104: Two Years After its Passing, Has Proposition 19 Delivered on its Promises to California Homeowners?

Absolute Trust Talk

California’s Proposition 19 was passed as a constitutional amendment about two years ago amid quite a bit of confusion. A large part of this stemmed from the misleading rationale that positioned it mainly as a means to extend a financial lifeline to Californians whose homes were destroyed by wildfire or other natural disasters. This paved the way for them to transfer their property tax base to a new home in any of California’s 58 counties and thus rebuild their lives after such a tragedy.

Obscuring things further were also some takebacks from the homeowner benefits offered, which largely replaced — Proposition 58. These takebacks from Proposition 58 centered mainly on the property tax benefits available when a primary residence was passed from parent to child. Now, it only covers the primary residency or family home. If it is transferred to a child, that child must make it their primary residency within one year after the transfer, and the property must remain their primary residence. Any other type of move will essentially trigger a reassessment. And many clients are still surprised about this.

Luckily the Board of Equalization has come out with clarifications and guidance on how Prop. 19 is supposed to work. So, if you’re wondering if the proposition has been a net gain or a bust, we are taking a closer look at both the good, the bad, and reviewing the new instruction in this episode of Absolute Trust Talk. Kirsten and Madison will weigh in on the proposition’s changes, what those changes mean for the citizens of California, and share some insights from the impacts we’ve been seeing with our clients here at Absolute Trust Counsel.

In this episode, we’re going to discuss:

• The enhanced property tax benefits that Proposition 19 now provides to homeowners over 55 or who have been victims of a natural disaster.
• The benefits that California homeowners lost when Proposition 58 gave way to Proposition 19 — they’re pretty substantial.
• The Board of Equalization’s part in overseeing property tax administration and how some recent changes have left the agency behind the eight ball.
• How a commonly misunderstood part of the tax reassessment process can leave some family members with a property tax bill, they hadn’t bargained for.
• What the Board of Equalization now says about the parent/child property tax exclusion if one inheriting child decides to buy siblings out of a deceased parent’s primary residence.
• Why this legislation reflects California’s push toward ADUs and how they’re favored over other forms of multi-unit residences.

And more.

Nearly every piece of passed legislation brings some unforeseen and often unintended consequences, but in several ways, Proposition 19 is unique. A large part of this distinction comes from its jurisdiction over homeowner tax protection. So, if you’re a California homeowner who plans to leave a primary residence to your children, listen in, as these changes will directly affect your — and their — financial future.