California Prop 19: Property Tax Law and Family Homes

Photo by The Lazy Artist Gallery

California Prop 19, defining the amount of your property taxes, passed in the recent election. As the holiday season approaches (and we’re getting closer to the date it will take effect - 2.15.21), we’ve got the pros and cons about passing on your family’s homes and properties to your kids.

— Pro: Homeowners 55+ or victims of wildfires and natural disasters can take their favorable tax rate on their home when they move, up to three times, in the state of CA.

— Con: Children inheriting property and not using it as their primary residence within a year will be taxed at the property’s new market value, not at the original purchase price. 63% of inherited properties were being used as second homes or rentals as a tax break for families.

— Pro: If they do take it on as their primary residence, the tax valuation is capped at $1M over the original value.

— Con: Most middle class families have their money tied up in their homes and now parents or children may be forced to sell those homes to avoid the taxes.

— Silver Lining: 75% of the billions raised will go to “generating much needed revenue for schools, fire districts, cities and counties as they face budget shortfalls due to the harmful economic impact of COVID-19.”

If you have any questions or would like more information on Prop 19 we would be happy to help!