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By Jon Coupal
This column has previously described Prop. 19, which barely passed with 51 percent of the vote, as a steak laced with cyanide. It may look good, but you don’t want to eat it.
While there are some benefits from expanding property tax “portability” to allow homeowners to transfer their Proposition 13 base-year value to anywhere in California, the cost of this benefit is outweighed by the damage it will inflict on families planning to transfer property from parents to children.
Few voters were aware of this downside of Prop. 19. Specifically, beginning on February 16, 2021, no longer will parents and grandparents be able to transfer their property to their children or grandchildren without triggering a massive increase in property tax liability. These “intergenerational transfer” protections — placed in the California Constitution in 1986 and 1996 with overwhelming support from voters — have been sharply cut back.
Under the 1986 measure, a parent could transfer a primary residence and up to $1,000,000 of assessed value of other property to their children, and such properties would see no change in their tax bill when transferred. They would retain the Prop. 13-protected base-year value for property tax purposes. But under Prop. 19, that only remains true if both the parent and the child use the property as their primary residence.
None of the paid advertising about Prop. 19 alerted voters that they were losing important taxpayer protections. In fact, the primary sponsor of the bill, the California Association of Realtors, spent $50 million on campaign ads claiming it was beneficial to taxpayers, not disclosing the billion-dollar property tax increase. Their deceptive tactics were successful and will undoubtedly advance their underlying motivation of churning real estate sales.
To read the entire column, please click here.
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