The Home Protection for Seniors, Severely Disabled, Families, and Victims of Wildfire or Natural Disasters Act (Proposition 19)
The following information is intended to help counties establish uniform and effective administrative practices for making and reporting their annual determinations to CDTFA. Information about the requirements CDTFA intends to establish by regulation is also included.
The Home Protection for Seniors, Severely Disabled, Families, and Victims of Wildfire or Natural Disasters Act (Proposition 19) was approved in the November 3, 2020, General Election.
Proposition 19 added sections 2.1, 2.2, and 2.3 to article XIII A of the California Constitution. Sections 2.2 and 2.3 provide a mechanism for the California Department of Tax and Fee Administration (CDTFA) to use state funds in the County Revenue Protection Fund to reimburse the counties and local agencies in the counties that have a revenue loss from the implementation of the property tax changes made by section 2.1. Section 2.3 also imposes new duties on counties and CDTFA as part of the reimbursement process.
The CDTFA intends to adopt a regulation:
- Requiring the counties' first annual determinations under subdivision (a) of section 2.3 to be made for the period from February 16, 2021, through June 30, 2022, and the subsequent annual determinations to be made for each subsequent fiscal year, beginning with the 2022- 2023 fiscal year; and
- Requiring each county to report its annual determinations for the county and each local agency in the county to the CDTFA every three years and establishing January 31, 2025, as the deadline for the counties to report their first three annual determinations.
How to Use This Guide
Each section of this guide contains important information regarding Proposition 19.
The Getting Started section provides background regarding sections 2.1, 2.2, and 2.3.
The Information section provides information regarding counties' new duties under section 2.3.
The Frequently Asked Questions (FAQs) section provides answers to frequently asked questions regarding Proposition 19.
Lastly, the Resources section provides links to additional information and statutory and regulatory information.
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The following information is intended to help counties establish uniform and effective administrative practices for making and reporting their annual determinations to CDTFA. Information about the requirements CDTFA intends to establish by regulation is also included.
Proposition 19 added section 2.1 to:
- Beginning April 1, 2021, allow taxpayers who are severely disabled, over the age of 55, or victims of a wildfire or other natural disaster to transfer the taxable value of their primary residence to a replacement primary residence regardless of the replacement residence's value or location, provided the replacement residence is purchased or newly constructed within two years of the date the original residence is sold; and
- Beginning February 16, 2021, limit the parent-child and grandparent-grandchild transfer exclusions from change in ownership so they only apply to a purchase or transfer of a family home or family farm and the taxable value of the transferred property increases when its assessed value exceeds a new value limit.
Proposition 19 added section 2.2 to annually allocate any additional revenues or savings to the state, as calculated by the Director of Finance, from the implementation of the property tax changes described above, as follows:
- 75 percent to the newly created California Fire Response Fund, which shall be appropriated by the Legislature, to expand fire suppression staffing; and
- 15 percent to the newly created County Revenue Protection Fund, which is continuously appropriated, to reimburse counties and local agencies with a negative gain (or revenue decrease) resulting from the implementation of the property tax changes described above.
Proposition 19 added section 2.3 to require each county to annually determine the gain for the county and for each local agency in the county resulting from the implementation of the property tax changes described above by adding the following amounts:
- The revenue increase resulting from the sale and reassessment of original primary residences for outbound intercounty transfers;
- The revenue decrease, which shall be expressed as a negative number, resulting from the transfer of taxable values of original primary residences located in other counties to replacement primary residences located within the county for inbound intercounty transfers; and
- The revenue increase resulting from the changes to the parent-child and grandparent-grandchild transfer exclusions referenced above.
Proposition 19 also added section 2.3 to require the CDTFA to:
- Adopt a regulation specifying the deadline for the counties' annual determinations;
- Use the counties' determinations to make its own calculations of each eligible county's and local agency's aggregate gain every three years; and
- Provide full or pro rata reimbursement to the eligible counties and local agencies with an aggregate negative gain (or revenue decrease) from the money in the County Revenue Protection Fund.
