Prop 19 Parent Child Exclusion for Multi-Unit Property
Does anyone know how the Prop 19 parent-child exclusion applies to multi-unit properties. My parents and I occupy 2 units in a 4 unit property as our primary residence. If my parents transfer the property to me will the exclusion apply to the entire property or will it be pro-rated (given that 2 units are rented to tenants)?
Did a quick search and was surprised to find that a portion might actually be excluded.
Here's the link and excerpt.
https://www.boe.ca.gov/proptax...
Multi-Unit Property
20. Question: If my original primary residence is a multi-unit property, am I still eligible to
transfer the base year value to a replacement primary residence?
Answer: Yes. However, you will only be eligible for that portion of the value attributable to
the unit that is your original primary residence. Section 2(a) of article XIII A of the
California Constitution provides that "a two-dwelling unit shall be considered as two separate
single-family dwellings." Thus, the base year value attributable to the unit that is occupied as
your primary residence may be transferred to a replacement primary residence. In
determining the new taxable value of the replacement primary residence, the full cash value
attributable to the unit that was the original primary residence will be compared to the full
cash value of the replacement primary residence.
For example, a duplex that is comprised of two identical units has a total factored base year
value of $300,000. One of the units is occupied by the owner of the property as their primary
residence and the other unit is being used as a rental unit. The duplex is sold on May 10,
2021, for $800,000. The owner of the duplex then purchases a single family residence as
their replacement primary residence on May 11, 2021, for $500,000. Under the provisions of
Proposition 19, as long as all other requirements have been met, the new taxable value of the
replacement primary residence would be calculated as follows:
Since both units of the duplex are identical, then the full cash value of the unit that is the
original primary residence is $400,000 ($800,000/2). Since the full cash value of the
replacement primary residence is greater than the full cash value attributable to the original
primary residence unit, the difference between the full cash values is added to the factored
base year value that is attributable to the original primary residence. Thus,
$500,000 - $400,000 = $100,000. The factored base year value that is attributable to the
original primary residence unit is $150,000 ($300,000/2). The new taxable value of the
replacement primary residence is $250,000 ($100,000 + $150,000).
The portion your parents lived in transfered to you if you live in may have a pro-rated exemption. Help us to #FiXProp19 by #RepealTheDeathTax. Download, print, wet ink sign and submit. Signer can be Circulator (witness for self and others). Complete BOTH sections. We need 1.3 million signatures to get on November 2024 ballot. Volunteer and Download petition at ForCalifornians.com or RepealTheDeathTax.com.
