Information on The Home Protection for Seniors, Severely Disabled, Families, and Victims of Wildfire or Natural Disasters Act (Proposition 19)

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.

Annual Determination Periods

Regulation 35401 requires annual gain determinations under subdivision (a) of section 2.3 to be made for the period February 16, 2021, through June 30, 2022, and for each subsequent fiscal year, beginning with the fiscal year starting July 1, 2022, and ending on June 30, 2023.

Deadlines for Annual Gain Determinations

Regulation 35401 makes January 31, 2024, the deadline for the counties to determine their gains under subdivision (a) of section 2.3, for fiscal year 2022-2023 and each subsequent January 31 as the deadline for the counties to determine their gains for the prior fiscal year. However, counties should determine their gains as soon as practical and not wait for the deadlines.

The deadline for the counties to determine their gains for the period from February 16, 2021, through June 30, 2022, was not included in Regulation 35401 because it was retroactive. However, the gains for that period must be reported by the reporting due date (discussed below); counties should determine their gains for that period as soon as practical, and counties should not wait for the reporting due date.

Revenue Included in Annual Gain Determinations

Annual gain 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 Gains to CDTFA

Regulation 35401 requires each county to report the gains it determines for the county and each local agency in the county to CDTFA every three years and makes January 31, 2025, the reporting due date for counties to report the gains they determined for the first three determination periods, which are:

1. February 16, 2021, through June 30, 2022;
2. Fiscal year 2022-2023; and
3. Fiscal year 2023-2024.

Regulation 35401 provides an automatic one-month extension of the reporting due date. It also allows CDTFA to grant a county an extension of the reporting due date to April 30, if a state of emergency due to a disaster, as proclaimed by the Governor pursuant to section 8625 of the Government Code, is in effect in the county at any time during the month before or after the reporting due date.