AI Q&A: Property Power-Play: The Impact of California's Propositions 13 and 19 on Homeowners and Real Estate Transactions
See GPT-4 answer: How do property tax rules and propositions in California, like Propositions 13 and 19, impact homeowners and real estate transactions in the state?
OpenAI GPT-4 Q&A
The following text is GPT-4’s reply:
Property tax rules and propositions in California, such as Propositions 13 and 19, have significant impacts on homeowners and real estate transactions in the state.
Proposition 13, which was passed by California voters in 1978, limits annual increases in property taxes to no more than 2% per year. It also limits property tax rates to 1% of a property's assessed value at the time of purchase. This means that even if the market value of a property increases significantly over time, the property tax assessment can only increase by a maximum of 2% per year, plus any additional taxes levied for voter-approved bond measures or special assessments.
The benefits of Proposition 13 include providing stable and predictable property taxes for homeowners and limiting the risk of sudden spikes in tax bills. However, it also means that many homes in California are taxed at levels far below their market value, which can have implications for funding government services and other tax revenue-dependent programs such as schools.
In November 2020, California voters passed Proposition 19, which makes changes to the state's property tax rules in several ways. The most significant changes include:
Limits on intergenerational transfer of property: Proposition 19 limits the ability of homeowners to pass down their homes to their children without triggering a reassessment of the property's market value for property tax purposes. Under the new rules, transfers of primary residences between parents and children are generally exempt from property tax reassessment only if the child continues to use the property as their primary residence and the home's market value is not more than $1 million greater than its assessed value.
Expanded ability to transfer tax basis within the state: Proposition 19 allows eligible homeowners aged 55 or older, disabled, or victims of natural disasters to transfer their current property tax basis to a replacement home anywhere in California, rather than just within the same county or to a less expensive home as was previously allowed.
Self-Generation Incentive Program (SGIP): SGIP provides financial incentives to customers who install renewable energy systems such as solar, energy storage, and fuel cells. The rebate amount depends on the size of the system and the customer's electricity usage. The incentives are available for residential and commercial customers and range from $250-$400 per kilowatt-hour of storage capacity.
California Clean Fuel Reward Program: This is a rebate program for customers who purchase or lease eligible new zero-emission or plug-in hybrid vehicles offered by participating dealerships. The rebate amount varies based on the type of vehicle and the customer's location. The program provides up to $2,000 to eligible light-duty vehicles and up to $5,000 for eligible medium and heavy-duty vehicles.
California Clean Fuel Reward Program: This is a rebate program for customers who purchase or lease eligible new zero-emission or plug-in hybrid vehicles offered by participating dealerships. The rebate amount varies based on the type of vehicle and the customer's location.
California Alternative Energy and Advanced Transportation Financing Authority (CAEATFA): CAEATFA offers low-interest loans, leases, and other debt financing to businesses investing in energy-efficient, renewable energy, or advanced transportation projects.
Overall, Proposition 19 expands the ability of homeowners to transfer properties within families and across the state while providing additional funding for fire protection, emergency response, and schools.
In summary qualifying renewable energy systems are not subject to property tax increases resulting from those installations.
Note that these incentives may have specific eligibility requirements and application processes. For detailed information on available incentives and rebates in California, including specific terms and eligibility criteria, visit the California Energy Commission's website, or consult your local tax professional or CPA.
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