Los Angeles County Assessor Jeff Prang (photo courtesy of Assessor Jeff Prang)

Los Angeles County Assessor Jeff Prang is encouraging residents to take advantage of a property tax savings program that can help reduce family budgets.

The Homeowners’ Exemption can automatically reduce tax burden by $7,000, if the home was a primary residence as of Jan. 1. That translates to an actual reduction of $70 to a homeowners’ tax bill. All homeowners have to do is fill out an application by visiting assessor.lacounty.gov. The deadline is Feb. 15 to get the entire savings, but those who miss the deadline are still encouraged to file to receive a prorated savings this year, and the full amount in future years. Homeowners need only apply once to receive the savings each year, as they continue until a change, such as a sale, is recorded.

One in three homeowners in Los Angeles County do not take advantage of this tax savings program, leaving $30 million unclaimed each year, Prang said. Across the county, an additional 435,000 families could be saving on tax bills, he added.

In Beverly Hills, approximately 31% of property owners are not using the 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. 

“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,” Prang said.

This year, the Homeowners’ Exemption is even more important because of Proposition 19, which changes the rules that apply to transfers between parents and children or in some cases, even grandparents to grandchildren. Current law allows family members to transfer a primary home of any value without 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 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 in which 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.

Prang said importantly, the parent or owner of the home that is going to be left to the children needs to have the Homeowners’ Exemption at the time of the transfer. The child receiving the home has one year from the date of transfer to acquire the Homeowners’ Exemption, if the parent did not have it at the time of the transfer. Currently that is not a requirement. If the home does not have the Homeowners’ Exemption, the children will not receive the tax benefit, and they could get stuck with a huge property tax increase. The 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, Prang said. Moreover, there are drafting errors that will need to be fixed so assessors statewide can administer the law.

In the meantime, Prang said he expects Proposition 19 will likely disrupt some homeowners’ estate plans and place others who are buying or selling their homes into uncertainty, awaiting specific and technical clarifications. The assessor said he will continue to provide updates for taxpayers as they become available.

For information, call (213)974-3211, or visit assessor.lacounty.gov.