New CA Property Tax Relief Transferring Low Property Tax Values

Transferring A Parents Property Tax Value In California

Transferring A Parents Property Tax Value In California

2022 Tax Relief: Inherited Properties & Replacement Homes

The 2021 CA constitutional amendment, Proposition 19, otherwise known as the “Home Protection for Seniors, Severely Disabled, Families and Victims of Wildfire or Natural Disasters Act”, expands a surprising number of tax breaks (with respect to “replacement residence” tax relief benefits) mainly for homeowners over age 55 or suffering from a severe disability… making it possible to transfer a low property tax base from an original home to a new residence, or “replacement home”.

Californians also able to take advantage of expanded property tax breaks are homeowners with a damaged or completely destroyed home, caused by a natural disaster such as a flood, earthquake, or wildfire, can now move to a replacement residence, up to three time – in any of California’s 58 counties, expanded from previous limits of only ten counties allowing the transfer of a low property tax base to a new residence. This is actually quite ironic, as senior and elderly Americans, and folks with disabilities, generally find themselves either ignored or on the short end of the stick, so to speak. So this represents a societal shift, for the better.

However, it is important to point out that Proposition 19 also imposes new limits on property tax benefits for inherited family property, limiting uses of the popular 1986 Proposition 58 “parent-to-child exclusion” from reassessed (i.e., increased) property taxes; limiting parent-to-child transfers of property by narrowing usage in various ways.

This necessitates primary or principal residence (as opposed to owning and renting out investment properties) for both parents and beneficiaries, along with some other, minor, limitations.  On the other hand, beneficiaries do have a full year to move into an inherited primary home, only requiring a minimum of one heir to move in.

Buying Out Siblings & Keeping a Low Property Tax Base

Moreover, beneficiaries still have the ability to keep their parents’ family home, with their parents’ low property tax base, while taking advantage of Prop 19’s parent-to-child exclusion;  always staying focused on inheriting property taxes from parents during a typical  property tax transfer. Avoiding property tax reassessment being a top priority at all times.  For many beneficiaries getting a loan to a trust is critical, generally to buyout problematic co-beneficiaries insisting on selling their inherited property shares.

This typically involves a 6-figure or 7-figure loan to an irrevocable trust from a trust & estate lender, for example like industry leader Commercial Loan Corp, working in conjunction with Proposition 19 – supplying beneficiaries who are selling their inherited property shares with more money than a conventional buyer is likely to offer.

Avoiding a realtor, bypassing their standard 6% commission, and side-stepping the usual legal fees and transaction charges, leaves a good deal more cash, from a trust loan, to equalize beneficiaries selling their share of inherited property.  Basically, a win-win transaction all the way around.

Property Tax Relief Forms

  1. BOE-19-B, Claim for Transfer of Base Year Value to Replacement Primary Residence for Persons at Least Age 55 Years[External PDF]
  2. BOE-19-C, Certification of Value by Assessor for Base Year Value Transfer[External PDF]
  3. BOE-19-D, Claim for Transfer of Base Year Value to Replacement Primary Residence for Severely Disabled Persons[External PDF]
  4. BOE-19-DC, Certificate of Disability[External PDF]
  5. BOE-19-V, Claim for Transfer of Base Year Value to Replacement Primary Residence for Victims of Wildfire or Other Natural Disaster[External PDF]
  6. BOE-60-NR, Notice of Rescission of Claim to Transfer Base Year Value to Replacement Dwelling Under Revenue and Taxation Code Section 69.5 (Propositions 60/90/110)[External PDF]
  7. BOE-502-A Preliminary Change in Ownership Report[External PDF]
  8. BOE-502-AH Change in Ownership Statement[External PDF]
  9. BOE-502-D Change in Ownership Statement Death of Real Property Owner[External PDF]

Base Year Value Transfers for Homeowners 55+ or Disabled

Proposition 60/90 and 110 allowed persons over 55 or severely and permanently disabled persons to transfer the taxable value of their existing home to their new replacement home, so long as the market value of the new home is equal to or less than the existing home’s value and located in one of ten tax relief portability approved counties in California.

That left 48 counties not participating with tax breaks allowing the transfer of a low property tax base from an original home to a new replacement residence. When dealing with damage from a natural disaster like the wildfires California has been contending with lately… Or simply because you’re over the age of 55,  or suffering from a serious physical disability.

Of course the good news is that Proposition 19 now allows eligible homeowners to transfer the taxable value of their existing home to their new replace, and wish to move to a replacement home, or to new residence – of any value, anywhere within the state, up to three times (rather than once, with limited county choices and limited assessed dollar values – as it used to be until 2021).

Age 55+ and Disability Tax Relief Forms

  1. Claim for Transfer of Base Year Value to Replacement Primary Residence for Persons at Least Age 55 Years: BOE 19-D[External PDF]
  2. Claim for Transfer of Base Year Value to Replacement Primary Residence for Severely Disabled Persons: BOE 19V[External PDF]
  3. Certificate of Disability: BOE 19DC[External PDF]

Disaster Relief

Proposition 50 stipulated that a base year value of a home or property that is legitimately destroyed, or damaged beyond the point of residing there, by a disaster or wildfire verified as legitimate by the Governor may be transferred to comparable property within the same county.

Proposition 171 stated that the transfer of the base year value of a principal residence to one of 10 counties that has adopted these tax breaks. However, Proposition 19 now permits homeowners to move to a “replacement home” of higher assessed value than a previous primary residence – and transfer the lower tax base with an adjustment for the value difference when a home is damaged or destroyed by a wildfire or some other natural disaster.

Proposition 19 is covered at California State Board of Equalization  
Natural Disaster and Replacement Residence Form



2021 Update: Property Covered or Not Covered by CA Proposition 13

CALIFORNIA PROPOSITION 13

CALIFORNIA PROPOSITION 13

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…

Homeowners’ 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.

Business Inventory
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.

Religious Exemption
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.

Welfare Exemption
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.

Personal Effects
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”.