Property Taxes In California

CA Proposition 19 Expanded Property Tax Breaks

The state of California now informs us that homeowners can transfer the taxable value of their original home to a replacement as many as three times during their life anywhere in the state. The expansion is part of Proposition 19, also called the Home Protection for Seniors, Severely Disabled, Families and Victims of Wildfire or Natural Disasters Act, that was passed in Nov of 2021.

Eligible homeowners are now able to transfer the taxable value of their primary residence to a “replacement residence” that is also a primary home – anywhere in California, within two years of the sale of the initial property.

Another improvement is the fact that this tax benefit can be taken advantage of three times in ones’ life, as opposed to homeowners’ previous ability to take advantage of this only once, and only in certain counties. Ironically, these property tax breaks offer homeowners relief from excessive limitations – while limiting tax measures such as the popular parent-to-child exclusion, or the ability to transfer parents property taxes and keep parents property taxes, inheriting property taxes, and property tax transfer in general, to avoid property tax reassessment.  Property tax breaks that have helped so many middle and upper middle class homeowners over the years.

Property Damage from California Wildfire

The proponents of Proposition 19 make sure that everyone knows how pleased they are that there are absolutely no limitations for homeowners whose homes were destroyed by wild-fire, or forest fire. This sounds generous, and in some ways it is. However, when you sit back and consider it carefully, it’s not terribly realistic.

You have to ask yourself – how many times in a lifetime is someone’s residence going to be destroyed or seriously damaged by wildfire, or a forest fire? If it’s more than once, it’s doubtful that it’s an accident. Yet the fact remains that California wildfires are spiraling more out of control year after year actually making new property tax breaks for homes damaged or destroyed by wildfires extremely relevant.

In fact, experts tell us that we are now experiencing the worst trend of wildfires ever seen in California, as there has been more wildfire damage in 2020—2021 for example that in the previous three years combined, with millions of acres and thousands of homes and structures having been destroyed by uncontrolled wildfires.

Replacement Property Transfers

However, as most Californians know by now, Proposition 19 has also revised how California residents are able to transfer their property tax base to a “replacement property” in other ways, now with the benefit of being over age 55; of suffering from a severe disability; in addition to owning property that has been damaged or destroyed by other forms of natural disaster such floods or earthquakes, which is not unrealistic, and is actually rather likely, at least in Southern California, just as wildfires are.

California State Board of Equalization (BOE) website Chairman Antonio Vazquez has said recently, “Seniors, the severely disabled, and victims of wildfires or natural disasters can now move to a replacement home anywhere in California and avoid significant property tax increases if eligible. Property tax relief can be beneficial for those especially on limited incomes or who have been affected by wildfires or natural disasters.” Even Mr. Vazquez avoids mentioning unlimited tax breaks during a lifetime for victims of wildfire.

Property Destruction by Natural Disasters

If your property is damaged or destroyed by a calamity, such as a fire, earthquake or flood, you may be eligible for property tax relief.  You may also qualify if you own damaged business equipment and fixtures; orchards or other agricultural groves; or aircraft, boats and certain manufactured homes.

Damaged or destroyed property can be reappraised based on its current condition, and your tax burden will be adjusted accordingly.  Property owners may be able to apply for a deferral of property taxes owed without penalties or interest until the county assessor has had time to reassess the property and correct the tax bill.

As for residential properties, homeowners must have been victimized by a minimum of $10,000 in property damage, or at least 10% of their property’s value, whichever is less, to be eligible for property tax exclusions, or exemptions. Once a home has been rebuilt, the tax basis will rebound to the pre-damage value. Moreover, the base year value of a damaged house can even be transferred for many homeowners.

CA County Tax Assessors

It is important to remember that homeowners claiming disaster caused property tax relief, or their legal representative, must file their claim with the County Tax Assessor’s office inside of 12 months from the date of the property damage; and can even extend the deadline, depending on the county.

County Tax Assessors throughout California can be located here.