What is Prop 19 and How You Might Save Money on Taxes When You Buy a New Home

California Proposition 19 went into effect on February 16, 2021 and gives certain homeowners the ability to transfer their primary residence’s property tax base to a replacement property even if the replacement property is located in a different county or has a higher market value. This is known as the “parental transfer” provision.

• People who benefit from Prop. 19 include:
• Homeowners over the age of 55
• Disabled homeowners
• Wildfire or disaster victims

Eligibility

You must be over the age of 55 or have been severely disabled before the sale of your current home.

• You must purchase or construct a replacement dwelling of equal or lesser value within two years of the sale of your current home.
• You must occupy the replacement dwelling as your primary residence.

If you meet these requirements, you can transfer your primary residence’s property tax base to the replacement property, which could result in significant savings on your property taxes.

Overview 

Begin by completing the claim form for the “parental transfer” provision, which is known as Form BOE-501-G. This form can be obtained from your local county assessor’s office or online at the California State Board of Equalization’s website.

Fill out the claim form, providing information about the sale of your current home and the purchase or construction of your replacement dwelling.

Attach any required supporting documentation to the claim form, such as proof of age (if you are over 55), proof of disability (if applicable), and documentation of the sale and purchase or construction of the replacement dwelling.

Submit the completed claim form and supporting documentation to your local county assessor’s office.

Proposition 19 also changed the rules for property tax assessments on inherited properties.

Under previous law, when a person inherits a and uses it as their primary residence, the property’s tax assessment was generally frozen at the value it had when the previous owner died.

Under proposition 19 when the property is inherited by someone who is not a close relative, such as a child or grandchild the tax assessment will generally be increased to the current market value.

You should consult with a tax professional or your local county assessor’s office to understand how Proposition 19 may affect your specific situation and to understand the specific requirements and deadlines for taking advantage of the “parental transfer” provision of Proposition 19. They can also help you ensure that you have all the necessary documentation and that your claim form is completed correctly.