Proposition 19 Alert
This amendment to the California Constitution passed in the November election, expands property tax savings for homeowners over 55, or who are severely disabled or victims of natural disasters (including wildfire). When purchasing a new home, these owners may now retain their original property tax assessment.
However, Proposition 19 severely limits the property tax exclusion for parent-child transfers. Beginning February 16, 2021, only transfers of the donor’s residence which will be used as the recipient’s personal residence will be exempt from property tax reassessment. Plus, only $1 million over the assessed value will avoid reassessment.
The property tax revenue raised from this new reassessment of most parent-child transfers is dedicated to wildfire relief.
Any clients who intend to gift high-value property to a child or parent (other than the family home) should act urgently before February to retain the exclusion from property tax reassessment. This includes real estate still to be distributed from a trust or estate which the Beneficiary plans to keep. Potential gift tax consequences must be weighed if the property has a low tax basis which may result in higher capital gains tax on a future sale.
Please contact our office promptly if you have real estate you are planning to pass on to your children, or parents.