California Changes to Tax Assessment on Inherited Homes Initiative (2024)

California Changes to Tax Assessment on Inherited Homes Initiative
Election date November 5, 2024
Topic Taxes and Property
Status Not on the ballot
Type Constitutional amendment	Origin Citizens

The California Changes to Tax Assessment on Inherited Homes Initiative was not on the ballot in California as an initiated constitutional amendment on November 5, 2024.

The ballot measure would have made changes to the property inheritance reassessments in California.

Measure design

See also: Text of measure

The initiative would have re-enacted the constitutional right of parents or grandparents to transfer primary residential properties to their children or grandchildren without the property's tax assessment resetting to market value. Other types of properties, such as vacation homes and business properties, could have also been transferred from parent to child or grandparent to grandchild with the first $1 million exempt from re-assessment when transferred.

It would have removed the requirement enacted by Proposition 19 (2020), which requires that inherited homes that are not used as principal residences, such as second homes or rentals, be reassessed at market value when transferred. Beginning in 2025, properties assessed under Proposition 19 could have been reassessed under reinstated rules.

Text of measure

Ballot title

The ballot title was as follows:

“

Repeals voter-enacted changes to property tax rules for transfers between family members. Initiative constitutional amendment.

”

Petition summary

The summary provided for inclusion on signature petition sheets was as follows:

“

Reinstates property tax reassessment rules for certain real property transfers between family members (including by inheritance), which voters eliminated through Proposition 19 in 2020, reducing local property tax revenues and eliminating funding source for Proposition 19’s California Fire Response Fund. Allows transfers to children (or grandchildren if parents are deceased) without property tax reassessment of: (1) principal residence, regardless of current value or continued use as principal residence; and (2) $1 million in other real property. Starting in 2025, properties assessed under Proposition 19 may be reassessed under reinstated rules.

”

Fiscal impact

The fiscal impact statement was as follows:

“

Some owners of inherited properties would pay lower property taxes. This would reduce revenue for local governments and schools by several hundred million dollars per year in the first few years. These losses would grow over time, reaching $1.5 billion to $2 billion annually.

”

Constitutional changes

See also: Article XIII, California Constitution

The ballot measure would have amended Section 2.4 of Article XIII A of the California Constitution. The following underlined text would have been added:

Note: Hover over the text and scroll to see the full text.

Sec. 2.4. RESTORATION OF CONSTITUTIONAL RIGHTS; PROTECTION AGAINST DEATH TAX ON FAMILY PROPERTY

(a) In 2021, Californians lost a constitutional right they had for nearly 35 years to transfer their home and a limited amount of other property to and from their children without triggering reassessment to current market value and higher property tax bills. This section restores that constitutional right, and also restores the same constitutional right for grandparents and grandchildren if the children's parents are deceased. 

(b) Subdivisions (c) and (d) of Section 2.1 shall apply and be operative only to those purchases or transfers of real property occurring after February 15, 2021, through December 31, 2024. Notwithstanding subdivision (d) of section 2.1 or any other law, subdivision (h) of Section 2 shall be operative and shall apply to a purchase or transfer of real property that occurs after December 31, 2024. 

(c) Notwithstanding subdivision (b) herein and subdivision (j) of Section 2, a purchase or transfer of real property subject to subdivisions (c) and (d) of Section 2.1 after February 15, 2021, through December 31, 2024, shall, upon the filing of a claim, be prospectively reassessed as if subdivision (h) of Section 2 had been in effect. In implementing this section, the Legislature shall by statute provide a simple claim procedure and publicize its availability, with an emphasis on reaching minority communities.

(d) Nothing herein is intended to repeal or invalidate the exclusion from change in ownership for family farms provided in section 63.2(a)(2) of the Revenue and Taxation Code, or disallow its application to Section 2.1(c) and Section 2(h) of this Article. No statute curtailing Section 63.2(a)(2) as it existed on October 1, 2021, shall be effective unless submitted to the electorate and approved by a majority vote.

