By Jeff Prang
Los Angeles County Assessor
This month, I want to take a moment of your time to visit about a property tax-savings program my office offers that’s just waiting to reduce your budget.
I’m speaking about the Homeowners’ Exemption that can automatically reduce your tax burden by $7,000, if the home is your primary residence as of Jan. 1. That translates to an actual reduction of $70 to a homeowners’ tax bill. And all the homeowner has to do is fill out the application at assessor.lacounty.gov and they are good to go. The deadline is Feb. 15 to get the entire savings but if you miss the deadline, please file anyway and you will get it prorated this year and the full amount the following years.
Homeowners need only apply once in order to receive these savings each year. The savings continue until a change (such as a sale) is recorded.
However, nearly one in three homeowners in Los Angeles County do not take advantage of this tax savings program, leaving $30 million unclaimed each year. Across the County, an additional 435,000 families can be saving on their tax bills.
For Santa Clarita, about 37 percent are not availing themselves of this tax savings program. Although the largest number of unclaimed exemptions usually falls within Los Angeles, the highest rates of unclaimed exemptions have been in Palmdale, Lancaster, Lynwood, Pomona and Norwalk. This savings is probably the simplest to get and still people don’t use it.
In fact, in the past because I feel so strongly about this savings program I have along with the Los Angeles County Board of Supervisors proclaimed January as Homeowners’ Exemption Awareness Month.
This year the homeowners’ exemption is even more important than ever before because of Proposition 19. Prop. 19 changes the rules that apply to transfers between parents and children or in some cases, even grandparents to grandchildren. Current law allows these family members to transfer a primary home of any value and not cause a reassessment, even if they use it as a rental property. Each person can also transfer other property, such as rental homes or commercial property, and exempt up to $1 million of assessed value (not market value) from reassessment. A married couple can transfer up to $2 million.
Prop. 19 abolishes these transfers of any property not being used as a primary residence. It also eliminates the current parent-to-child and grandparent-to-grandchild exemption in cases where the child or grandchild does not use the inherited property as their principal residence, such as using a property as a rental house or a second home.
But this is most important: The parent/owner of the home that is going to be left to the children must have the Homeowners’ Exemption at the time of the transfer. Currently, that’s not a requirement. If the home does not have the homeowners’ exemption, the children do not receive the tax benefit and they could get stuck with a huge property tax increase.
This provision applies to transfers starting Feb. 16, 2021.
As with any ballot initiative, the Legislature may be forced to propose legislation to clarify implementation of Prop. 19. Moreover, there are a number of drafting errors that will need to be fixed so that I and the other 57 assessors statewide can administer it. The Board of Equalization, which provides guidance to county assessors, said it “will issue guidance once election results are final and upon completion of our analysis of Proposition 19.”
In the meantime, I do imagine that Prop. 19 will likely disrupt some homeowners’ estate plans and throw others in the midst of buying or selling their home into limbo, awaiting for very specific and technical clarifications.
I will be providing regular briefings as we move forward and our website will be continuously updated to provide general information on Proposition 19 that may assist taxpayers.
For more information on Prop. 19 or other tax savings programs, visit assessor.lacounty.gov or call (213) 974-3211. Los Angeles County Assessor Jeff Prang has been in office since 2014. Upon taking office, Prang implemented sweeping reforms to ensure that the strictest ethical guidelines rooted in fairness, accuracy and integrity would be adhered to in his office, which is the largest office of its kind in the nation with 1,400 employees and provides the foundation for a property tax system that generates $17 billion.