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Property Tax Planning

What is Proposition 19?

Proposition 19 was passed by voters in the 2020 election.  The proposition helped seniors mainly by allowing seniors to transfer their base year value (i.e. their property tax bill) to a new property.  However, the proposition also hurt families in a major way.  Proposition 19 altered Proposition 13 so that the only property that can be transferred after death that can keep the same property tax bill (i.e. Prop 13) is the primary residence of the senior, and only if that primary residence becomes the primary residence of the child within the first year after the death of the senior.  This new rule became operative on February 16, 2021.

Can we avoid property tax reassessment upon death?

YES!  California Estate Planning Services has developed a strategy that can save property taxes and avoid a reassessment upon death!  This strategy, what we call the "Prop 19 Plan," can save primary homes, secondary/rental homes, apartment buildings, and commercial buildings.  Schedule a free phone consultation with one of our attorneys today to learn how the Prop 19 Plan can save your family tens, if not hundreds of thousands of dollars today!

What if my parent already passed away?

Unfortunately, if your parent has already passed away and you are facing a reassessment, there is not much planning that can be done.  However, if you are facing a buy-out situation with your sibling(s) where one of you wants to keep mom or dad's house and the other just wants cash, call us today!  There is a plan we need to implement so that your buy-out of your sibling does not get classified as a "sibling to sibling" transfer and trigger a reassessment.  Schedule a free phone consultation today!

MORE FREQUENTLY ASKED QUESTIONS ABOUT PROPOSITION 19

  1. Question: Is Proposition 19 retroactive, and will it reassess properties already transferred under Proposition 58?

    • Answer: Proposition 19 is not retroactive, so properties transferred under Proposition 58 will not be reassessed. Proposition 58 applies to transfers before February 16, 2021, while Proposition 19 applies to transfers on or after that date.
       

  2. Question: What is Proposition 58?

    • Answer: Prop 58 is excludes from reassessment transfers of real property between parents and children.  This is also codified in Revenue and Taxation Code §63.1.
       

  3. Question: If a family home is given to two children, do both need to live there to qualify for the exclusion?

    • Answer: Only one child needs to live in the home and apply for the homeowners' or disabled veterans' exemption within a year of the transfer for the exclusion to apply.
       

  4. Question: If I inherit my parent's home and move in, do I need to live there permanently to maintain the exclusion?

    • Answer: Yes, you must live in the home continually for it to maintain the exclusion. If it ceases to be your principal residence, it will be reassessed at its market value.
       

  5. Question: Does Proposition 19 apply to rental properties transferred between parents and children?

    • Answer: No, Proposition 19 only applies to family homes that are primary residences and family farms, not rental properties.  This means every real property except the primary residence will be reassessed.
       

  6. Question: Do we need to file the parent-child exclusion claim before February 16, 2021, to qualify under Proposition 58?

    • Answer: As long as the transfer date is on or before February 15, 2021, you can file the claim within three years of the transfer date or six months after receiving a supplemental or escape assessment notice.
       

  7. Question: Will I qualify for the parent-child exclusion if the family home is worth more than $1 million?

    • Answer: Yes, but only up to the factored base year value plus $1 million. Any value above this limit will be added to the base year value.
       

  8. Question: If a parent died before February 16, 2021, but the property is reassessed later, which proposition applies?

    • Answer: The date of death determines the applicable law. If the parent died on or before February 15, 2021, Proposition 58 applies. If the death occurred on or after February 16, 2021, Proposition 19 applies.
       

  9. Question: If my deed was signed before February 16, 2021, but not recorded by then, does it still qualify under Proposition 58?

    • Answer: Yes, if the transfer occurred by February 15, 2021, it qualifies under Proposition 58, even if recorded later. Since February 15, 2021 was a state holiday, the deadline was extended to February 16, 2021.
       

  10. Question: How does Proposition 19 affect property held in a trust?

    • Answer: A change in ownership for properties in a trust occurs when the trust becomes irrevocable, usually upon the trustor's death. The applicable law is determined by the date of this change.

  11. Question: How do I apply for the homeowners' or disabled veterans' exemption to qualify for the exclusion?

    • Answer: File a claim with the County Assessor using forms BOE-266 (homeowners' exemption) or BOE-261-G (disabled veterans' exemption) within one year of the transfer.

PLEASE NOTE- These questions and answers, and any information contained on this website, is purely for informational purposes and should not be construed as legal advice.  Please contact California Estate Planning Services at (714) 584-5009 to set up a phone consultation where your questions can be answered and legal advice can be given.

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