Property Taxes Transfer of Title
- Amends State Constitution by not requiring new appraisal of real property upon purchase or transfer between grandparents and their grandchild, subject to certain conditions.
- Parents of grandchild must be deceased as of date of purchase or transfer.
- Purchase or transfer of principal residence does not qualify if grandchild already received a principal residence through previous purchase or transfer not requiring a new appraisal.
- $1,000,000 limit on purchases or transfers of real property not requiring new appraisals, includes purchases or transfers between grandparents and grandchild, as well as between parents and children.
The information below was provided by the California Journal.Background: Proposition 13, approved by voters in 1978, froze property tax rates at their 1975 levels and generally limited annual rate increases to 2 percent. A new appraisal, based on current market rates, is required when property is sold or transferred, which could result in a substantial increase in taxes on a property whose market value has risen faster than an average of 2 percent a year. There is an exemption to this reassessment requirement for parents who sell or transfer ownership of their principal residence and up to $1 million of other property to their children.
Proposal: This proposition generally would allow grandparents to transfer real property to their grandchildren without triggering a new appraisal of the property for tax purposes if the parents of the grandchildren are deceased. This exemption from the reappraisal requirement would not apply if the grandchild already has received a principal residence through a previous purchase or transfer that was exempt from reappraisal. The proposition places a $1 million limit on purchases or transfers qualifying for this exemption; this limit would apply to transfers or purchases between grandparents and grandchildren and between parents and children. According to the state's legislative analyst, this change in the property tax law would result in about a $1 million annual loss in property tax revenue to schools, counties, cities and special districts, with the loss to schools made up by the state's general fund. The changes proposed by this measure would apply to sales or transfers occurring after March 26, 1996.
Arguments for: Proponents, including Assemblymen David Knowles and Bill Hoge and Senator K. Maurice Johannessen, state that Proposition 193 would fix a small but important problem with the current property tax law that penalizes individuals who have lost both of their parents. Allowing grandparents to provide for and safeguard the future welfare of grandchildren in these circumstances by transferring real property without triggering an automatic reassessment is just as proper as allowing parents to do this, which current law permits.
Arguments against: Proposition 193 would only increase the unfairness of the current property tax system by creating a special exemption for a privileged few, according to Gary B. Wesley, a private attorney who often opposes ballot measures. He argues that voters should be presented with a comprehensive constitutional amendment to the system that would make it fairer for everyone. He recommends periodically reassessing all business and residential property, regardless of whether it changes hands, and lowering the tax rate.
For additional information please see:
Secretary of State Ballot Pamphlet
Campaign Finance Data from the Secretary of State
California State Senate Office of Research
California League of Women Voters
Easy Reader Voter Guide
Related News Articles
Campaign Web Sites:
- Yes on 193
- No on 193
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