Proposition 19 is a ballot measure that was approved by California voters in November 2020. This measure creates county revenue by limiting and changing the rules surrounding parent-to-child transfers and dedicates that revenue to wildfire relief. But Proposition 19 can also impact your estate planning and make it even more crucial.
So how can Prop 19 affect your estate planning? Before Prop 19 was passed, children and grandchildren were able to inherit real estate and benefit from an unlimited tax reassessment exception. This meant that they could benefit from the lower property taxes that their parent or grandparent had. Now, children or grandchildren who inherit property from their family will now have the property’s tax value reassessed if they don’t occupy the inherited home within one year of the deceased person passing away and the property value is worth $1 million over the original tax basis. This means that if you inherit a house and live there, your home’s property taxes will stay the same as it was for your family (assuming the value requirement is met). Unfortunately, not everyone is able or ready to live in their inherited home right away, or some may have desired to use that inherited home as a rental for a source of income. Plus, the way California property values are increasing year to year, many inherited properties will not meet the value requirement. In those cases, there will be a tax reassessment to the current fair market value of the property.
Meza Talbott Law
A Modern Family + Estates Firm
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