As many of you know, Proposition 19 passed and will go into effect on February 16, 2021. This newly enacted law creates major changes in California’s property tax laws surrounding parent-child transfers. 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 lives in the inherited residence, the child’s assessed property tax value will then be 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 see our video here and contact us for more information.
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)