2irro2 California Propostion 19: What Does This Mean for Property Tax Transfers and Exemptions? | Best Best & Kiieger LLP - JOSupra December 11, 2020 California Proposition 19: What Does This Mean for Property Tax Transfers and Exemptions? Christine Chacon, Monica Rosas Best Best & Krieger LLP Children Inheriting Parents’ Property Will Be Impacted Financially Newly passed Proposition 19 will have potentially severe financial consequences for children inheriting property from their parents. Approved by California voters in the November election, Prop. 19 marks a landmark change to Prop. 13, the 1978 law that aims to limit property taxes. Eligible homeowners may now transfer their tax basis anywhere within the State and to a property of greater value, whereas previously homeowners were limited to transfers within certain counties and to homes of the same or lesser market value, Prop. 19 increases the number of times that certain people may transfer their tax assessments. If a person is 55 years or older, has severe disabilities, or lost a home in a natural disaster, the person may transfer their tax assessment up to three times now (up from one). The new law also requires market-value sments for inherited properti that are not used as the heir’s principal residence. For those property owners age 56 and older, they will be able to blend the taxable value of their old home with the value of a new, more expensive home, which will result in positive property tax savings. For example, if a senior couple sold their home with an assessed value of $250,000 for $2 million and bought a new home for $3 million, the new home's assessed value would be $1.25 million, which is the $250,000 assessed value, plus the $1 million increase in home value. But unfortunately, many people will experience a nega’ considerably limits the availability of the parent-child « assessments and the resulting property-tax consequent Prior to Prop. 19's passage, parents could transfer a pri new fair-market reassessment, regardless of how the cl Effectively, this would allow children to avail themselv ir parents enjoyed. Additionally, any secondary property, or commercial property, could be transferred with up t exempt from the inerease in property taxes — again, re,, htpssiwwucidsupra.comegalnews(calflomia-proposion-19swhal-daes-20766) 192iri02t California Propostion 19: What Does This Mean for Property Tax Transfers and Exemptions? | Best Best & Krieger LLP - JOSupra Beginning Feb. 16, children who inherit real property from their parents will have to factor in increased property tax real property and use it as the child’s primary residence, then up to $1 million of the reassessed value will be excluded from the new property-tax basi in the decision to keep or sell the property. If a child chooses to keep the (Before, primary residences could be transferred with no cap.) If the child chooses to keep the property as a second home, vacation home or rental property (anything other than as the child’s primary residence), there is no $1 million exclusion and the child will face a significant increase in property taxes. For example, if parents purchased a rental property in 1940 for $50,000, and the value of the rental property is more than $1 million when it is transferred to a child after Feb. 16, the parents’ tax basis does not pass to the child. The child will now have to pay property taxes based on the assessed fair market value, which will significantly affect the child’s decision to keep or sell. [View source.] LATEST POSTS * FCC Continues to Undercut Local Authority on OTARD ‘© Court Provides Guidanc Rights Act Challenge Applying “Racially Polarized Voting” Analysis to a California Voting Speakers © Redistr ing in Califor * Elected Officials Entitled to Some, Not All, Public Agency Records ‘See more » This website uses cookies to im ust rience, track anonymous sit DISCLAIMER: Because of the generality of this update, the information| (ycaye, store authorization tokens ar and should not be acted upon without specific legal advice based on par _ permit sharing on social media netw ntinuing to browse thi © Best Best & Krieger LLP 2021 | Attorney Advertising ite you accept the use of cookies Click h ad more about how we WRITTEN BY: Best Best & Krieger LLP bbs htpssiwwucidsupra.comegalnews(calflomia-proposion-19swhal-daes-20766) 28PUBLISHED IN: Popular Property Owners Property Tax Real Estate Market State and Local Government Residential Real Estate Tax Commercial Real Estate BEST BEST & KRIEGER LLP ON: BRON This website uses cookies to improve user experience, track anonymous site store authorization tokens ar permit sharing on social media networks. By continuing to browse thi website you accept the use of cookies. Click here to read more about how we Continue htpssiwwucidsupra.comegalnews(calflomia-proposion-19swhal-daes-20766) a