(e) Notwithstanding any other law, every statute, regulation, and court decision relating to or affecting this section shall be consistent with a broad application of the exclusion under subdivision (h) of Section 2 and a liberal interpretation of this section that effectuates its purposes of reinstating subdivision (h) of Section 2 and allowing the statutory exclusion for family farms. Any provision of this section held invalid is severable. This section shall supersede any law in conflict therewith.

Support

Repeal the Death Tax, a committee sponsored by the Howard Jarvis Taxpayers Association, led the campaign in support of the initiative.

Supporters

Political Parties

• Republican Party of California

Organizations

• Apartment Association of Greater Los Angeles
• Apartment Owners Association of California, Inc.
• California Taxpayer Protection Committee
• San Luis Obispo County Farm Bureau

Arguments

• Dave Nystrom of Pacific Grove, California: "While seniors gain tax breaks, families pay for it by increased property taxes on heirs. It gets worse for millions of small business owners, the backbone of California’s economy. Proposition 19 can make restaurants or other businesses owned by multiple generations of families suddenly unaffordable and uncompetitive due to higher taxes from reassessment when inherited. The result is lost family legacies, gentrification, higher rents and evicted tenants."
• Jon Coupal, president of Howard Jarvis Taxpayers Association: "Proposition 19 was sold to voters as protection for wildfire victims and seniors who wanted to move to a new home. Our initiative does not change those provisions at all. But we believe voters did not intend to enact the biggest property tax increase in California history, one that hits families who have a just lost a parent."

Opposition

Ballotpedia did not locate a campaign in opposition to the ballot measure.

Campaign finance

See also: Campaign finance requirements for California ballot measures

The campaign finance information on this page reflects the most recent scheduled reports that Ballotpedia has processed, which covered through December 31, 2023.

Ballotpedia identified one committee—Repeal the Death Tax—registered in support of the initiative. It reported over $299,000 in contributions.

	Cash Contributions	In-Kind Contributions	Total Contributions	Cash Expenditures	Total Expenditures
Support	$296,994.31	$2,922.08	$299,916.39	$459,854.76	$462,776.84
Oppose	$0.00	$0.00	$0.00	$0.00	$0.00
Total	$296,994.31	$2,922.08	$299,916.39	$459,854.76	$462,776.84

Support

The following table includes contribution and expenditure totals for the committee in support of the measure.

Committees in support of Changes to Tax Assessment on Inherited Homes Initiative
Committee	Cash Contributions	In-Kind Contributions	Total Contributions	Cash Expenditures	Total Expenditures
Repeal the Death Tax	$296,994.31	$2,922.08	$299,916.39	$459,854.76	$462,776.84
Total	$296,994.31	$2,922.08	$299,916.39	$459,854.76	$462,776.84

Donors

The following were the top donor who contributed to the support committee.

Donor	Cash Contributions	In-Kind Contributions	Total Contributions
Family Business Association of Sacramento	$1,000.00	$0.00	$1,000.00

Background

California Proposition 19 (2020)

See also: California Proposition 19, Property Tax Transfers, Exemptions, and Revenue for Wildfire Agencies and Counties Amendment (2020)

In 2020, California voters approved Proposition 19 with a margin of 51.1% to 48.9%. It was placed on the ballot by the state legislature. Proposition 19 amended the California Constitution:

• allowing eligible homeowners to transfer their tax assessments anywhere within the state and allow tax assessments to be transferred to a more expensive home with an upward adjustment;
• increasing the number of times that persons over 55 years old or with severe disabilities can transfer their tax assessments from one to three;
• requiring that inherited homes that are not used as principal residences, such as second homes or rentals, be reassessed at market value when transferred; and
• allocating additional revenue or net savings resulting from the ballot measure to wildfire agencies and counties.

At the time of the election, eligible homeowners could transfer their tax assessments to a different home of the same or lesser market value, which allowed them to move without paying higher taxes. Parents or grandparents could also transfer primary residential properties to their children or grandchildren without the property's tax assessment resetting to market value. Other types of properties, such as vacation homes and business properties, could also be transferred from parent to child or grandparent to grandchild with the first $1 million exempt from re-assessment when transferred.

