Proposition 19 which went into effect February 16, 2021 has created a major change in how real estate assets can be passed from parents to children.
What you need to know ...
Part A :
A tax transfer with less limitations
Includes people who are 55 years or older, disabled or affected by a natural disaster.
Could move a property tax base from your previous home to your new home.
This tax transfer benefit can be used up to three times.
The replacement home can be located anywhere in the state of California.
The effective date is April 1, 2020.
Part B :
A tax hike related to property taxes tied to inheritance
Includes significant restrictions to preferential parent-child/grandparent-grandchild exclusion that allowed parent/grandparents to pass property down with a lower property tax base.
Upon a parent's death, the preferential lower property tax base transfers with the property only if (1) it was the parent's primary home, and (2) it will also be the child's primary home.
Grandparents can only pass to grandchildren if the parents are already deceased.
An inherited property with an assessed value of greater than $1,000,000 will also have a reassessment for the amount over the first million dollars.
The effective date is February 16, 2021.
Does this effect you?
Many of us will not pay attention to this until it impacts us personally. For those looking to take advantage of your low property tax basis or your parents low property tax basis, take a look at California's current law to review your rights under Prop 19 and let us know if you have any questions.
For more information on this bill, visit state resources: