California property tax Propositions, such as the recently passed California PROP 19, may affect your property taxes. Enjoy the overview below of the many CA Props. If you have further questions about property taxes, you are advised to contact your tax professional. You can also go to your county’s website for more property tax information – El Dorado County, Sacramento County, and Placer County. If you need additional proposition information you can also contact the local tax assessor or you can go to the California Board of Equalization for further information on the California property tax Propositions and how they may affect you as a homeowner, a home buyer, or a home seller.
PROP 19 amends the California Constitution by adding sections that provide further expansion and qualification regarding limitations on property tax increases for persons over 55, the severely disabled, victims of wildfires or other natural disasters (collectively referred to as "eligible homeowners") and transfers of certain inherited properties. These new changes may affect your next home purchase, if eligible. Additional forms may be required if you plan to transfer your tax basis for an eligible transaction.
Prop 19 - ELIGIBLE HOMEOWNERS
Effective April 1, 2021, location restrictions will be removed allowing eligible Prop 19 homeowners to:
Prop 19 - INHERITED PROPERTIES
Effective February 16, 2021, the following Prop 19 qualifications will apply to inherited properties:
Proposition 90 allows for a homeowner to transfer the base year value from an original property in one county to a replacement property in another California county. In order for the transfer to be eligible, the county where the replacement property is located must have adopted an ordinance that allows the transfer to take place. Always double check directly with the County their rules if you are hoping to take advantage of Proposition 90. The other basic rules of Proposition 60 apply to Proposition 90 in that one homeowner must be 55 years or older, the replacement property must be equal or less value and the benefit can only be used once.
El Dorado County Prop 90 Update: On November 7th, 2017, the Board of Supervisors voted to end El Dorado County's participation in Prop 90 effective November 7th, 2018. Any questions should be directed to Karl Weiland, Assessor by calling (530) 621-5757, or in person at temporary building T3 next to the main library at 345 Fair Lane in Placerville. SEE PROP 90 EXPIRATION DETAILS-pdf
The granddaddy property tax proposition of them all is Proposition 13 which was the result of a bit of a California tax revolt and essentially established the base year value concept for property tax assessments. Those who owned their homes prior to 1978 initially reaped the greatest benefit as the 1975-1976 fiscal year served as the original base year in determining the assessment of real property. From there the annual increase over the base year value is limited to the inflation rate (using the California Consumer Price Index) or 2% whichever is less.
Another benefit that came as a result of property tax Proposition 13 is that the property tax rate is fixed at 1% plus voter approved assessment bonds (currently it is approximately 1.25%). This property tax rate (approx. 1.25%) is the calculation used whenever a property or any portion thereof has a change in ownership or if it has been newly constructed and it is applied to the value at the time the property is transferred. When home values drop during dips in the market, the stability of the property tax rate has been a contributing factor in keeping home affordability for many first time home buyers.
Proposition 60 allows for a homeowner to transfer the base year value from their current home to a replacement dwelling within the same county. There are certain requirements that need to be met such as at least one of the owners must be 55 years or older, the replacement property must be equal or less in value and no person on record (Title) has previously used this benefit.
There is a provision that allows for an individual to use this benefit again but it must be based on a disability and it requires a different claim form. Be sure to verify the requirements on this disability provision as certain requirements need to be met in order to qualify. There are also certain situations that allow for the replacement property to exceed the value of the relinquished property and you should check with the local tax assessor for those guidelines.
Proposition 3 is a little less known and it allows for a transfer of a property’s base year value to a replacement property when a property has been taken as a result of eminent domain proceedings, an acquisition by a public entity, or a government action resulting in a judgment of inverse condemnation.
Proposition 8 (Decline in Value) passed in 1978 which amended Proposition 13 to recognize declines in value for property tax purposes. Proposition 8 requires the county assessor to annually enroll either a property’s adjusted base year value (the Proposition 13 value) or its current market value, whichever is less. This usually becomes a topic of discussion when there is an extreme decline in property values.
Most county assessors are on top of this since they are required to do so, but if your property taxes appear to grossly exceed the current property values then you should contact your county assessor or a real estate professional to look into the matter. Just remember that when it comes to taxes; what goes down will usually go up and when the markets improve the tax assessor can reinstate the Proposition 13 value.
Proposition 58 provides an exclusion from reassessment when real property transfers between parents and children. This is a great benefit to take advantage of.
Proposition 193 expanded this tax relief to include “certain” transfers from grandparents to grandchildren. There are some exclusions and specific requirements to adhere to.
Proposition 110 modifies the benefits of both Proposition 60 and 90 to qualified disabled homeowners of any age. All of the other requirements of Proposition 60/90 still need to be met. One change that was made, and became effective September 25, 1996, allowed qualified persons who had a prior claim based on age to file a second claim based on disability. One stipulation is that once a person qualifies due to disability, they cannot receive the base year value transfer due to age.
Those are summaries of the main California Propositions that affect your property taxes and although they may not apply to you now, it is always good to keep an eye out to protect your interests. You are always advised to contact your tax professional, accountant, or attorney for any tax or legal advise regarding property taxes and property tax propositions and how they many affect you. Real Estate brokers and real estate agents do not provide legal or tax advise.
Contact Cheri Elliott anytime if you have any further questions or real estate needs.
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