After voters passed Proposition 19 in the November 2020 election, the real estate community has been anticipating the policy changes and how it will affect their clients. Essentially, Proposition 19 restructures the taxation limitations on California residencies to reduce financial strain for homeowners who qualify under certain conditions, and restructures the taxation on inherited properties.
If you are a California homeowner, here is what you need to know:
- Under Prop 19, homeowners who qualify as 55+, disabled, or are displaced due to wildfires or other natural disasters, will be able to transfer their tax base to another home, regardless of the difference in new property value.
- In a departure from the previous law, the tax base can be transferred to new property in any county in the state.
- This qualified transfer can be done up to three times over their lifetime.
- Under the new law, if the homeowner’s relatives do not intend to use inherited property as a primary residence, but intend to use it as a second home or rental property, it will be reassessed at market value when ownership is transferred, and the property tax rate will be adjusted accordingly.
- The additional taxes raised from the new tax rates will be allocated to local governments to fund community programs, as well as fire protection efforts around the state.
Depending on your situation, Proposition 19 could have a major impact on plans for your Lake Tahoe property. If you have any questions about what this could mean for you, please contact us.