PROP. 19’S TAX HIKE HITS HARD
In November, voters narrowly approved Proposition 19, a measure that unleashed huge tax increases on property transferred between parents and children.
That will come as an unwelcome surprise to many voters. A costly and deceptive advertising campaign created the false impression that Proposition 19 was merely providing help to seniors, disabled individuals, and wildfire victims who wanted to move to a new home.
The rest of the story is that Prop. 19 repealed Proposition 58, the 1986 constitutional amendment that allowed parents to transfer a home and limited other property to their children without any change to the property tax bill. Now, under Proposition 19, those same properties will be reassessed to market value as of the date of transfer, with only a limited exclusion for family farms and for homes that become the principal residence of the new owner within one year.
Proposition 19 also repealed Proposition 193 (1996), which extended the Prop. 58 rules to some transfers between grandparents and grandchildren.
The portion of Proposition 19 that applies to intergenerational transfers became effective on February 16. That gave California families an inadequate amount of time to seek financial and legal advice for the new tax rules, especially with the ongoing pandemic making it difficult to access government offices.
State tax authorities also expressed concerns about the lack of time to prepare for the implementation of the measure. The California Assessors Association wrote in a letter to the state Board of Equalization (BOE) that Prop. 19 “is silent on many critical implementation issues.” The BOE itself agreed that “the text of Prop. 19 leaves a number of significant questions unanswered.”
Sen. Patricia Bates, R-Laguna Niguel, has introduced Senate Bill 668, which would change the implementation date from February 16, 2021, to February 16, 2023. The Howard Jarvis Taxpayers Association is sponsoring and enthusiastically supporting this bill. We will not stop there. HJTA is pressing lawmakers to support a constitutional amendment to restore Proposition 58 and Proposition 193 and bring back these important protections for California families.
Visit www.hjta.org/Reinstate58 to stay up-to-date and find out how you can help.