California’s unofficial election results suggest that Proposition 19 passed and will go into effect on February 16, 2021. With this passage, California will face vast changes in our laws surrounding parent-child transfers which will have a significant negative financial impact. Specifically, Proposition 19 has (1) eliminated the lifetime $1 million non-primary residence exclusion; and (2) eliminated the primary residence exclusion unless the child resides in the primary residence received from a parent. Even if the child utilizes the inherited property as his or her primary residence, the child’s assessed value is then determined based on whether the property’s value at the time of transfer is greater than the parent’s assessed value by more than $1 million. If the value of the property at the time of the transfer exceeds the parent’s assessed value by less than $1 million, then the child takes the parent’s assessed value. If the value of the property at the time of the transfer exceeds the parent’s assessed value by $1 million or more, then the child’s assessed value is the current value of the property less $1 million.
Individuals owning real properties in California should consult an estate planning attorney to discuss their options, such as transferring real property to their children now or holding real properties in a legal entity. To learn more about how we can help, please contact us here.
The material in this article, provided by Chauvel & Glatt, is designed to provide informative and current information as of the date of the post. It should not be considered, nor is it intended to constitute, legal advice or promise similar outcomes. For information on your particular circumstances, please contact Chauvel & Glatt at 650-573-9500. (photo credit: 123rf.com)