Proposition 19 Solutions - What you need to know

Proposition 19 will change the way one can pass property along to their children while maintaining their property tax basis.  At the bottom of this article are two links of PDFs you should read to help you calculate what your property tax situation might look like. The information provided in this presentation is intended as general advice and is not intended as a substitute for individual legal advice.  This presentation is also not intended to and does not create a standard of care for real estate professionals.

Currently, under Proposition 58 – Parent to Child Exclusion and Proposition 193 – Grandparent to Grandchildren Exclusions, a property owner can transfer their principal residence to their child or children without reassessment, and with no value limit.

Additionally, a property owner can transfer their non-primary residence properties of all types (residential, commercial, industrial, etc.) with up to $1M of assessed value per parent excluded from reassessment. The same is true of Grandparent to Grandchild Exclusions, where the parents in between have predeceased the grandparents.

In fact, since February 15th is a holiday (President’s Day), it would be in your best interest to have all Parent to Child Exclusions completed and postmarked by Thursday, February 11th, 2021.  This pre Prop 19 status ended on February 15, 2021.  However, play the video below to learn about what the new property taxes will be on parent to child or a straight sale and purchase with transfer of your old property tax base.

Proposition 19 Calculations – What will your property taxes be under differing scenarios?

Proposition 19 Solutions

Starting February 16, 2021, any transfer events from Parent to Child (gift, sales, death, probate, etc.) will only be exempt from reassessment IF the property transferred is the primary residence of the parent AND will be used as a primary residence of the child. Additionally, the amount exempt from reassessment will be based on the fair market value of the home, less $1M. Additionally, you now only have one year to file for the homeowner’s exemption that will allow this exclusion.

Any additional property transferred from a parent/grandparent to child/grandchild will be subject to full market value reassessment.

There are also some changes when it comes to transferring your current assessment basis to a replacement property. If you are over 55 or permanently disabled, starting April 1, 2021, you can move the existing Proposition 13 protected assessed value of your home to any home anywhere in California up to three times. Additionally, you can now buy a home of equal or greater value, and the additional amount of the new property over the previous property’s fair market value will be added to your existing Prop 13 basis. You no longer must downsize for your replacement property to qualify for the exclusion.

Property Tax Planning is just one of the many services ACS offers. We are fully aware of the new property tax laws, and we are ready to help you achieve your property tax planning goals now and in the future.

2021 Decline in Value Appeals

Your annual property taxes are based on the value of your property as of January 1 each year. While filing an assessment appeal with your local county does not begin until July, talk with ACS TODAY about your options.

Has your commercial or industrial property been adversely affected by the COVID-19 closures? Have you experienced higher vacancy rates in your hotel or multifamily apartment property? Get a jump on your 2021 Assessment Appeals and talk to us about your options for property tax reduction.

Who to contact for help?

One of the best property tax experts that I’ve come across in my 40 years of serving my clients is Bob Slavin of Assessment Counseling Services. Bob can be reached at 805.374.9500 x 227.  Or click the image in this post to go to their website

When changing ownership from parent to child or grandparent to child, where do you go next. One thing for sure NOT to do is use those big portals that disguise themselves as real estate sites but which are really data mining sites. They take your private contact information and search patterns then sell that information to multiple advertisers on their platform. For example, did you know that the one that has the name that rhymes with “pillow” (you know the one I’m talking about) made nearly 1 billion in revenues doing just that type of thing!  Instead, learn how to Search Homes In Private!

You might also want to know more about how many buyers, real buyers, actually are searching for a home in your area.  If you are, click here

Quick Guide

Helpful guide for calculating your property taxes