Prop. 19 aids homeowners, backers say
Ellie and Jack Rosebush lost their Paradise home in the Camp Fire two years ago.
The last thing the couple wanted to worry about after deciding to rebuild downtown was a jump in property taxes based on their new construction, Ellie Rosebush said.
The couple are using a one-time exemption to carry their old property tax rate to their new Butte County home but worry about neighbors being ineligible for the tax break because they’ve moved multiple times.
Rosebush, a real estate agent, believes Proposition 19 on the November ballot would grant relief to homeowners struck by natural disaster.
“We haven’t had many wins,” said Rosebush, 64. “It feels fair to me.”
Property tax relief for homeowners devastated by wildfires is only part of Proposition 19.
It’s a complex proposal affecting older homeowners, family ownership transfers, inheritance and fire protection, and expanding the benefits of Proposition 13, which placed caps on property taxes.
The measure generally would allow homeowners 55 and older to sell a property and keep their lower tax rate on a purchase in all other California counties. Under current law, homeowners can take their preferential tax rate to the same county or 10 others in the state, including Alameda, San Mateo and Santa Clara counties.
Realtors have long promoted property tax portability, saying it would increase sales and encourage long-time homeowners to move out of the Bay Area and Los Angeles and ease the housing shortage. Property taxes are based on the value of a home at the time of purchase, so someone who bought a home 30 years ago pays much less than a next-door neighbor who bought last year.
But proponents, led by the California Association of Realtors, prefer not to focus on property tax portability, an unpopular proposal that was defeated soundly in 2018.
Instead, they say the measure closes a tax loophole that allows descendants to keep taxes on certain inherited property artificially low, and creates new, dedicated funding for fire protection.
“Everyone’s susceptible to a wildfire in their community,” said Becky Warren of the Yes on 19 campaign.
Opponents say the proposal expands a tax break that already has hampered housing production and would dig the state deeper into a crisis. Others see it as a $1 billion property tax increase on inherited properties.
“What the Realtors have done is taken a proposition that failed and added a $1 billion tax hike to it,” said Jon Coupal, president of the Howard Jarvis Taxpayers Association.
The conservative group endorsed the 2018 proposal that would have allowed homeowners to take their property tax rates with them. Adding a firefighting fund to this year’s measure, he said, “is a cynical ploy.” Under Proposition 19, older homeowners could sell their house and keep the lower property tax rate if they moved elsewhere in the state. This includes purchases of more expensive properties, in addition to empty-nesters seeking to downsize. The reassessment exemption can be used multiple times.
To be eligible, a homeowner must be at least 55 years old, severely disabled or have had the property ruined by natural disaster or contamination. The new measure would allow older residents to move without serious property tax consequences if they have declining health or need to be closer to family, Warren said.
Proposition 19 also closes the “Big Lebowski” tax loophole, dubbed for favorable property tax rates received by actor Jeff Bridges and his family on an inherited rental property in Malibu. The measure would limit low-tax allowances to homes used as a primary residence by a child or grandchild. Inherited farms must continue to be working family farms, or the owners would forfeit their tax break.
Tax bills also would escalate on inherited highvalue homes and farms. The Legislative Analyst’s Office estimates the measure could increase tax revenues by tens of millions of dollars and grow over time. Some of the additional revenue would go to a dedicated fund for fire protection.
The property tax portability idea is similar to Proposition 5, backed by Realtors in 2018 and rejected by a 20% margin.
Warren said almost all of Proposition 19 is new.
Gov. Gavin Newsom has endorsed the measure. The Yes on 19 campaign is fueled by $15.7 million from the California Association of Realtors and $2.8 million from the National Association of Realtors.
No opposition groups have registered donations with the state.