The Effect of Proposition 19 on Base Value Transfers for Persons Aged 55 and Older William C. Mason III, Esq., Of Counsel, The Law Offices of Tony J. Tyre, Esq., APC
On November 3, 2020, California voters approved Proposition 19—the Home Protection for Seniors, Severely Disabled, Families, and Victims of Wildfire or Natural Disasters Act. Effective February 16, 2021, the provisions of Proposition 19 replaced those established by Propositions 58 and 193 with respect to parent to child and grandparent to grandchild real property transfers. Additionally, effective April 1, 2021, the provisions of Proposition 19 replaced those established by Propositions 60, 90, and 110 with respect to transfers of the base year value of real property to newly purchased primary residences by homeowners aged fifty-five and older.
While Propositions 60, 90, and 110 already permitted transfer of the base year value, generally defined as the assessed value, of a primary residence to a newly purchased residence, Proposition 19 makes a few notable changes to the rules promulgated by its predecessors:
- Propositions 60, 90, and 110 required that a base value transfer take place either within the same county or between counties with reciprocal agreements. However, Proposition 19 allows a homeowner to transfer the base year value of their primary residence to a newly purchased or constructed piece of real property anywhere within the State.
- While Propositions 60, 90, and 110 allowed for only one base year value transfer (except in very limited circumstances), Proposition 19 permits a homeowner to transfer the base year value of their primary residence up to three times.
- Finally, Propositions 60, 90, and 110 only allowed for the transfer of a property’s base year value to a newly acquired primary residence of equal or lesser value (again, with limited exceptions). Proposition 19 adds some flexibility as a base year value can be transferred to a new primary residence of any value. However, there is a caveat: in the event the value of the newly acquired property exceeds the value of the property from which the base year value is being transferred, the difference between the value of the old property and the value of the new is added to the transferred value.
It is important to remember that applications for the transfer of the base year value of previously held property newly acquired property must be submitted to the county in which the property is located within two years of the sale of the previously held property. By taking advantage of Proposition 19 base year value transfers, property owners who have reached the age of fifty-five can minimize tax liability and, by doing so, better provide for themselves and their families.