Prop 19 and Property Taxes in California for Inherited Property

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In November, Proposition 19 passed in California. This Proposition changes the way Prop 13 works, the monumental proposition from 1978 which fixed property taxes in California to 1% of the purchase price plus inflation every year. Essentially, this proposition allows seniors, victims of natural disasters, and disabled individuals the ability to transfer their property tax basis anywhere in the state. This means that many elderly people who could not afford to move due to their property taxes increasing when they buy a new home will now be able to bring their old tax basis with them to a new home in California. With this in mind, the individuals protected by this proposition may be more interested in moving, which will help free up some of the inventory and give buyers more options when it comes to purchasing a home.

At first it seems like a good idea... till you get to the part where they increase property taxes. Prop 19 gets rid of the parent-child exclusion in a huge way that will hurt long term real estate investors. Any inherited investment property will be reassessed to current market value rather than inheriting the tax basis from when the property was originally purchased. This means that people who inherit investment property will have to pay more in property taxes, typically a lot more

 There are a lot less exclusions in Prop 19 than in the old Prop 58 which created the parent-child exclusion. In the example in this article, a girl who received an inherited primary residence and one investment property from her family had the total property tax bill go from $12,500/year under the old rules to $62,500/year under the new rules. That is an extremely high jump! How can that girl expect to hold on to her family property under those circumstances? 

My question today is: how can people who invest in real estate in California structure property transfers to their heirs to avoid massive reassessments like in the example above? What can people do to preserve their family assets, land, and investment property?

I am investigating this myself.  I have parents in CA that own rental property and their personal residence.  I have not seen any good solution yet to avoid having property reassessed. 

If I don’t create an irrevocable trust as my attorney is suggesting and I miss the February deadline on Prop 19, maybe I can 1031 exchange my two investment properties out of California before I die. 
Is that a viable option? I don’t use either as a primary residence.  The equity in them  is over $2M total.  I do have mortgages for about 50%. 

I am investigating this myself.  I have parents in CA that own rental property and their personal residence.  I have not seen any good solution yet to avoid having property reassessed. 

Another good example of government sanctioned theft, in addition to why people in CA are moving to Texas.  You would figure that if the government could qualify dead people to count as a vote, that at that least we could use our dear loved ones to qualify as home owners even after they have passed.  Oops...forgot about the unspoken double standard...my mistake.

Originally posted by @Deanne Bourne :

If I don’t create an irrevocable trust as my attorney is suggesting and I miss the February deadline on Prop 19, maybe I can 1031 exchange my two investment properties out of California before I die. 
Is that a viable option? I don’t use either as a primary residence.  The equity in them  is over $2M total.  I do have mortgages for about 50%. 

 Time is of the essence if you are going to 1031 exchange.  Biden's tax plan is set to eliminate the 1031 tax exchange.