In the State of California, it’s possible to transfer the assessed value of a property you own to a new home. This is known as transferring the “base year value” of the property and can only be done under certain conditions.
Effective February 16, 2021 or April 1, 2021 (varies by provision), Proposition 19 provisions changed provisions that were added by Propositions 58/193, 60/90, 110, 171.
This transfer of assessed property values can protect home buyers from higher property taxes than they are used to paying, but this option is not open to all Orange County residents. Here’s what you need to know about the rules governing property tax transfer options in California.
Proposition 19
November 2020 saw the passage of California’s Proposition 19, also known as the Home Protection for Seniors, Severely Disabled, Families and Victims of Wildfire or Natural Disasters Act.
Prop 19 further modified a homeowner’s ability to transfer assessed value that was previously established by Propositions 60/90.
Seniors and Severely Disabled Persons
Effective April 1, 2021, allows homeowners who are age 55 or older, or severely and permanently disabled of any age, to transfer the “taxable value” of their principal residence to a replacement property up to three times anywhere in the state.
Disaster Victims
Effective April 1, 2021, allows victims of a wildfire or natural disaster to transfer the taxable value of their primary residence to a replacement residence anywhere in the state.
Transfers Between Parents and Children/Grandparents and Grandchildren
Effective February 16, 2021:
- Allows transfers of a family home or family farm between parents and their children without causing a change in ownership for property tax purposes.
- Allows transfers of a family home or family farm between grandparents and their grandchildren under limited conditions without causing a change in ownership for property tax purposes.
Significant Changes from Proposition 19
- Allows eligible homeowners to transfer the tax basis of that principal residence to the purchase of a replacement principal residence anywhere in the State of California. See Proposition 90 below for prior law.
- Easier for eligible homeowners to upgrading or downgrade because they can keep the ad valorem tax rate of their old property.
- Allows transfers up to three times. Prior law allowed such transfers only one time.
Special Considerations For Inherited Properties
Under Prop 19, inherited properties are treated a bit differently. Only two types of inherited property can have assessed value transferred. Those are:
- A home used “continuously” by a child or grandchild
- A farm that could be sold at a price that exceeds the assessed value
For a farm or inherited home, the excess the property sells for compared to its assessed value could be applied for future property taxes. If your home was assessed at $1 million but sold for $1.5, the additional profit could be a factor when the new property taxes are calculated.
There are variables to consider (the specific excluded amount compared to the specific excess amount, for example) but if you have inherited property it’s smart to discuss your assessment options with a professional.
How To Apply For A Proposition 19 Property Tax Transfer
- Complete an application using BOE-60-AH – Claim of Person(s) at Least 55 Years of Age for Transfer of Base Year Value to Replacement Dwelling.
- Submit this completed application to the Assessor’s office where the new home is located.
- Expect to pay a processing fee and due to high demand, the wait times for processing may be longer than expected.
What Does “Equal Or Lesser Value” Mean For Prop 19?
The definition for “equal or lesser value” mentioned above in the context of Proposition 19 means the market value of a replacement home on the date of purchase is not in excess of:
- 100 percent of the market value of the original property based on the date of sale IF a replacement dwelling is purchased before an original property is sold
- 105 percent of the market value of the original property (on date of sale) if the owner purchases a new home within one year after the sale of the original property
- 110 percent of the market value of the original property (as of the date of sale) if a replacement dwelling is purchased within the second year after the sale of the original property
Confusing and Contradictory Guidelines?
Some of Prop 19 was, according to some, too vague, too ambiguous, and in some cases contradictory. The California Assessor’s Association stepped in to create a committee to help tackle some of those issues so Prop 19 could function as intended.
That committee was reported to be “working closely” with the Board of Equalization, and in 2021, Prop 19 began allowing the following qualifying homeowners to claim the transfer:
- Homeowner is 55 or older or
- Homeowner is severely disabled or
- Homeowner’s property was destroyed by a disaster
Proposition 19 requires you to transfer the value within two years of the sale of the first home.
Under Proposition 19, a primary residence’s base year value may be transferred, and the property must be of equal or lesser value. If the new home is worth more, the transfer may still be permitted (assuming the other qualifications are met) but the difference in market value is added to the transferred value of the property.
If the property in question is a mobile home or a multi-unit dwelling, additional requirements may apply. Contact your assessor’s office to learn more about these rules.
What To Know About The One-Time Property Tax Transfer
There may be further modifications to Proposition 19, and in successive tax years, it pays to know how any such changes may affect your home purchase. Remember that you have two years from the time of sale of the original home to claim the tax transfer, so if you sold last year and purchase again next year, be sure to check for any changes to Prop 19 in the meantime.
Tax laws change frequently. Today’s accurate information is tomorrow’s expired or replaced tax law, so it pays to consult a tax professional about your options. When it comes time to pay your tax, you can submit Orange County property taxes online during tax season.
Proposition 60: One Time Property Tax Transfer for Persons Age 55 and Over
Proposition 60 expired on February 15, 2021 and was replaced by Proposition 19.
In 1986, Proposition 60 passed to allow homeowners to transfer the base-year value of their home to a new property, assuming the owners and the property meet certain conditions. Those conditions included an age requirement (applicants must be 55 or older) and the property must be a principal residence and not an investment property.
Eligibility Requirements:
- The replacement home must be bought or built within two years of the sale of the first home
- The original property must be subject to reappraisal at its current fair market value.
- The claim form must be filed within 3 years of the date a replacement dwelling is purchased or new construction of that replacement dwelling is completed. If the claim is filed after 3 years, relief will be granted beginning with the calendar year in which you file the claim.
Filing Requirements:
- Proof of age of at least 55 years of age
- Social security card
- Completed form BOE-60-AH, Claim of Person(s) at Least 55 Years of Age for Transfer of Base Year Value to Replacement Dwelling.
Proposition 90: Intercounty Transfers
Proposition 90 expired on February 15, 2021 and was replaced by Proposition 19.
In 1988 Proposition 90 was passed to allow for the transfers of a base year value from one county to another county in California (intercounty) if the county had authorized such a transfer by an ordinance. Fortunate.
California counties that allowed intercounty base value transfers: Alameda, Los Angeles, Orange, Riverside, San Bernardino, San Diego, San Mateo, Santa Clara, Tuolumne, and Ventura.
Only the county in which the replacement residence was located had to have an ordinance that accepts intercounty transfers. It did not matter in what county in California the original property was located.
Proposition 19 now allows a seller of a principal residence to transfer the tax basis of that principal residence to the purchase of a replacement principal residence anywhere in the State of California.
All Propositions changed by Proposition 19
- Proposition 58/193: Parent-Child & Grandparent-Grandchild Exclusion
- Propositions 60/90/110 (RTC Section 69.5): Base Year Value Transfer – Persons At Least 55/Disabled
- Proposition 50 (RTC Section 69): Base Year Value Transfer – Intracounty Disaster Relief
- Proposition 171 (RTC Section 69.3): Base Year Value Transfer – Intercounty Disaster Relief
Here are the Board of Equalization’s comparison charts of the former and current laws.
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