Economic impact: “C.A.R. estimates that hundreds of millions of dollars in revenue will be generated for local governments and schools, with a major portion going to the state’s fund for fighting wildfires and to under-funded fire districts. These changes are also expected to spur activity in the housing market.”
If the Proposition is estimated to increase taxes, what are the benefits to taxpayers?
Prop 19 allows a homeowner who is 55 years of age or older, severely disabled or whose home has been substantially damaged by wildfire or natural disaster to transfer the taxable value of their primary residence to: a) a replacement primary residence anywhere in the state, b) regardless of the value of the replacement primary residence (but with adjustments if replacement has a greater value), c) within two years of the sale and d) up to three times (or as often as needed for those whose houses were destroyed by fire).
The prior rule limited this exemption to a one-time transfer within the same county (Prop 60) or between certain counties (Prop 90) and only if the replacement property was of “equal or lesser value.”
For inherited properties, Prop 19 limits the exemption to those properties where the home is used as the primary residence by the child or grandchild. The taxable value will remain the same, subject to some upward adjustments if the property value, at the time of transfer, is more than $1M over the original tax basis.
It appears that the increased taxes on inherited properties are estimated to be greater than the tax savings on primary residence transfers. Creating a multiple generation vacation or income property will be more costly.