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Proposition 19 Basics

Information is directly from the LA County Assessors website. Information deemed reliable but not guaranteed. See comparison chart showing former propositions (old law) with prop 19 (new law)

Background

In November 2020, California voters passed Prop 19, which made changes to property tax benefits for families, seniors, severely disabled persons, and victims of natural disasters. These changes became effective in February and April 2021, depending on the component of the measure.

What is Proposition 19?

INHERITING PROPERTY

Proposition 19, or the Home Protection for Seniors, Severely Disabled, Families and Victims of Wildfire or Natural Disasters Act, is a Constitutional Amendment that imposes new limits on property tax benefits for inherited family property. Under Proposition 19, a child or children may keep the lower property tax base of the parent(s) ONLY if the property is the principal residence of the parent(s) and the child or children make it their principal residence within one year.

TRANSFER OF PROPERTY TAX BASE

The other component of Proposition 19 allows homeowners who are over 55 years of age, disabled, or victims of a wildfire or natural disaster, to transfer their lower assessed property value of their primary home to a newly purchased or newly constructed replacement principal residence up to three times (or once per disaster). The tax base may be transferred to a property located anywhere in the state.

Proposition 19 changes two programs currently administered by county assessors:

Parent-Child Transfers (Prop. 58)/Grandparent-Grandchild Transfers (Prop. 193), effective February 16, 2021
Senior Citizen and Disaster Relief Tax Base Transfers (Prop. 60/90 50/171), effective April 1, 2021.

Parent-Child Transfers & Grandparent-Grandchild Transfers

Prop. 58 & Prop.193, allowed a parent(s), and in certain cases grandparent(s), to transfer their existing property assessments of a principal residence of any value without triggering a reassessment, which is generally required upon a change in ownership – even if the property is used as rental property by the child.

Prop. 58 & Prop.193 also allowed for the inheritance of property assessments for up to $1 million in additional real estate, whether residential or commercial.

Under the new Proposition 19 (effective Feb. 16, 2021), parent(s) and grandparents(s) can transfer their property along with its Proposition 13 base year value to their children or grandchildren if the following conditions are met:

The property must be the principal residence of the parent(s) or grandparent(s)
The property must become the principal residence of the child or grandchild within one year, and all applicants must have a valid Homeowners’ Exemption (HOX) filed within 1 year of the transfer in order to qualify for this exclusion.
Only the principal residence of a parent(s) or grandparent(s) qualifies for a base year value transfer. Other property, residential or commercial no longer qualify for this benefit

The provisions under Proposition 19 apply to intergenerational transfer exclusions starting Feb. 16, 2021 (since Feb. 15 is a holiday).

Transfer of Assessment to a Replacement Property (55 and Older and Disabled)

Propositions 60/90 allowed persons over 55 or severely and permanently disabled persons to transfer the taxable value of their existing home to a new replacement home, so long as the market value of the new home is equal to or less than the existing home’s market value and located in Los Angeles County or one of nine other participating counties in California. Proposition 19 (effective April 1, 2021) modified the previous provisions, and now allows eligible homeowners to transfer the taxable value of their existing primary residence to a new replacement primary residence. The replacement residence can be of any value*, and anywhere within the state. The exclusion can be filed up to three times by a property owner over their lifetime.

*Subject to conditions

The effective date of implementation is April 1, 2021.

Disaster Relief Tax Base Transfers

Prop. 50 provided that the base year value of property that is substantially damaged or destroyed by a disaster, as declared by the Governor may be transferred to comparable property within the same county. Prop. 171 allows the transfer of the base year value of a principal residence to a county that has adopted the ordinance. Prop. 19 allows homeowners to purchase a replacement home of greater value than their original home and transfer their tax base with an adjustment to account for the value difference in cases of homes destroyed by wildfires or other natural disasters.

The effective date of implementation is April 1, 2021

Reassessment Exclusion for Property Transfer

NO LIMIT IS PLACED ON THE ASSESSED VALUE OF A PRINCIPAL RESIDENCE THAT MAY BE EXCLUDED FROM REASSESSMENT

Collectively, these propositions make it easier to keep property “in the family.” In general, Proposition 58 states that real property transfers, from parent to child or child to parent, may be excluded from reassessment, meaning that property taxes will remain at the current amounts and not step up to the amounts that would be determined by the homes current value. Proposition 193 expands this tax relief to include transfers from grandparents to grandchildren. In both cases, a claim must be filed within three years of the date of transfer to receive the full benefit of the exclusion.Props 58 and 193 are constitutional initiatives that provide property tax relief for real property transfers between parents and children, and from grandparents to grandchildren.

Requirements and Guidelines for Propositions 58 and 193

The principal place of residence must have been granted a Homeowners’ Exemption or Disabled Veterans’ Exemption before the transfer. This residence need not be the new principal residence of the person that acquired the property.
No limit is placed on the assessed value of a principal residence that may be excluded from the reassessment.
In addition to tax relief on the principal residence, you may claim an exclusion on transfers of other real property with an assessed value of up to $1,000,000.00
The $1,000,000.00 exclusion applies separately to each eligible transferor. A $2,000,000.00 limit applies to community real property of an eligible married couple.
Transfers by sale, gift or inheritance qualify for the exclusion.
Transfers between parents and children as individuals, from grandparents to grandchildren as individuals, between joint tenants, from trusts to individuals, or from individuals to trusts may qualify for the exclusion. Transfers from grandchildren to grandparents are not eligible for this tax relief.
Transfers of ownership interests in legal entities, aside from most trusts, do not qualify for the exclusion.
A claim must be filed within 3 years after the date of purchase or transfer for which the claim is filed or prior to transfer to a third party, whichever is earlier, or within 6 months after the mailing of the notice of supplemental or escape assessment, issued as a result of the transfer for which claim is filed. Untimely filed claims are subject to certain conditions, i.e., the property must not have transferred or resold to a third party and the claim will only apply to future tax years.
If reassessment of your property occurs before the approval and processing of your timely filed claim, the reassessment may be reversed. In these situations, a corrected tax bill and/or a refund will proceed.

(Proposition 58) Transfer between Parent and Child Eligibility Requirements:

1. The real property must be owned by the eligible transferor who is the grandparent.
2. You must be a grandchild whose parents qualify as the deceased children of the grandparents as of the date of transfer, and you must be the decedent’s child.
3. You must complete a Claim for Reassessment Exclusion for Transfer from Grandparent to Grandchild form for a gift or purchase of real property from grandparent to grandchild.

(Proposition 193) Transfer from Grandparent to Grandchild Eligibility Requirements:

The real property must be owned by the eligible transferor who is either the parent or child.
You must be a parent or child. A child may be a son, daughter, son-in-law, daughter-in-law, stepchild, or child adopted before the age of 18.
Spouses of eligible children are also eligible until divorce or, if terminated by death, until the remarriage of the surviving spouse, stepparent or parent-in-law.
You must complete a Claim for Reassessment Exclusion for Transfer between Parent and Child form for a gift of purchase of real property between parent and child.

How do You File for Proposition 58/193 Tax Relief?

Claim forms are available from several sources.
Online Forms are available at the Assessor’s website www.assessor.lacounty.gov
Phone: Call 213.893.1239

What form do I need?

Claim for Reassessment Exclusion for Transfer Between Parent and Child (OWN-88)

Understanding Prop 19 – How it Replaces Other Propositions