Proposition 19 Passed in California
If you or a family member have an inherited property in California or expect one in the future, you would benefit from the information found in California’s newly passed Proposition 19, “The Home Protection for Seniors, Severely Disabled, Families, and Victims of Wildfire or Natural Disasters Act”.
Previous laws such as Proposition 13 allowed homeowners who were disabled or over the age of 55 to transfer their property tax basis one time to a new home under the condition of their replacement residence being valued equal or less than the original home. Furthermore, children could inherit their parents and grandparents properties and keep the same tax basis. However, with Proposition 19 the child must use the home as a primary residence to keep the same property tax basis. The added benefit of the new law is seniors, disabled, and those affected by wildfire and other natural disasters can transfer property tax basis to a home even if it is more expensive than their current residence. As well, property tax transfer may be done up to three times. It is important to note that if you buy a more expensive property, the transfer is prorated, meaning there will be a calculation to adjust the basis .
These rules will not affect transfers of property occurring before February 15, 2021. If you or someone you know is planning on passing a property, it is recommended you consult your tax professional soon. Note that when you pass the property, you also pass the unrealized gain in the property since it is considered a gift as opposed to inherited properties where the realized gain is removed since the cost basis is updated at death. The lifetime gift limit is above $11 million, so it may not be as large of an issue for most.
About the author
By accepting you will be accessing a service provided by a third-party external to https://assetplanninginc.com/
