Despite wide coverage afforded by Proposition 13 property tax relief, in which certain California property tax exemptions substantially reduce the tax burden for many thousands of residents throughout the states’ 58 counties – assessment of some personal property and certain real estate categories in California are not impacted by Proposition 13 property tax relief at all.
And yet some properties and items are partially exempt from paying full freight on up-to-date fair market property tax rates, such as historical aircraft; so-called livestock; most burial plots; nonprofit colleges and schools; large vessels and low-cost boats; free libraries; free museums; and art galleries.
Below is a summary of other commonly used, popular Proposition 13 assessments with updated BOE rulings for 2021 forward, along with those items that are not assessed for property tax exemption…
There is a one-time filing with the County Assessor for this exemption. The Homeowners’ Exemption requires a $7,000 reduction of taxable value for owner-occupied principal residence homes. As most Californians know by now, rental properties and vacation properties are not exempt. Moreover, California does reimburse local-agencies for any lost property tax revenue.
Disabled Veterans’ Exemption
Requiring a one-time filing, veterans that are affected by a medically verified disability – or a deceased veteran’s unmarried surviving spouse – have access to a property tax exemption totaling $100,000 for one primary residence. If a veteran has an income not exceeding $40,000 this property tax exemption can be increased to a $150,000 exemption, which requires a formal yearly filing. Naturally, the income limit and exemption dollar amounts are adjusted for inflation every year.
Sold or leased personal property used for normal business activity is considered to be exempt in California, without any filing requirements, however with the possibility of audits by the County Assessor for verification purposes. This exemption covers business inventory such as standard products for sale or lease, animals used in the production of food, and related supplies of which the cost is added to the consumer retail price. The exemption does not cover property that was in use on the “lien date”, with the exception of animals and normal supplies.
Crops, Trees, and Vines
Crops grown locally are exempt, and filing is not necessary. Date palms under eight years of age are exempt; along with grapevines, which are exempt for the initial first three years; as well as orchard trees, which are exempt for the first four years after the initial season in which they were planted.
As many Californians already know, buildings, personal property, and land used exclusively and only for religious purposes are exempt from paying standard current property taxes; requiring yearly formal filing with the County Assessor. With any other use of that property, this religious exemption becomes null and void, and reverts to non-exempt status.
The so-called “welfare exemption” covers real estate that is owned and utilized for religious, hospital, scientific, and/or charitable purposes. The California State Board of Equalization extends a one-time decision on whether or not an organization providing any of these specific services is actually able to take advantage of this sort of exemption – with a yearly revisit from the County Assessor to re-determine if the property is still being utilized for any of these specified purposes and therefore still exempt.
Exemptions are afforded to household furniture, equipment used for hobbies, and numerous other personal effects that a tax attorney or accountant can verify; without filing. What is not included under Prop 13 are vehicles, airplanes or boats worth over $400. Also not exempt are properties in use for business or a trade of any kind.
Intangible Personal Property
A good deal of what is referred to as “intangible personal property” such as cash, bank accounts, mortgages, and stocks are exempt under Proposition 13; without having to file any documents or forms.
“Low-Value” Property Tax Exemption
Real estate, homes and land, with a base year value and personal property with such a low value that, if not exempt, taxes and assessments on the property would be less than what it would cost to actually assess and collect these taxes. A county board of supervisors have the authority to authorized this type of property tax exemption in California – with a value threshold of $10,000 or under. With one exception – namely, that the $10,000 value threshold is accelerated up to $50,000 for “possessory interests that are for a temporary and transitory use in a publicly owned convention center, cultural facility, or fairground”.