Moving to California, especially the Redding area, can be an exciting adventure. But one thing that often surprises newcomers is how property taxes work. If you've heard of Proposition 13 and Proposition 19 but aren't quite sure what they mean, you're in the right place. These two propositions have a huge impact on homeowners, buyers, and even retirees looking to relocate. We're going to break down how they work, who benefits, and what you need to know if you're looking to buy or sell in California.
Prop 13: Protecting Homeowners Since 1978
Prop 13 has been shaping how property taxes work in California since 1978. This law was created to protect homeowners from huge jumps in their property tax bills as home values rose. And believe me, with how California real estate has appreciated over the years, this is a really big deal.
How Prop 13 Works
When you buy a home, your property tax is based on 1% of the purchase price. So, if you buy a house in Redding for $300,000, your base property tax will be about $3,000 per year. But your actual tax bill is a little higher than that.
Here in Shasta County, including Redding, there are additional local taxes, voter-approved bonds, and special assessments that are added to that base rate. These help fund things like schools, fire departments, and infrastructure. Depending on where your home is located, your effective property tax rate might be closer to 1.1% to 1.2% of your home value.
For example, if you buy the same $300,000 home, you're looking at an annual tax bill somewhere between $3,300 and $3,600, depending on what local assessments are included in your area.
Homeowner's Exemption: Reduce Your Taxable Value
If you're living in the home you own, there's a way to lower your property tax a little bit. It's called the homeowner's exemption, and it gives you a $7,000 reduction in your home's taxable value.
That translates to about $70 to $80 in annual tax savings. It's easy to qualify. Just own and occupy the home as your primary residence and file a simple form with the Shasta County Assessor's Office. You only have to file it once, and it automatically renews every year. Just make sure to get it in by February 15th to get the full benefit for that tax year.
Additional Exemptions
There are also other exemptions to Prop 13 that you can look into, like exemptions for disabled veterans, as well as disaster relief. The disaster relief exemption really allows homeowners to rebuild damaged properties without triggering reassessments.
The 2% Cap: Limiting Annual Increases
One of the biggest perks of Prop 13 is that your property tax bill won't suddenly skyrocket just because your home values are increasing. Your assessed value can only go up by a max of 2% per year, no matter how much your home appreciates. That's why longtime homeowners in California tend to have much lower property tax bills than newer buyers.
Prop 19: Changes to Property Tax Transfers
Prop 19 went into effect in California on February 16th, 2021. This law made two major changes: one that benefits certain homeowners and one that's been a big adjustment for families inheriting properties.
Benefits for Homeowners 55+, Disabled, or Disaster Victims
If you're 55 or older, severely disabled, or a victim of a natural disaster, Prop 19 allows you to transfer your existing low property tax base to a new home anywhere in California. You can now do this up to three times in your lifetime, instead of just once.
If the new home is of equal or lesser value, your tax basis stays the same. If it's more expensive, your tax rate only increases based on the difference in price. This can save you thousands of dollars a year in property taxes. Just keep in mind, you must file your claim within 2 years of purchasing or completing new construction on your replacement home.
Impact on Inherited Properties
Here's where things got tougher for families inheriting properties. Before Prop 19, if a parent passed down their home, the child could keep the same low tax rate even if they rented it out or sold it. That's no longer the case.
Now, to keep the low tax base, the inherited property must become the child's primary residence within one year, and the tax benefit is capped at that home's assessed value plus $1 million. So, if the home is worth more than that, anything over that limit gets reassessed at market rates.
Exceptions to Reassessment Under Prop 19
There are a few exceptions under Prop 19 where the reassessment may not happen:
- Primary Resident Transfers: If a child moves into the inherited home and files a claim within 1 year, they can keep the lower tax basis.
- Children Under 18, Disabled, or in the Military: If the inheriting child meets these criteria, the reassessment can be delayed.
- Family Farms: If the inherited property is a working family farm, it can avoid reassessment.
- Disaster Victims: Homeowners who lost their home in a wildfire, earthquake, or other natural disaster can transfer their tax basis with no location restrictions.
To qualify for these exemptions, you must file the correct paperwork at the Shasta County Assessor's Office.
Overall Impact
Prop 19 is a mixed bag. It's great for older homeowners and disaster victims who want to move without a major tax hike. But for families inheriting property, it's much harder to keep that low tax rate unless they're planning to live in the home. That means we may see more family homes hit the market instead of being passed down.
Important Considerations
Keep in mind that Prop 13 and Prop 19 apply only within California. If you own a home in, say, Texas, and you're moving to California, your property tax does not transfer from Texas to California. It's only within the state.
Navigating Your Property Tax Questions
Understanding Proposition 13 and 19 can be tricky, and everyone's situation is unique. For personalized advice, it's always best to consult with a licensed tax professional who can address your specific concerns. You can also contact the Shasta County Assessor's Office directly.
Conclusion
Hopefully, this has helped make sense of California's property tax laws, especially if you're coming from a new area or even if you're moving from down south up here and you want to take advantage of Prop 19. If you have any questions about how this affects real estate and something we didn't cover, please leave a comment below. Thanks so much for tuning in. Don't forget to like this video, comment with your questions, and subscribe for weekly content about Redding and the real estate market as a whole.
