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CA Prop 19: Property tax breaks

Proposition 19 includes two elements related to taxes tied to the transfer of property.

CALIFORNIA, USA — There are two main parts to Proposition 19, a tax increase as well as a tax benefit. 

The tax hike will be for people who inherit property from their family.

The tax benefit is to help seniors, the disabled, and victims of wildfires and disasters.

Back in 1978 California enacted a law to keep property taxes down. The voters chose to pass Proposition 13 back in 1978 to cap property taxes on properties at 1% of the sales price and the property taxes can only increase a maximum of 2% per year. That means that California property owners are paying property taxes based on the price that they originally paid for the property, typically much less than what it is actually valued at today.

So even if your home value goes way up, your property tax can only go up 2% a year. The older you get, the better this becomes given the rise in California property values.

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But there’s a side effect. It keeps seniors from wanting to move from their homes where they would be paying higher taxes if they buy a new house.

To help people over 55 years old, disaster survivors and the disabled, the law currently allows them to take this lower tax base and move it to a new home with a few important rules. 

  • You can only keep the lower tax base if the new home is worth less than the old one.
  • You can only use it once in a lifetime.
  • You can only use it within the same county or in a select group of counties that allow transfers.

Proposition 19 would change all of that. If California voters pass it, the rules would change. 

  • You could move your low tax base to a pricier home and only pay higher property tax on the difference.
  • You could use this tax base benefit up to three moves.
  • And you could move to a new home anywhere in the state without losing your lower tax base.

The other part of Proposition 19 is a tax hike related to property taxes tied to inheritance. 

The current law allows you to leave your property to your kids and grandkids when you pass away and they get to keep your lower tax base.

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If you inherit the house, you get to pay tax based on the property value tied to the person who gifted to you.

If Proposition 19 passes, anyone who inherits a home from their parents or grandparents would only be allowed to keep the low property taxes if they use the home as their primary residence. 

It still allows the tax break if you inherit your parent’s or grandparent's house and live in it.

Most of the new taxes would be dedicated to fire protection, but some would go to local governments.

Find more background about this proposition as well as opinions from both sides on the California Voter Guide or on your local voter guide.

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What does a YES vote on Prop 19 mean?

A yes vote allows more flexible moves for people over 55 years old, disaster survivors and the disabled and includes an increased tax on non-owner occupied inherited properties. 

What does a NO vote on Prop 19 mean?

A no vote keeps the law as it is.

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