Understanding California’s Proposition 13 Property Transfer Exceptions

David Deem
714-997-3486
 
Are you looking to transfer property? If so, your property transfer may be exempt from reassessment for real estate property tax purposes. In California, the annual real estate tax on a parcel of property is limited to one percent of its assessed value (Proposition 13). The “assessed value” may not be increased by more than two percent per year unless the property has changed ownership. The following types of ownership transfers are not considered “changed ownership” and should not result in a reassessment. Please let your title or escrow officer know if one of the following exceptions applies to your transaction: 

Proposition 19 – The Home Protection for Seniors, Severely Disabled, Families, and Victims of Wildfire or Natural Disasters Act X Eligible homeowners who are 55 years and older, severely disabled, or victims of wildfires and natural disasters may transfer their tax assessments to a different home of the same or lesser market value, within the same county, which allows them to move without paying higher taxes. Proposition 19 allows eligible homeowners to transfer their tax assessments anywhere within the state and allows tax assessments to be transferred to a more expensive home, but now with an upward adjustment. X Parents or grandparents may transfer their primary residence to their children or grandchildren without the property’s tax assessment resetting to market value. In addition, in cases where the child or grandchild does not use the inherited property as their primary residence, such as using the property as a rental house or second home, the first $1 million is exempt from re-assessment. Proposition 19 eliminates the parent-to-child and grandparent-to-grandchild exemption in cases where the child or grandchild does not use the inherited property as their primary residence and thus, the inherited property not used as a primary residence is no longer able to be transferred without a tax reassessment to market value. 

Proposition 110 – Severely and Permanently Disabled by Property Owners X This constitutional initiative provides property tax relief for severely and permanently disabled claimants when they sell an existing home and buy or build another. © 2021 Stewart. All rights reserved. | 743003731 Stewart Title of California, Inc. stewart.com X If you or your spouse who lives with you is severely and permanently disabled, you can buy a home of equal or lesser value than your existing home and transfer the factored base year value to your new property. X Modifications of your current home are permissible if they directly satisfy disability requirements without the modifications being assessed as new construction. 

Proposition 50 – Property Substantially Damaged by Disaster X Owners of property substantially damaged 50% or more by a governor-declared disaster may transfer the factored base year value prior to the disaster to another comparable property within the same county. X The replacement property must be acquired or newly constructed within five (5) years of the disaster and have a value of 120% or less of the former value of the damaged property. If the replacement’s value is greater than 120%, that portion of value greater than 120% will be added to the transferred base year assessment. 

Proposition 3 – Property Take by Government Action (Eminent Domain) X A constitutional amendment that provides property tax relief, under certain conditions, to a person whose property has been taken by eminent domain proceedings, acquisition by a public entity or governmental action resulting in a judgment of inverse condemnation. X It allows property owners to transfer the factored base year value of real property taken by government action to a comparable replacement property located anywhere in California, if certain qualifying conditions are met. X The replacement property must be of similar use as the property taken by government action. 

For more information and to get more details on your property transfer exceptions qualification, visit ca.gov.

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