The Yes on 19 campaign was funded by the California Association of Realtors Issues Mobilization PAC, the National Association of Realtors, and the California Professional Firefighters Ballot Issues Committee.

California Proposition 13 (1978)

See also: California Proposition 13, Tax Limitations Initiative (June 1978)

California Proposition 13, the Tax Limitations Initiative, was on the ballot for the election on June 6, 1978. Voters approved Proposition 13, with 64.79% voting for passage. Howard Jarvis, who founded the Howard Jarvis Taxpayers Association, developed Proposition 13. He worked with Paul Gann on writing the ballot initiative.

Proposition 13 required that properties be taxed at no more than 1% of their full cash value shown on the 1975-1976 assessment rolls and limited annual increases of assessed (taxable) value to the inflation rate or 2%, whichever was less. When a property is sold or transferred to new owners, however, the property is reassessed at 1% of its full cash value and the limit on increases to assessed value resets.

Amendments to Proposition 13

The following ballot measures amended Proposition 13 to change who can transfer their home's taxable value and how the transfers work:

• Proposition 58 (1986): Voters approved Proposition 58, which allowed the transfer of a principal residence between spouses or between parents and children without a reset on the home's taxable value. Proposition 58 also exempted the first $1 million of other real properties that are transferred from parent to child from tax reassessments.

• Proposition 60 (1986): Voters approved Proposition 60, which permitted homeowners over the age of 55 to transfer the taxable value of their present home to a replacement home, assuming the replacement home was of equal or lesser value, located within the same county, and purchased within two years of selling the original home.

• Proposition 90 (1988): The voter-approved Proposition 60 allowed qualified homeowners age 55 or older to transfer the current taxable value of their original home to a replacement home in another county, but only if the county in which the replacement home is located agrees to participate in the program.

• Proposition 193 (1996): Proposition 193, which was approved, allowed the transfer of a principal residence from a grandparent to a grandchild when the parent is deceased without a tax reassessment. Proposition 193 also exempted the first $1 million of other real properties that are transferred from grandparent to grandchild from tax reassessments.

Path to the ballot

See also: Laws governing the initiative process in California

Process in California

In California, the number of signatures required for an initiated constitutional amendment is equal to 8 percent of the votes cast in the preceding gubernatorial election. Petitions are allowed to circulate for 180 days from the date the attorney general prepares the petition language. Signatures need to be certified at least 131 days before the general election. As the verification process can take multiple months, the secretary of state provides suggested deadlines for ballot initiatives.

The requirements to get initiated constitutional amendments certified for the 2024 ballot:

• Signatures: 874,641 valid signatures were required.
• Deadline: The deadline for signature verification was 131 days before the general election, which was around June 27, 2024. However, the process of verifying signatures can take multiple months and proponents are recommended to file signatures at least two months before the verification deadline.

Signatures are first filed with local election officials, who determine the total number of signatures submitted. If the total number is equal to at least 100 percent of the required signatures, then local election officials perform a random check of signatures submitted in their counties. If the random sample estimates that more than 110 percent of the required number of signatures are valid, the initiative is eligible for the ballot. If the random sample estimates that between 95 and 110 percent of the required number of signatures are valid, a full check of signatures is done to determine the total number of valid signatures. If less than 95 percent are estimated to be valid, the initiative does not make the ballot.

Initiative #21-0015

• Jon Coupal filed the ballot initiative on June 15, 2023.
• The initiative was cleared for signature gathering on August 21, 2023.
• The secretary of state reported that the initiative reached the 25% signature threshold on January 11, 2023.
• On March 5, 2024, the secretary of state announced that the initiative had not turned in enough valid signatures by its circulation deadline of February 20, 2024.

See also

2024 measures

• 2024 ballot measures
• Taxes on the ballot
• Property on the ballot

California

• California ballot measures
• California ballot measure laws

News and analysis

• Ballot measure lawsuits
• Ballot measure readability
• Ballot measure polls

External links

• Petition #23-0005