How can you avoid property tax reassessment in California with Prop 19?

In California, Proposition 13 gives homeowners the benefit of having their property tax increases capped at 2%. Given the rapid rise in California property values, long-term homeowners often pay taxes well under the market rate for their properties. However, upon change in ownership, the tax base is reset to the property purchase price. Proposition 19 provides a solution to maintaining a low tax base even during a change in ownership, allowing eligible homeowners to move to a new property or transfer their existing tax base to a family member without triggering a reassessment at the current market rate.

Transfer to a Replacement Property (55 and Older or Disabled)

If you're over 55 years old or disabled, you can transfer your tax base from an original property to a replacement one in California.

Qualifications:

• You must be 55 or severely disabled at the time the original property is sold
• You must reside in the original property at the time it is sold
• You must purchase and move in to the replacement property within 2 years from the sale of the original property

Limits:

• You can only use this benefit 3 times in a lifetime
• The market value of the original property must be the same or less than the market value of the replacement property to directly transfer the original property tax base. If the market value of the replacement property is greater than the market value of the original property, then the difference is added to the replacement property's tax base. For example: if your taxable base on the original home is $100,000, you sell your original home for $500,000 and buy a new home for $700,000, then the taxable base on your new home is $300,000 ($100,000 + [$700,000 - $500,000])

To apply, select your county to fill out form BOE 19B and submit it to your local county assessor's office within three years of the purchase date of the replacement property.

Transfer from Parent-Child or Grandparent-Grandchild

Prop 19 also allows for transfer of a family home from a parent to a child or grandparent to grandchild without triggering a reassessment of the property's tax base.

Qualifications:

• Must be the primary residence of the transferrer (parent or grandparent)
• The transferee (child or grandchild) must live in the home as a primary residence within one year of the transfer. The transferee must file for homeowners exemption within one year of transfer
• If transferring from grandparent to grandchild, the parent (middle generation) must be deceased on date of transfer

Limits:

• Exclusion limit is capped at $1,000,000. For example, if the taxable base is $400K and the market rate of the property is $1,100,000, then the taxable base stays at $300K. But, if the market rate of the property is $1,600,000, then the new taxable base is $600K ($300K + [$1,600,000 - $400,000 -$1,000,000]).

To apply, you'll need to select your county and fill out the BOE 19B or BOE 19G form and submit it to the county assessor's office within three years of the purchase date of the replacement property and when the replacement property is occupied as the new principal residence. You can read more about Proposition 19 through the California Board of Equalization.

How can I lower my property taxes?

While property tax payments are obligatory, there are strategies to reduce the amount you owe:

1. Applying for exemptions: Most California homeowners are eligible for property tax exemptions that allow you to lower your taxes. California property tax exemptions include the Homeowner's Exemption, Senior Exemption, and Veteran's Exemption. This means if you live in the unit that you own, are over 65, or are a disabled veteran, then you most likely qualify for property tax exemptions in California.
   
   

   Use Parcel to see if you qualify for any exemptions and automatically file your exemption paperwork with your county assessor's office.

2. Contesting your property value: Another avenue to explore is contesting your property value with the county. In most counties, this involves meeting with a panel of judges from your county assessor's office and bringing market comps to justify why you believe your property is not correctly assessed. By demonstrating that your property has been overvalued, you can secure a lower property value, subsequently resulting in a reduced tax bill.

Questions? We're here to help. Sign up for a free 15-minute consultation with one of our property tax specialists to help you lower your property taxes in California.