Starting Thursday, California homeowners who are over the age of 55 or are disabled or victims of a natural disaster can transfer their previous property-tax base when they sell their home and purchase a more expensive one.
The benefit, which is part of Proposition 19 approved by voters during the Nov. 3, 2020 election, allows eligible homeowners to transfer their property's assessed value to a home up to three times more expensive. Under the previous law, homeowners could only transfer their base-year assessed value to a home of equal or lesser value.
"Eligible homeowners can now take advantage of the benefits that come from Prop 19, which will give them more flexibility if they choose to move to a home that better suits their needs, even if it's more expensive than their current home," said Los Angeles County Assessor Jeffrey Prang. "California has long struggled with a housing shortage, which has contributed to the high cost of housing statewide. Prop 19 works to partially address this shortage by removing the disincentive many seniors confront when they consider moving into a more manageable home. By allowing eligible homeowners to take their assessed value with them, we may start to see more movement in the housing market."
The proposition also reduces tax benefits for families that inherit properties. In that circumstance, families will not automatically inherit the property's assessed value. If the inheriting family member doesn't move into the property within a year, the property's value will be reassessed.
Prang has expressed concern that this component of the proposition could disproportionately impact middle-income families who want to build intergenerational wealth.
"There has been a lot of confusion surrounding Prop 19, and frustration over its vague language and aggressive implementation dates. I have been working with the California State Board of Equalization, the California Assessors' Association, and state legislators to put forth legislation that will address some of the major issues with Prop 19," Prang said.
"However, we can all agree that seniors shouldn't feel locked into homes that are simply not a good fit for them anymore. This component of Prop 19 is a welcome change."
Homeowners can find more information about the proposition and how it impacts them at assessor.lacounty.gov/prop19.
Original source: https://www.nbclosangeles.com/news/local/california-proposition-prop-19