Prop 19: Property Tax Breaks


Prop 19 exacerbates an already inequitable property tax system - offering tax breaks to people who do not need them. Providing tax breaks to homeowners over 55 who purchase a replacement home, and allowing them to “transfer” their current tax assessment to a new home anywhere in the state, does nothing to help low-income seniors or families struggling to find housing. This proposition would allow not just one, but three such transfers. Senior citizens are already allowed to keep their current tax assessment when they purchase a home of equal or lesser value. And while the plan to put state revenue from increased home sales into a fund to support firefighting may sound appealing, it will make it more difficult for the legislature to fund the state’s response to other natural disasters or public health crises. While Prop 19 eliminates a tax break for some property inherited by children from parents, this beneficial element is not sufficient to merit support.

Vote NO on Prop 19

League Analysis: 

Current law allows homeowners over the age of 55, or those living with severe disabilities, to purchase another home at the same or lower market value and retain the same assessment as they have on their current residence. They can only do this within the county of their current residence or across counties when the counties have agreed to permit the retention. This allowance can only be made once.

Prop 19 would allow homeowners to take advantage of this tax break up to three times. It could be applied anywhere in the state of California, not just in the county where the homeowner currently lives or by agreement among counties. It would apply to homes worth more than the currently held home. Qualified persons, age 55 and older or those living with severe disabilities, would retain their current assessment on that portion of the purchase price that equals the market value of their current residence. The assessed value will be adjusted upward based on the value of the new home. The end result is that the newly purchased home will be assessed at less than the full market value of the home. For example, a person selling a home worth $300K but assessed at $150K and purchasing a home for $425K would have an initial assessment of $275K computed as follows:

          $150K (current assessment on property on property worth $300K)
     +  $125K (difference in market value between new and old property = $425K-$300K)
     =  $275K

One reasonable aspect of Prop 19 is that it eliminates a tax break for most property passed from parent to child (inherited property) that is not used as a residence. A child could retain the current assessment only if the property becomes their primary residence and only up to the point at which the fair market value exceeds the current assessment by $1M. Inherited second homes and business properties would be assessed at full market value.

The League believes that earmarked funds or taxes should be adopted sparingly, be subject to periodic review, and have a fixed sunset date. The two funds that would be created by this initiative meet none of these criteria. Alarmingly, no one has even estimated the probable dollar amount that would be automatically appropriated into these funds. California has faced many disasters over the last thirty years – power shortages, earthquakes, and a pandemic as well as forest fires. The legislature needs the flexibility to budget based on current needs and priorities.

Paid for by League of Women Voters Supporting Schools and Communities First – Yes on Prop 15 (Nonprofit 501(c)(4))