California Proposition 19: Property tax break for older Californians

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The basics

What would Proposition 19 do?

Give Californians 55 or older a big property tax break when buying a new home. To fund that new tax break, it would curtail a separate tax break Californians may receive on homes inherited from parents and grandparents.

Typically when Californians buy a new home, their property taxes shoot way up. That’s because property taxes here are based mostly on the value of your home when you bought it — not its current market value. Baby Boomers who bought that bungalow down the street right after Woodstock are paying way less in property taxes than the tech yuppies who bought an identical bungalow last year.

This prop would allow the Boomer couple to buy a new house anywhere in the state and retain relatively low property taxes.

Also under current law, a Californian who inherits a Malibu estate can rent it out on Airbnb yet still pay property tax locked in at the parents’ rates. Under this prop? If adult heirs want to keep their artificially low property tax bill, they’ll need to live in their inherited digs.

New revenue from closing the inheritance tax break could generate billions for schools, local governments and the state. A big chunk would go to firefighters.

Why am I voting on this?

Because Realtors really, really, really want you to pass it. They floated a very similar initiative two years ago, which California voters rejected overwhelmingly. But that initiative didn’t close the inheritance tax break, so according to a nonpartisan analysis, it would have cost local governments billions.
In the broader sense, you’re voting on this because almost any change to property taxes in California has to come through a constitutional amendment, which requires a ballot measure. The Realtors and firefighters’ union, two powerful state interest groups, convinced lawmakers to put this one on the 2020 ballot.

Supporters say

Prop. 19 will incentivize seniors stuck in oversized homes to downsize, freeing up inventory in the state’s ridiculously expensive housing market. Closing the inheritance tax break will provide a budget boost to local governments and state firefighting efforts, at a time when the coronavirus pandemic has depleted public coffers.

Opponents say

This is a giveaway to Realtors, who are twisting public policy to boost their commissions. Plus, adult children should have the right to do whatever they want with the property they inherited — without facing a crushing tax burden.