California voters approve Prop. 19, giving new property tax breaks to older homeowners
California voters have approved a new property tax break for older homeowners in the state, easing their tax burdens if they move.
The success of Proposition 19 means that those 55 and older will be able to blend the taxable value of their old home with the value of a new, more expensive home they purchase, resulting in property tax savings that could reach thousands of dollars a year.
As part of the measure, children who inherit their parents’ houses will no longer receive a property tax break if they intend to keep it as a second home or rent it out.
The election was close. Just over 51% of voters supported Proposition 19 when the Associated Press called the race Wednesday evening, when returns showed the measure had a lead of more than 350,000 votes.
"Voters passed Proposition 19 because it is a win-win for California, providing needed housing and tax relief for seniors, wildfire victims, and generating much needed revenue for schools, fire districts, cities and counties as they face budget shortfalls due to the harmful economic impact of COVID-19," said Jeanne Radsick, president of the California Assn. of Realtors, which was the principal supporter of the measure.
Before Proposition 19's passage, older homeowners had a one-time opportunity to retain their existing tax benefits if they moved to a home of equal or lesser value within the same county. They could do the same when moving between Los Angeles and nine other counties. If they didn't meet those requirements or moved to a more expensive home, they would have had to pay the full amount in property taxes.
Now, older homeowners will receive a property tax benefit when they buy a more expensive home anywhere in the state — up to three times. Homeowners with disabilities will be able to do the same, and victims of wildfires and other natural disasters will be able to do so after their home is damaged.
Supporters of Proposition 19 argued the measure would help empty-nesters and those wanting to move for health reasons to find new homes without facing a big tax hit.
Proposition 19 also restricts an inheritance property tax break that allowed the children of homeowners to keep their parents’ low property tax assessments. A 2018 Times investigation found a large number of inherited homes along the coast that are used as investment properties.
Real estate interests raised more than $39 million to support Proposition 19's passage. Realtors are expected to benefit from increased home sales, both by older homeowners deciding to take advantage of their new tax benefits to move and heirs preferring to sell their parents’ properties rather than pay higher property taxes.
Much of the Realtor-backed campaign for Proposition 19 focused on benefits to wildfire victims and increased funding for wildfire response. But disaster-affected homeowners constitute well under 1% of those eligible for tax relief under Proposition 19, according to an analysis by the California Budget and Policy Center, which found the benefits almost entirely accruing to older homeowners.
And while the measure does reserve new tax revenue for wildfire response, the state’s nonpartisan Legislative Analyst’s Office believes that the vast majority of the wildfire funding will not start flowing until 2025 at the earliest.
This story originally appeared in Los Angeles Times.
