Vicki Moore Pacifica Realtor
In 2018, Proposition 5 went before the California voters and failed. I knew it was going to fail the first time I saw a commercial with firefighters decrying that it would harm them, schools, and healthcare. You can’t win against firefighters. So some brilliant person got them on the same side, rewrote Proposition 5 turning it into Proposition 19 and it just passed.
California Proposition 5 (2018)
In summary, Proposition 5 stated: A “yes” vote supported amending Proposition 13 (1978) to allow homebuyers who are age 55 or older or severely disabled to transfer their tax assessments, with a possible adjustment, from their prior home to their new home, no matter (a) the new home’s market value; (b) the new home’s location in the state; or (c) the buyer’s number of moves.
The opponents argued that it “will actually put the services millions of seniors rely on at risk. Voters have already changed the California Constitution to protect seniors and people with disabilities from higher property taxes and allow people who lose their homes in a natural disaster to rebuild without a tax penalty.”
California Proposition 60, Property Tax Assessments for Older Homeowners (1986)
California Proposition 60 was approved in 1986.
Proposition 60 provided a special method of establishing assessed value for replacement residential property by a homeowner over 55. It allowed homeowners over 55 to transfer the assessed value of their present home to a replacement home, if the replacement home was located in the same county.
To qualify, the replacement home had to be:
- The owner’s principal residence;
- Of equal or lesser value than the original property;
- Located within the same county; and
- Purchased or newly constructed within two years of the sale of the current home.
California Proposition 90, Assessed Valuation of Replacement Dwellings (1988)
For the San Mateo County homeowner, it was basically useless because the value of homes had increased so rapidly that purchasing a home of equal or lesser value than the original property wasn’t feasible. That situation was helped by Proposition 90 by adding volunteering counties.
Proposition 90 allowed qualified homeowners age 55 or older to transfer the current assessed value of their original home to a replacement residence in another county, but only if the county in which the replacement home participated in the program.
County participation was voluntary and then the issue became that not many volunteered. In 1990, 12 counties participated. As of now, 10 counties are listed as participating on the California State Board of Equalization website. As a reference, there are 58 counties in California.
Propositions 60/90 worked in conjunction, taking Proposition 60’s authorization to allow homeowners over the age of 55 to transfer the assessed value of their present home to a replacement home, and adding Proposition 90’s ability to add participating counties instead of just the county the homeowner lived in.
California Proposition 19, Property Tax Transfers, Exemptions, and Revenue for Wildfire Agencies and Counties Amendment (2020)
California Proposition 19 made everybody a winner:
Prop 19 allows eligible homeowners to transfer their tax assessments anywhere within the state and allows the tax assessments to be transferred to a more expensive home (with an upward adjustment). In order to be eligible you must: be over 55 years old, or persons with severe disabilities, or victims of natural disasters or hazardous waste contamination.
Increases the number of times that persons over 55 years old or with severe disabilities can transfer their tax assessments from one to three.
Allocates the additional revenue or savings from the ballot measure to be given wildfire agencies and counties.
Well, almost everybody. It now requires that inherited homes that are not used as principal residences, such as second homes or rentals, be reassessed at market value.
How much will Proposition 19 really help?
How much Proposition 19 will really help remains to be seen. This new law didn’t change the fact that homeowners have a ginormous capital gains tax to pay upon sale. I’m not a tax expert so I can’t give any advice but I’ll direct you to the Nerd Wallet’s post 2020 Capital Gains Tax Rates — and How to Calculate Your Bill.
Just ignore the statement in the article that says: Capital gains taxes can apply on investments, such as stocks or bonds, real estate (though usually not your home), cars, boats and other tangible items. Remember, you live in California.
If you’re thinking about selling your home – whether you’re staying in California or not – your first stop should be at your tax person’s office. Selling your home could create a significant tax consequence. Find out before you make your final decision and spend all that time and money on selling and moving preparations. You’ll be more informed, have a better idea of your net and can make more educated decisions for your next move.