By Brian Johnson
2021 President
Santa Barbara Association of Realtors
Proposition 19 was approved in November of 2020. Its goal is to give seniors, people with disabilities and victims of disaster the ability to take their current property tax assessments with them when they move within California. Previously, only 11 of the state’s 58 counties had opted in to the property tax portability laws that allowed an owner to sell their property in one county and move to another and take their tax assessment with them as long as the replacement property didn’t exceed the value of the relinquished property. This was helpful for seniors looking to downsize or move closer to family without seeing a huge increase to their property tax bill. It also allowed a property to come to market that might not have otherwise. The intent of Proposition 19 was to expand this to all 58 counties in the state. It also expanded the opportunities from just seniors to those with disabilities and those impacted by fires and other disasters. These were all positive outcomes for portions of our society that could be most at risk from new property tax assessments when they move.
In order to pay for this measure there were changes to the inheritance laws for real estate. One big change was the closure of the “Lebowski Loophole”. This is in reference to the inheritance rules in California that law allowed parents or grandparents to pass on a property to their children or grandchildren after their death and the property would not be reassessed for tax purposes. A 2018 Los Angeles Times article reported on how Jeff Bridges, the actor famous for “The Big Lebowski” and his siblings were benefiting from this by paying only $5,700 per year in property taxes on an ocean side home in Malibu that his parents bought in the 1950s while renting it out for $15,000 per month. Mr. Bridges did nothing different from thousands of other Californians who utilized the same law in the same way to benefit their children or grandchildren but because of the circumstances his situation became fodder for the Legislature to look to overturn these rules.