According to the unofficial election results, Prop 19, which would extend a property tax break for the elderly but restrain another on the transfer of real estate between parents and children, it appears. as will be adopted.
The voting, with all precincts reporting at least partial results, was 51.5% to 48.5% as of Wednesday afternoon. The Gulf counties gave the most strong support for the ballot measure, with votes in agreement ranging from 56% to 60%.
The Legislative Analyst’s Office estimates that Prop 19’s net effect would be to increase property tax revenues for state and local governments, schools, and fire.
Proposition 15, which would raise taxes by reassessing most commercial real estate to market value at least every three years, appears to be beaten by margins almost similar to Prop 19. before.
While both will raise taxes, it’s likely that more voters focus on a section of Prop 19 that will give the elderly, the disabled and some disaster victims more ways to sell their homes and buy Other homes that are not facing large tax increases.
In California, an asset is revalued at market value when it changes hands, with some waivers of revaluation. Between transfers, its assessed value (also known as the taxable value or taxable base) may increase by no more than 2% per year, plus the value of major improvements. Usually, when a property is transferred over the years, its assessed value, and therefore its tax bill, increases.
Prop 19 would allow people over 55 or people with severe disabilities to sell their primary residence and move the tax base to another primary residence of any value anywhere in the state. , up to three times. However, if an owner purchases a more expensive home, the difference in market value between the old and new home is added to the old tax base.
Today, these people can only transfer the tax base if they purchase a comparable lower value home in the same county or one of 10 places that accept inter country money transfers. And they can do this only once. Prop 19 would also allow people who lost their homes in a natural disaster to move their tax base to a home in another location.
This provision will apply to transfers beginning April 1. Existing Law and Prop 19 both give a landlord a two-year qualification to sell the old home and buy a new home, or vice versa. It is not clear whether a qualifying homeowner will have to buy and sell on April 1 or later to take advantage of Proposition 19’s more generous provisions. The Legislature may be required to use clarifying language.
The LAO expects this provision to reduce real estate tax revenues, especially in counties that attract many older homeowners. Some of the extra revenue from another Prop 19 provision would go to unprofitable counties.
This would increase tax revenues by limiting generous tax breaks for the transfer of property between parents and children (and between grandparents and grandchildren if the parents of grandchildren are no longer alive).
Nowadays, parents and children can transfer – by gift, sell or inherit – a main home of any value and it will not be reevaluated at market value, even if they are Leave blank or rent out. They may also transfer other property, such as a rental home or commercial property, and waive a revaluation of up to $ 1 million in present value (not market value).
Prop 19 would repeal this tax relief on any property not used as primary residence or farm.
When a primary residence or farm is transferred, the property will not be revalued if the new owner also uses it as his or her main residence or farm and the difference between the assessed value and the market value. currently does not exceed $ 1 million (calculated for inflation). If it exceeds $ 1 million and is used as the primary residence, it will be partially reevaluated, but not at full market value, according to a formula. There are some disagreements over this formula, which the Legislature may also need to clarify.
This term will apply to transfers starting February 16.
Prop 19 would increase home sales, which is why California and the national real estate brokerage associations have spent more than $ 45 million together promoting it. The protesters, mainly the Howard Jarvis Taxpayers Association, spent less than $ 325,000.
The ad for this proposal focuses on the fact that it would deregulate wealthy heirs, including some Hollywood celebrities, to rent the valuable property they receive from their parents. without the tax increase. An advertisement showed two young men – in suits and branded suits with a grin on their faces – titled “Prop 19 closes a tax loophole for the Bank’s Trust heirs. Bronze.”
The Legislative Analyst’s office estimates that the proposal could generate tens of millions of dollars per year in tax revenue for state and local governments in its early years, increasing to several hundred million dollars annually. by the time. The schools can expect a similar wind. Revenue from other taxes, such as capital gains taxes on home sales, could increase by tens of millions of dollars each year, with much of that new money going to fire protection.
The California Budget Project calls this “one of the most complicated measures in the November 2020 state vote”. It said “their central proposition to extend tax breaks to older, mostly white homeowners with mainly economic advantage would make California’s tax system less fair.” while “little or no help for Californians most affected by the state’s housing affordability crisis, including tenants, low-income families, and most Black and Latin residents. “
Becky Warren, spokesman for the Yes on 19 campaign, said in a statement, “We are optimistic that when all votes are counted, seniors in California, homeowners with disabilities and fire victims The forest will receive as much housing as needed and tax breaks, while providing protected funding to fire forces, local schools, municipalities, and counties. “
Kathleen Pender is a journalist for the San Francisco Chronicle column. Email: email@example.com Twitter: @kathpender