The following information is intended to help counties establish uniform and effective administrative practices for making and reporting their annual determinations to CDTFA. Information about the requirements CDTFA intends to establish by regulation is also included.
The information is based on CDTFA's discussion with representatives from the counties at CDTFA's meeting on May 26, 2021. It is also based on the general consensus drawn from responses that CDTFA received to surveys sent to all counties and participants via email, during the survey periods from May 20 to May 28, 2021 and January 5 to January 21, 2022.
Periods for Annual Determinations
CDTFA intends to adopt a regulation requiring the first annual determinations under subdivision (a) of section 2.3 to be made for the period from February 16, 2021, through June 30, 2022, and the subsequent annual determinations to be made for each subsequent fiscal year, beginning with the 2022-2023 fiscal year.
Deadlines for Annual Determinations
CDTFA intends to adopt a regulation establishing January 31, 2023, as the deadline for the counties' first annual determinations under subdivision (a) of section 2.3, and each subsequent January 31 as the deadline for the counties' annual determinations for the prior fiscal year. However, counties should make their annual determinations as soon as practical and not wait for the deadlines.
Revenue Included in Annual Determinations
Annual determinations under subdivision (a) of section 2.3 should only include revenue from the 1 percent ad valorem tax on real property collected by the counties and apportioned to the districts within the counties.
Impacts of Events
If an event occurs that increases or decreases revenue under subdivision (a) of section 2.3, the event should continue to impact revenue until the property's value is reassessed and the revenue impact from the event should be adjusted for inflation.
Revenue Increases from the Limits on the Parent-Child and Grandparent-Grandchild Transfer Exclusions
For purposes of determining revenue increases from the limits on the parent-child and grandparent-grandchild transfer exclusions under subdivision (a)(3) of section 2.3, counties should identify and include every purchase or transfer of real property for which a claim for either exclusion is filed and is either partially granted or denied under section 2.1. The counties should not try to identify or estimate the revenue increases from any purchases or transfers for which no claim is filed.
Revenue Decrease from an In-Bound Base Year Value Transfer
To determine the revenue decrease from an in-bound base year value transfer under subdivision (a)(2) of section 2.3, the decrease in assessed value of the replacement property due to section 2.1 should be calculated as the purchase price of the replacement property minus the replacement property's new base year value with any adjustments required by section 2.1.
Example: An intercounty base year value transfer occurred on April 15, 2021. The original property in Napa County has a base year value of $200,000. The replacement property in Kern County has a base year value of $450,000. The original property is sold for $1,000,000. The replacement property is purchased for $1,100,000. The new base year value for the replacement property is $300,000 ($200,000 + ($1,100,000 - $1,000,000) = $300,000) under subdivision (b)(2) of section 2.1.
The decrease in assessed value of the replacement property due to the base year value transfer is $800,000 ($1,100,000 purchase price - $300,000 new base year value = $800,000).
Reporting Annual Determinations to CDTFA
CDTFA intends to adopt a regulation requiring each county to report its annual determinations for the county and each local agency in the county to CDTFA every three years and establishing January 31, 2025, as the deadline for counties to report their first three annual determinations.
The following information is intended to help counties establish uniform and effective administrative practices for making and reporting their annual determinations to CDTFA. Information about the requirements CDTFA intends to establish by regulation is also included.
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What is the effective date of Proposition 19?
The Home Protection for Seniors, Severely Disabled, Families, and Victims of Wildfire or Natural Disasters Act (Proposition 19) was approved in the November 3, 2020, General Election and added sections 2.1, 2.2, and 2.3 to article XIII A of the California Constitution effective December 16, 2020.
Section 2.1's limits on the parent-child and grandparent-grandchild transfer exclusions became operative February 16, 2021.
Section 2.1's new base year value transfer provisions became operative April 1, 2021.
Section 2.3's reimbursement provisions became operative on December 16, 2020.
Who is the CDTFA required to reimburse under section 2.3?
The CDTFA is required to provide full or pro rata reimbursement from the money in County Revenue Protection Fund to the counties and eligible local agencies with an aggregate negative gain (or revenue decrease) from the implementation of section 2.1 every three years, based on the counties' annual determinations under section 2.3 (discussed below).
