How Does California’s Proposition 19 Affect Inherited Property?

Question from l, How Does California’s Proposition 19 Affect Inherited Property?

Answer from AI:

Proposition 19, passed in California in November 2020, significantly changes the property tax rules for inherited properties. It primarily affects how property tax assessments are handled when property is transferred between parents and children or grandparents and grandchildren. Understanding these changes is crucial, especially if you are a disabled person and the sole beneficiary of your brother’s property.

Key Changes Under Proposition 19

Proposition 19 introduces several important changes to property tax rules in California:

• Parent-Child Exclusion: Previously, children could inherit their parents’ primary residence and up to $1 million of other property without a reassessment of property taxes. Under Proposition 19, the parent-child exclusion is limited to the primary residence, and the child must use it as their principal residence to qualify for the exclusion.
• Grandparent-Grandchild Exclusion: Similar rules apply to transfers from grandparents to grandchildren, provided the parents of the grandchildren are deceased.
• Reassessment: If the inherited property is not used as the primary residence, or if it is a second home or rental property, it will be reassessed at its current market value, potentially leading to higher property taxes.

Implications for Disabled Beneficiaries

As a disabled person and the sole beneficiary, you may have specific considerations under Proposition 19:

1. Primary Residence Requirement: If you intend to live in the inherited property as your primary residence, you may benefit from the parent-child exclusion, avoiding a full reassessment of property taxes.
2. Disability Considerations: California law provides certain property tax reliefs for disabled individuals, such as the Disabled Veterans’ Exemption. However, these are separate from Proposition 19 and may not directly impact the reassessment rules.
3. Legal Advice: Given the complexity of property tax laws and the potential for significant financial impact, consulting with a legal professional or a tax advisor is recommended to understand your specific situation and explore any available exemptions or reliefs.

Steps to Take

If you are inheriting property under Proposition 19, consider the following steps:

1. Review the Property’s Use: Determine if you will use the property as your primary residence to qualify for the exclusion.
2. Consult a Professional: Seek advice from a legal or tax professional to understand the implications and explore any potential exemptions.
3. File Necessary Paperwork: Ensure you file any required forms with the county assessor’s office to claim the exclusion or any applicable exemptions.

Resources and Further Reading

For more detailed information, you can refer to the following resources:

• California Board of Equalization – Proposition 19
• California Franchise Tax Board – Property Tax Exemptions

Understanding Proposition 19’s impact on your situation is crucial, and professional guidance can help navigate these changes effectively.