Senator Patricia Bates (R-Laguna Niguel) announced today that she has introduced Senate Bill 668 in partnership with the Howard Jarvis Taxpayers Association to delay the implementation date of a provision of Proposition 19 (2020) from February 16, 2021, to February 16, 2023.
The delay would apply to the “Property Tax Fairness for Family Homes” (intergenerational transfer exclusion) provision, providing time for assessors, the Board of Equalization, and the Legislature to clarify ambiguities. The delay would not apply to the base year value transfer provision that will become operative on April 1, 2021.
Senator Bates said, “While Prop. 19 is now law, the measure is silent on some issues regarding implementation. A two-year delay will give the state time to clarify how it will implement the ‘Property Tax Fairness for Family Homes’ provision. It will also give families additional time to seek professional advice on how a transfer of property to children will affect potential tax liabilities.”
Jon Coupal, the president of the Howard Jarvis Taxpayers Association, said in support of the bill, “Many voters were not aware that Prop. 19 repealed well-established protections from tax increases when property is transferred from parents to children, and the measure’s quick implementation date is a hardship for many families.”
Approved narrowly by California voters in the 2020 November election, Prop. 19 helps some taxpayers while hurting others. While Prop. 19 will expand “portability” of property tax base-year value, allowing homeowners over age 55 more opportunities to move to a replacement home while keeping their prior home’s lower tax bill, the downside is that this measure has repealed Proposition 58 (1986) and Proposition 193 (1996).
The loss of these constitutional protections mean property will be reassessed to market value when it is transferred from parents to children, and sometimes from grandparents to grandchildren. The only exception is if the person to whom the property is transferred moves in within one year and the property is that person’s principal residence.
However, it is not always possible for family members to quickly relocate, especially in the midst of the COVID-19 pandemic. With the February 16 implementation date now in effect, adult children could be forced by higher taxes to sell their longtime home if they cannot move in fast enough.
County assessors and many taxpayers have expressed concerns on how to implement a significant change to California’s property tax system.
The California Assessors Association outlined their concerns to the California Board of Equalization stating, “Proposition 19 is silent on many critical implementation issues. Assessors have received a steady stream of inquiries as to how they will implement Proposition 19. It is extraordinarily urgent that ambiguities in the law are resolved.”
The California Board of Equalization’s website also states, “Unfortunately, Proposition 19 did not have companion legislation that would have clarified a host of issues.”
The bill is currently awaiting referral to a Senate policy committee.