Prop 19 Explained: How It Affects Escrow and Home Ownership
On November 3rd, 2020, voters in the state of California approved Proposition 19, aka the Home Protection for Seniors, Severely Disabled, Families and Victims of Wildfire or Natural Disasters Act. Proposition 19 amends the California Constitution by adding sections that provide further expansion and qualifications regarding limitations on property tax increases for persons over 55, the several disabled, victims of wildfires or other natural disasters (collectively referred to as “eligible homeowners”) as well as transfers of certain inherited properties. These new changes have the potential to affect your next escrow, if eligible. Be advised that additional forms may be required if you plan to transfer your tax basis for an eligible transaction.
For Eligible Homeowners:
Effective April 1, location restrictions will be removed, allowing eligible homeowners to do the following:
- Move anywhere in the state. The taxable value of a primary residence may be transferred to a replacement primary residence anywhere within the state, as long as it is within two years of the sale of the original primary residence.
- Buy a pricier home. A more expensive home can be purchased under this proposition without incurring a substantial increase in taxable value. While the property tax bill would still go up, it would not increase as much as it would for other homebuyers.
- Increase the use of the transfer. With this proposition, homeowners who are over 55 or severely disabled can now transfer the property’s taxable value up to three times in their lifetime.
For Inherited Properties:
Effective February 16, the following qualifications will apply to inherited properties:
- Continued use as a primary residence or family farm. Under this proposition, the reassessment exemption on inherited properties will only apply if the property is used by the child or grandchild as their primary residence or if the property is considered a family farm.
- Increase for high value inherited homes and farms. If the value of an inherited property exceeds the parent’s taxable value by over $1 million, then the taxable value of the child shall be assessed as the current market value less $1 million.
I hope this information was helpful to you and gave a thorough explanation of how Proposition 19 will affect home buying, escrow, and home buying in California. If you’re looking for more content regarding real estate in California, keep up with my blog (insert links) or follow me on any of my social platforms (insert links). Feel free to shoot me a comment or a message – I’m always happy to help!
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