Silicon Valley Real Estate | JLee Realty
We've seen quite a few complaints about Proposition 19 made online by Silicon Valley residents who've inherited property. People thought they were voting to help victims of natural disasters but have found that it affects all inherited property, often adversely, and it affects people 55+ moving to a new home. It is now law and you should understand it to benefit as much as possible from your choices.
Propositions 58/193 previously provided exclusions from reassessment for property tax when property was transfered from a parent to child or from a grandparent to grandchild. Rules:
Proposition 19 rules:
Propositions 60/90/110 previously provided exclusions when selling your home and buying a new home. Rules:
Proposition 19 rules:
Proposition 50 previously provided exclusions. Rules:
Proposition 19 rules:
Inherited property is much more likely to be assigned a higher property tax basis. There are more opportunities for people 55+ to move without incurring higher property taxes. Disaster replacement now only applies to a principal residence but "wildfire" replacement does not require state of emergency proclamation.
I've read that future interpretations and revisions will help define Proposition 19. I've also read that if there are multiple children inheriting a primary residence only one of the children has to use it as her/his primary residence. Similar as to when you buy a new home and receive a supplemental property tax assessment possibly months later, inherited property may also result in a supplemental property tax assessment months later (may need a reserve when settling estate).
NOTE: Property tax laws are state laws and do not apply when moving to a new state.
To see more details you can view the official California State Board Of Equalization Proposition 19 Fact Sheet.
In the video above John C. Martin talks about how the property owned by a large company is not reassessed when stock (ownership) is sold and bought. The reassessment happens when a controlling interest in the property is transferred. With informed legal advice you can transfer your property without having it reassessed, but any number of mistakes can trigger a reassessment. Proposition 19 has created a hazard for the average homeowner who wishes to create a multigenerational home. This new hazard may lead you to create an even more lasting family legacy with the proper estate planning.
You can learn more about estate planning, trusts, probate, and taxes from the seminar video that was also co-hosted by John.
Our thanks to:
John C. Martin, Esq.
johncmartinlaw.com
650-329-9500
636 Middlefield Road
Palo Alto, CA 94301
650-857-1000
homes@julianalee.com