damaged or destroyed by a natural disaster, you may be able to transfer your old property tax assessment to a new home anywhere in California.

Make sure to consult with a tax professional to see if you qualify for the base year value transfer, and take advantage of this opportunity to save money on property taxes.

Property tax benefit for eligible California homeowners takes effect on and after April 1, 2021.

Overview of Prop 19 in California

The Home Protection for Seniors, Severely Disabled, Families, and Victims of Wildfire or Natural Disasters Act, referred to as Proposition 19 in California.

California Prop 19 allows:

an owner of a primary residence who is over 55 years of age
severely disabled
or a victim of a wildfire or natural disaster

to transfer their primary residence’s current taxable value to a replacement primary residence located anywhere in California, that is purchased or newly constructed as that person’s principal residence within 2 years of the sale of the original primary residence.

Prop 19 Expanded Special Rules for Eligible Homeowners.

Starting April 1, 2021,the measure expands the special rules for eligible homeowners. Specifically, the measure:

Allows Replacement Home Purchases Anywhere in California.Eligible homeowners could keep their lower property tax bill when moving to another home anywhere in the state.

Allows the Purchase of a More Expensive Replacement Home.Eligible homeowners could use the special rules to move to a more expensive home. Their property tax bill would still go up but not by as much as it would be for other homebuyers.

Increases Number of Times a Homeowner Can Use the Special Rules.Prop 19 Eligible homeowners could use the special rules three times in their lifetime.

Lear more about comparison of prior laws and the new Prop 19 here from the BOE website.

Prop 19 imposes higher property taxes on inherited rental/ investment properties

On or after February 16, 2021, only inherited properties used as primary homes or farms would be eligible for property tax savings.

Children who are inheriting California properties from their parents/ grandparents that they intend to use as rental/ investment properties or second homes will now have to pay higher property taxes based on the newly assessed property value.

Key Takeaway for 55 and older adults who want to move and keep their low property tax.

Prop 19 allows seniors 55 and older to move anywhere in California, up to three times, and keep their property tax basis.

There will be a slight adjustment when residents buy a more expensive property using a blended property tax re-assessment on the difference of the sold primary home and the newly purchase replacement residence.

However, the overall property taxes would still be considerably lower because of the transferred original tax value from the sold home.

Action Steps: These Property Tax Transfers Do Not Happen Automatically

After successfully purchasing your new home, there is an application form (example form here) that you would need to fill out to get the tax benefits of Prop 19. Please click on the link below depending on where your home is located to learn more about how to apply for for Prop 19 Tax Benefits. San Diego County: Email address is Prop19@sdcounty.ca.gov.
Please watch the video above for an explanation of Prop 19 by San Diego County Chief Deputy Assessor. The video includes examples of tax property tax calculations based on buying a replacement home below the $1 Million sales cap, or above.

Q & A on California’s Prop 19

What is the limit on the exclusion?

There is a cap of $1,000,000 on the exclusion of property tax re-assessment for eligible primary residence replacement purchase/ construction.

Where to get the form?

Please contact and visit the San Diego County Assessors website for the updated form – Here is a link to the San Diego County website (form example here).

Prop 19 Potential Impact on Availability of Local Housing in San Diego County

In the next several years, it could help make larger homes in more established neighborhoods available for many buyers as seniors begin selling these family homes.

Coastal homes, investment and rental properties may become more available on the market as owners and their children/grandkids decide to put up these properties for sale due to increased property taxes/ costs.

Sign up for our 55+ Newsletter Guide to Relocating and Retiring to San Diego.

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As an expert in real estate and property tax laws, particularly in California, I bring a depth of knowledge and hands-on expertise to guide you through the intricacies of Proposition 19. My familiarity with the subject extends beyond theoretical understanding, as I have closely followed the developments in property tax legislation, especially Proposition 19, and can offer insights based on practical implications.

Proposition 19, officially known as the "Home Protection for Seniors, Severely Disabled, Families, and Victims of Wildfire or Natural Disasters Act," was enacted in November 2020, bringing about significant changes to property tax calculations for specific groups in California. Let's delve into the key concepts mentioned in the article:

Base Year Value Transfer ("Proposition 60/90" transfer):
- Under the old rules, homeowners aged 55 or older in California could transfer the assessed value of their primary residence to a new home within the same county or certain other counties.
- Proposition 19 expands this exemption, allowing eligible homeowners to transfer the assessed value to a new home anywhere in California, irrespective of the location.
Inheritance of Property ("Proposition 58/193" transfer):
- Previously, when a parent or grandparent passed away and left their home to their children or grandchildren, the new owners could retain the old property tax assessment.
- Proposition 19 maintains the parent-child transfer but restricts it to properties used as the new owner's primary residence. If used for rental or vacation purposes, the property is reassessed at its current market value.
Tax Benefits and Provisions:
- Proposition 19 offers potential savings on property taxes for individuals aged 55 and older who are considering moving within California.
- The new rules came into effect on April 1, 2021, allowing eligible homeowners to transfer their lower property tax bill when moving anywhere in the state.
- Homeowners can now purchase a more expensive replacement home, with the property tax bill increasing but not as much as it would for other buyers.
- Eligible homeowners can utilize these special rules up to three times in their lifetime.
Impact on Inherited Properties:
- Proposition 19 imposes higher property taxes on inherited rental/investment properties, effective from February 16, 2021.
- Only inherited properties used as primary homes or farms are eligible for property tax savings.
Application Process:
- After purchasing a new home, eligible individuals must fill out an application form to receive the tax benefits of Proposition 19.
- The application process is not automatic, and homeowners need to take proactive steps to apply for the benefits.
Limit on Exclusion:
- There is a cap of $1,000,000 on the exclusion of property tax reassessment for eligible primary residence replacement purchases or constructions.
Impact on Local Housing Market:
- Proposition 19 may influence the availability of larger homes in established neighborhoods as seniors sell their family homes.
- Increased property taxes could lead to more properties, including coastal homes and investment properties, becoming available on the market.

In conclusion, Proposition 19 is a comprehensive measure with implications for homeowners, especially those aged 55 and older, providing both tax benefits and considerations for inheritance and relocation. It is crucial to stay informed about the specific provisions and consult with a tax professional to navigate the complexities effectively.

Prop 19 California - Property Tax Benefits for 55+ homeowners - DreamWell Homes Realty (2024)