Prop 19 will be implemented Feb 15 and upon your death will trigger a new evaluation of your properties for property taxes. This could force your family to sell the property to pay taxes. If they don’t move into the property immediately upon your death the MARKET value applies to the homes recalculation of property taxes.
@Deanne Bourne Why do you think it's passage was so heavily supported and financed by Realtors? Almost entirely in fact. The California Association of Realtors spent over $35 MILLION dollars to help get it passed, and the National Association of Realtors spent almost $5 MILLION. (Source: Mercury News: California voters approve Prop 19, changing property tax breaks)
They also learned from their loss in 2018 after a similar ballot measure was defeated, and came back with a few tweaks (and more money) to get this one (narrowly) passed. But it did pass, and it's what we have to deal with now. Like it or not.
@Deanne Bourne um...not in CA so don't have a horse in the race so to speak...but isn't another way of phrasing this "if the family is living in the home taxes won't be raised" ?That seems like a benefit. Why shouldn't taxes be raised upon this transfer of ownership, similar to other transfer of ownership tax triggers?
If the family is holding it as an investment, then they shouldn't be shielded from the full cost, yes? On the other hand I'm very sympathetic to @Kyle J. s post. Anything realtors spend that much money on...look out.
@Kyle J. . There is little or no inventory of houses and this will change that dramatically: mostly behind people’s backs. Who benefits that has political power? The realtors. The unfortunate people who lost their homes in fires are not a large enough body of voters to draw this up and push it through alone.
I rely heavily on my realtors. They are my eyes and ears for property, loans and other types of information, I feel they are invaluable as my property managers and they work incredibly hard. But in CA someone recognized a veritable gold mine in an aging population with tons of equity and tied it indiscriminately to another truly needy group that lost their homes. These did not need to be grouped but by doing it “what a sweet deal for CA and for the realtors. I think I even voted for it unknowingly.
I will do whatever I can to quickly move ownership or whatever needs to be done to preserve the work of a lifetime which is my pension really bc it supports me now in my 70s as a rental. Without this forward thinking I would be entirely dependent on social security . Instead this one property has allowed me to put about $3MILLION back into the economy in repairs, purchases, remodeling and capital improvement in 4 states.
We should plan to take care of ourselves with our knowledge and assets and I did. I don’t feel this is a just reward for my plans to educate my grand children and to relieve the financial burdens of my sons.
@Deanne Bourne I really don't see how this disadvantages you--or your children--so much? If they live in the property they keep the same tax basis according to what you said? If so, thats a big win for them. If they don't they are simply being taxed on the market value of the investment, hardly draconian. Do I have this wrong?
Well, it already works that way here, just by normal process. A homeowner/occupant gets a homestead exemption, with a yearly cap of a 3% increase in assessed value. When that person no longer occupies the residence, for whatever reason, the taxes go to the current market assessed value.
Jonathan R McLaughlin. The fact that families who inherit may not be ABLE to fit in the property and will be forced to sell is my problem. Then they have capital gains. The big investors and the wealth will find a way around this. It is the average homeowner and small investor who, again, will be paying the bulk of the property and capital gains taxes. There is talk about 1031 Exchanges being challenged or modified nationally to help the federal coffers. I bet the lobby on that has already started. The stepped-up basis is going on the block soon probably. The little guy doesn’t have a full time attorney. They will pay.
Another reason that I'm leaving Cali, and not investing in California.