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Prop 19 Update

Posted by James Burns | Mar 09, 2021 | 0 Comments

February 16, 2021 became the deadline for any title changes in order to avert the consequences of proposition 19 which again eliminates the inter-generational transfer protection from property tax reassessment. Now the only way children can inherit your home is if they physically move into it and claim it as their own personal residence and it is under $1,000,000 on top of the purchase base.

Some of the redeeming qualities of Proposition 19 are as of April 1, 2021, Prop 19 allows real property owners over 55 years of age, severely disabled, or victims of wildfire or natural disaster to carry-over the assessed value of their existing primary residence to a newly-purchased or newly-constructed primary residence anywhere in California, avoiding the payment of higher property taxes.

This provides property tax relief to this select group of people, which is limited to the value of the original primary residence regardless of the price paid for the replacement property.

A few other particulars:

  • This select group of people are allowed to make three such transfers in their lifetime.
  • The new residence must be purchased/constructed within two years of the sale of the original primary residence.

Will it be recalled?

A Proposition becomes a part of the State Constitution and can only be overturned by a subsequent proposition voted on in a statewide election (which may not occur for another two years); it cannot be eliminated by an act of the legislature.  However, there is speculation that the legislature may issue regulations defining how Prop 19 will work, including possibly deferring the February 15 deadline. Two California senators and the state's 58 county assessors are seeking clarification on the implementation of a new property tax measure, and they're hoping to delay a provision that makes it more costly for children to inherit some homes from their parents.

Senate Bill 668, authored by Sen. Patricia Bates, R-Laguna Nigel in partnership with the Howard Jarvis Taxpayers Association, would delay implementation of the property inheritance provision until Feb. 16, 2023.

"A two-year delay," Bates said, would give the state time to assess the issues. Families would also have additional time to seek professional advice on how a property transfer might affect potential future ax liabilities.

“While Prop. 19 is now law, the measure is silent on some issues regarding implementation,” Bates said in a statement, adding that it's not always possible for family members to quickly relocate — particularly amid the COVID-19 pandemic. Currently, the bill is awaiting referral to a Senate policy committee.

If any of this makes you concerned then by all means make an appointment: https://calendly.com/jb--31

About the Author

James Burns

Estate Planning, Asset Protection, Business and Real Estate Transactions, nutraceutical Law and franchising:

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