In February 2022, I was elected as your assessor-recorder and I am honored to represent and serve you. My office plays an important role in our city, typically generating over $3.6 billion in property tax revenue and providing over 33% of San Francisco's General Fund budget. These dollars represent the largest, most stable source of funding that enables our civic leaders to invest in our communities, schools, parks, and first responders, among other programs and partners that ensure San Francisco thrives. While out in community, I have heard from you on two major items of public interest: Proposition 19 and our newly piloted Estate Planning program.
Proposition 19
Since the statewide ballot measure was narrowly approved in November 2020, Proposition 19 has been one of the more complex laws mentioned by San Franciscan homeowners that needs clarification. Prop 19 has two parts — intergenerational property transfers and preservation of your base year value of your home if you decide to move. For an intergenerational transfer, there are three basic ways that property transfer can occur between parents and their children: gift, sale, and inheritance at death. Some essential elements to consider when using the example of a parent to child transfer include: the home must be the primary residence of the parent; the transferee child must move in and file a Homeowner's Exemption form; and the base year value of the home plus $1,000,000 will be compared to the fair market value to determine the new assessed value. You must file paperwork with my office within three years of transfer. As Prop 19 requires, this filing must be timely, otherwise these provisions are forfeited, and the inherited home will be revalued at market rate. If the appropriate elements apply, the base year value can be transferred.
The second part of Prop 19 is called the Transfer of the Base Year Value. This tax benefit is available to three groups of taxpayers: persons 55 years of age or older, persons who are severely disabled, or victims of a wildfire or natural disaster. You may transfer the base year value of an existing principal residence to a replacement principal home. However, if the replacement home is of greater value than the original home, the difference will be added to the transferred base year value. The new home may be located anywhere in California and homeowners can apply for this benefit three times. The sale of the original property or the purchase of the replacement property must occur after April 1, 2021. The two transactions must occur within two years of each other. Prop 19 paperwork must be filed in the office within three years of purchase of the replacement residence to apply the base year transfer.
If you have submitted a Prop 19 claim, thank you for your patience as we process them. The last letter to clarify Prop 19 came from the state Board of Equalization in April 2022. Now with the proper guidance from the state, my office has begun to process these claims. Also, at the beginning of May, it was announced that a partial repeal of Prop 19 had failed. It did not gather enough signatures to appear on the November 2022 ballot. My office will continue to track and share any developments that change Prop 19. I understand that Prop 19 may significantly impact San Francisco homeowners and I want to keep you informed.
Frequently asked questions on Prop 19
What does an example of an intergenerational transfer look like?
If a family home is valued over $1,000,000, partial benefit is available. For example: if the base year value of a family home is $400,000 and the fair market value is $1,500,000. The excluded amount is $400,000 + $1,000,000 = $1,400,000. The difference is $1,500,000 -$1,400,00 = $100,000. The new adjusted base year value is $500,000 ($400,000 + $100,000).
What does an example of a Base Year Value Transfer look like?
Here is an example of the Base Year Value Transfer when the new home has a higher value than the original home's value. Your original home with a base year value of $600,000 sold for $1,200,000. The replacement home costs $1,500,000. The difference between the sale and purchase price is $300,000 ($1,500,000 - $1,200,000). This additional amount of value between the two homes is added to the original base year value ($600,000 + $300,000). The new home's base year value will be $900,000.
Estate planning
Every year I host the Family Wealth Series — a four-part series to promote financial health and literacy. Through this series and by engaging with the community, I learned many households with fewer financial and legal resources faced economic barriers to properly transfer their assets to their loved ones. Listening to that need, I spearheaded a new estate planning program — provided at little-to-no cost depending on income — that offers a valuable resource to settle and transfer a family's hard-earned assets. This program is aimed at low-income and moderately low-income households in southeastern neighborhoods and the Western Addition. Estate plans consist of a will, living trust, financial power of attorney, and health care directive.
Everyone has an estate, and everyone should have an estate plan. Estate plans are not limited to a homeowner, but are also vital in establishing inheritance guidance for your business and heirlooms. Estate plans protect you as they ensure your wishes are carried out and protect your estate from going through the expensive and time-consuming probate process. Probate is a process that is triggered when there is not a will in place. In those cases, the probate process will determine who should inherit your property after you pass and will make a judgment regarding the allocation of your property. An estate plan will avoid this process, keep decisions in your and your family's hands and avoid costs that could result in losing a hard-earned family asset.
If you have any questions, please do not hesitate to contact my office. My staff is ready to spend time with you to answer your questions. Please call us at (415) 554-5596 or email us at [email protected]. For estate planning, please contact Housing and Economic Rights Advocates at (510) 271-8443, ext. 300 or email [email protected].
For important new developments, please follow me on social media. For more information on Prop 19, please view my recorded presentation "Presentation: Prop 19 Property Tax Benefits."
I want to wish you and all a very Happy Pride Month!
Joaquín Torres, an ally, is the elected Assessor-Recorder for the City and County of San Francisco.
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