The recent passage of California Proposition 19 means substantial changes to the manner in which real property is reassessed in California. These changes will bring greater flexibility to certain property owners who are over 55 or the victims of natural disasters but will mean greater restrictions on certain intra-family transfers (aka parent to child or grandparent to grandchild).
1. Primary Residence Transfers. Currently, an individual who is over age 55 or who is a victim of wildfire or natural disaster and who sells his/her primary residence may transfer his/her assessed value in his/her existing primary residence to a new primary residence. This can only be done once per lifetime and only for a replacement dwelling in the same county or in the ten counties that permit intercounty transfers, and only if the purchase price of the replacement residence is equal to or less than the purchase price of the original residence.
Prop. 19, however, provides that these individuals may instead make three transfers per lifetime, in any county in California, and that they may do so for a replacement property with a purchase price higher than the value of the original property. In the latter case, the assessed value for the replacement property will be the assessed value of the original property, plus the difference in value between the original property’s sales price and the purchase price of the replacement property.
The Prop. 19 rules affecting these primary residence transfers will take effect on April 1, 2021. Therefore, individuals who believe they will qualify for such exemptions should wait till after April 1, 2021 to sell their current primary residence.