CA Prop 19 Changes to your Property Taxes

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Filed under: Property Taxes

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This video is a little late – I’m talking about proposition 19, which we voted on it in November and passed. I want to talk about it because of the undeniable impact it has on real estate – particularly property taxes.

Positive Benefits of Prop 19

A few good things that it has done:

Anyone who is over 55 can now transfer your assessed value between most counties in California. Previously, it was limited to just a few counties. That’s a big deal: if you’ve owned a house for years and you’re ready to downsize, then there’s the benefit of taking the lower assessment with you to the new property.

Before Prop 19, you could only move down in value to keep the assessed value. Now, you can move up in value (with a maximum of a million dollars) and still keep the original assessment for property taxes.

Negative Results of Prop 19

The drawback is notable: relating to inheritance. Before Prop 19, if you are inheriting a property, whether you are going to live in it or treat it as an investment property, you were able to bring the original assessed value with the inheritance. In some cases, it was greatly in the favor of the heir – for example, having the original assessment of $100,000 on a property that is now worth $1 million today.

Now, they are going to step up the assessment, unless the person who is inheriting the property is planning to move into it and treat it as a primary residence. There are still ways that might allow people to get around it, but we don’t know what the rules on it are yet.

Prop 19 Will Affect Real Estate

These new rules go into effect in mid-February. If you have a property that might fall into this category, then make sure to talk to an estate planning attorney right away. You might have time to roll it into an LLC or something else to get around the assessment.

Otherwise, if you inherit a property, the assessment will immediately increase to the assessed value at that time.

Any questions? Please reach out any time! I’m not an attorney, but I can refer you to someone who can answer your legal questions. I’m happy to help with mortgage-related inquiries any time.

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