California’s Prop 19 Impacts Homeowners & Heirs
ACT NOW to Prevent a Big Tax Hike
on Inherited Homes
California’s Proposition 19 passed in the November 2020 election. Prop 19 eliminates the parent to child exclusion for property tax reassessment EXCEPT when the beneficiary uses the inherited home as their primary residence. This law goes into effect February 2021.
Historically, many homeowners have benefited from Prop 13, previously passed in California, which restricted reassessment of home values for property tax rates. This law was designed to protect older Californians from being priced out of their homes through high property taxes. On top of that, homeowners were also able to avoid property tax reassessment when they transferred real property to their children, which meant the low property tax rates continued on to the next generation.
Under Prop 19, inherited properties will be reassessed at current market value for property tax purposes. For many heirs, this will result in a HUGE tax bill on inherited real property if the home is not used as the heir’s primary residence. This could create a financial hardship for many children who inherit a home from a parent and may force the heirs to sell the home even if their preference would have been to keep it in the family. This also means your children may not be able to afford to keep the property to use as a vacation or rental property.
Does This Impact You?
Ask yourself the questions in the following decision tree to determine how high of a priority it is for you to put a plan in place to preserve your parent to child property tax exclusion for the real property that you want to pass on to your children: Proposition 19 Decision Tree
If you currently have a Revocable Living Trust, it will do NOTHING to protect your home from reassessment when your heirs inherit the home.
If this impacts you, you have a narrow window of time to act!
There is a limited time to act to preserve the parent-child transfer exclusion before Prop 19 goes into effect. If you are already a client of our law firm, we invite you to attend one of the following webinars to learn about Prop 19 and the available planning options (click on the webinar to take you to the registration page):
- Client Review Webinar (for clients who signed off their living trust estate plan more than 3 years ago), Thursday, December 3, 3 pm
- Prop 19 Client Webinar, Tuesday, December 8, 2:00 pm
- Prop 19 Client Webinar, Thursday, December 10, 6:30 pm
Reservations are required. Click on the above dates to reserve your space.
CLIENTS – IF YOU HAVE QUESTIONS, PLEASE REGISTER FOR ONE OF THE WEBINARS ABOVE. OUR OFFICE HAS BEEN INUNDATED WITH CALLS AND EMAILS AND WE ARE UNABLE TO RESPOND TO EACH INDIVIDUAL QUESTION AT THIS TIME.
Unfortunately, due to the limited time period before Prop 19 becomes active, we are only offering the webinar and Prop 19 services to our existing clients. We apologize for the inconvenience.