What are the periods for the counties' annual determinations under section 2.3?
The CDTFA intends to adopt a regulation requiring the first annual determinations to be made for the period from February 16, 2021, through June 30, 2022, and the subsequent determinations to be made for each subsequent fiscal year, beginning with the 2022-2023 fiscal year.
When are annual determinations required to be made?
The CDTFA intends to adopt a regulation establishing January 31, 2023, as the deadline for the counties' first annual determinations, and each subsequent January 31 as the deadline for the counties' determinations for the prior fiscal year.
What information is a county required to include in its annual determinations?
Each county is only required to include the annual positive or negative gain for the county and each local agency in the county under subdivision (a) of section 2.3.
What information is a county required to report to CDTFA?
Each county is required to report a separate positive or negative gain amount to CDTFA for the county and each local agency in the county for each of the three annual determination periods within the reporting period. The following table illustrates how County X would report the positive or negative gain for the county and Agency A and Agency B in the county.
| Annual Determination 1 | Annual Determination 2 | Annual Determination 3 | |
|---|---|---|---|
| County X | -$10,000.00 | -$20,000.00 | $5,000.00 |
| Agency A | $30,000.00 | -$5,000.00 | $40,000.00 |
| Agency B | -$8,000.00 | -$25,000.00 | -$30,000.00 |
When will counties have to report their annual determinations to the CDTFA?
The CDTFA intends to adopt a regulation requiring each county to register with the CDTFA and report each annual determination for the county and each local agency in the county to the CDTFA every three years. The first report is due to the CDTFA no later than January 31, 2025, and subsequent reports will be due on January 31 every three years thereafter.
How will counties receive payments for negative gains?
If the CDTFA determines reimbursement is required, funds will be distributed by paper warrant directly to the county or local agency with the negative gain at the end of each three-year period.
Who should register with the CDTFA?
Each county should register with the CDTFA for the county and the county's local agencies. The CDTFA intends to adopt a regulation requiring such registration.
How does a county register?
Each county will be required to electronically register using our Online Services. CDTFA is working on the registration process and will provide information when it is available.
What information is needed to register?
You will need the following information to register:
- Name of county & each local agency (city, special district, or school district)
- Federal Employer Identification Number (FEIN) for each of the above
- Addresses (mailing and warrant for each of the above)
- County representative contact information (name, email address, phone number)
How do counties file reports?
Each county will be required to electronically file a report using a User ID and Password. The CDTFA intends to adopt a regulation requiring electronic filing. We are working on the filing process and will provide information when it is available.
Will the CDTFA audit the counties' annual determinations?
No. Section 2.3 does not establish a mechanism for the CDTFA to audit the counties' annual determinations.
Can the CDTFA make changes to the amounts the counties report?
No. Section 2.3 does not authorize the CDTFA to make changes to amounts determined by the counties.
If I have questions regarding CDTFA’s responsibilities under section 2.3, who do I contact?
Proposition 19 added section 2.3 to require CDTFA to:
- Adopt a regulation specifying the deadline for the counties' annual determinations;
- Use the counties' determinations to make its own calculations of each eligible county's and local agency's aggregate gain every three years; and
- Provide full or pro rata reimbursement to the eligible counties and local agencies with an aggregate negative gain (or revenue decrease) from the money in the County Revenue Protection Fund.
Send your questions to Prop19@cdtfa.ca.gov.
The following information is intended to help counties establish uniform and effective administrative practices for making and reporting their annual determinations to CDTFA. Information about the requirements CDTFA intends to establish by regulation is also included.
Legislation
Meeting Information
- Proposition 19 – County Meeting PowerPoint May 2021
- Proposition 19 – County Meeting Survey May 2021
- Proposition 19 – Interested Parties Meeting Information
Surveys
Helpful Resources
- Sign Up for Proposition 19 Updates – Subscribe to our Proposition 19 Updates List and receive the latest updates and announcements regarding Proposition 19.