Proposed Bill Would Delay Controversial Property Tax Law

March 4, 2021 Updated: March 8, 2021

A local state senator is working to delay a recently passed proposition that could cause the taxable value of inherited homes to rise.

Sen. Patricia Bates (R-Laguna Niguel) has introduced a bill that would delay the implementation of a portion of Prop. 19 until February 2023.

“While Prop. 19 is now law, the measure is silent on some issues regarding implementation,” Bates said in a statement. “A two-year delay will give the state time to clarify how it will implement the ‘Property Tax Fairness for Family Homes’ provision. It will also give families additional time to seek professional advice on how a transfer of property to children will affect potential tax liabilities.”

Passed last November with a 51 percent vote, Prop. 19 has two main elements.

Under the first rule, homeowners who are severely disabled or older than 55 can sell their home and maintain its base tax value when moving to another home.

The stipulation is that the current home’s market value needs to be the same or less than the new residence.

The second provision states that property will be reassessed at market value when it’s inherited by children and grandchildren and not used as principal residences.

Intergenerational protection, which allows children to maintain the tax value their parents paid on their property, was removed for non-principal residences.

The Howard Jarvis Taxpayers Association partnered with Bates on the initiative to postpone the second provision.

“Many voters were not aware that Prop. 19 repealed well-established protections from tax increases when property is transferred from parents to children, and the measure’s quick implementation date is a hardship for many families,” Jon Coupal, president of the Howard Jarvis Taxpayers Association, said in a statement.

He earlier told The Epoch Times that the move “amounted to a $1 billion tax hike.”

However, if an inherited home is used as a primary residence, it would maintain the intergenerational protection, meaning the beneficiaries would pay the same tax rate their predecessors paid.

The proposed bill would not delay the first provision, which goes into effect April 1.

The bill would only apply to the second provision, to allow more time for homeowners to speak with their estate planners and attorneys to find out if it is best to transfer their homes to their children and grandchildren immediately.

The bill has been referred to the Senate Governance and Finance Committee.