August 13, 2020
California Federation of Republican Women
Sue Blair, President
By Gretchen Cox, CFRW Legislative Analyst
CFRW Executive Committee Recommends:
Prop. 19 is another sideswipe at our property tax protections under Prop. 13. This is the 3rd attempt by the California Association of Realtors and lawmakers to sneak in a law that will increase their business, and bring in an estimated billion dollars in new tax revenue to the state.
First, they want you to think they are “giving” you something. Current laws allow homeowners who are 55 or older, or severely disabled, or victims of a natural disaster or contamination to sell their home and purchase another of equal or lesser value while keeping their current taxable rate, one time, within certain counties of Ca. that have reciprocal agreements. The new rules would allow this transfer of current taxable rates up to three times, in any county in the state. Sounds like a gift, right? It certainly is a gift to the C.A.R. because it would greatly increase the number of homes put up for sale annually and encourage “churning” in the real estate market.
However, this new amendment to our state constitution would also eliminate our protections under Prop. 58, which passed in 1986 with 75% of the vote, and Prop. 193, which voters approved in 1996. Those props allow a parent or grandparent to transfer a home and up to one million dollars in other property to children/grandchildren at it’s current taxable rate, without a reassessment to current market value.
If Prop. 19 passes, the home and other properties would be passed on at its current taxable rates ONLY IF the property was used as the primary residence of the person inheriting it, and the value on that would be capped. There would also be a cap on the total dollar amount of properties involved. So if you own a duplex, a rental home, or a small business property, your children or grandchildren would immediately be impacted by a reassessment to current market value upon inheriting that property. In many cases, they would have no choice but to sell it.
According to the Legislative Analysts Office, this would likely result in 40,000-60,000 families paying significantly higher property taxes, eventually adding up to about $1 billion in tax increases. Many would have to sell their family properties due to the higher taxes. This would also affect any properties owned by a legal entity in that if 90% of the legal entity’s ownership changes, the property would be reassessed at current market value even if no one person or entity acquires more than 50% ownership.
The C.A.R. managed to get some deep pocket support on this, by writing into the bill that firefighters would get some of this new revenue, and excludes family farms. This makes those two giant lobbies happy to support Prop. 19.
Prop. 19 requires only a simple majority to pass.