Proposition 19 Passes, Here's What That Means For Property Owners
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Categories: Homes Planning Property Management Real Estate
Published 11/20/2020
Photo by Andrea Piacquadio from Pexels
Proposition 19 has officially passed! California voters have approved a makeover to the state’s landmark 1978 law to limit property taxes with 51% support. The measure allows homeowners 55 and older, the disabled, and wildfire victims to carry low property tax rates with them when they move. Though, it strips property tax breaks from people who inherit property.
This new proposition is a substantial victory for the California Association of Realtors, who made changes to a similar initiative in 2018 that voters rejected by 20% points. The revamped proposal generated broad bipartisan support and only token organized opposition.
Under 1978 rules established under the landmark Proposition 13, property taxes are set at 1.1% of the sales price and increase no more than 2% a year for inflation until a property has sold — a system that can create huge savings for people whose homes generously appreciate. The newly approved Proposition 19 allows people 55 and older, the disabled, and wildfire victims to carry their low property tax assessments with them when they move. The exemption has expected to fuel home sales by encouraging people who were reluctant to move because their tax bills would rise sharply.
Unlike two years ago, the 2020 version prohibits people from keeping their reduced assessments when they inherit properties and don’t live in them, using them instead of rental income. The exemption for mature homeowners and others will cut into property tax revenue, but that will be more than enough to offset the gains from ending breaks on inherited properties. The state Legislative Analyst’s Office estimates this could reach hundreds of millions of dollars a year each for schools and local governments over time, while most of the new money would go to fire protection.