Prop 19 Is Here; Now What?
The Basics of Prop 19
Benefits of the New Proposition
The Negative Side of Prop 19
- Only the principal residence may be covered, and $1 million of the other property is eliminated.
- For the principal residence, the assessed value plus $1 million will not be reassessed (adjusted for inflation starting February 16, 2023).
- Children must file homeowners’ or disabled veterans’ exemption within one year instead of the three years previously, and they must use the home as their primary residence.
- If the current property value exceeds the assessed value plus $1 million, the property will be reassessed at fair market value minus $1 million.
What You Need to Know
- Only one child has to move into the home.
- The child must move into the home within one year of the parent’s death.
- The child must file a claim for homeowner exception within one year of the parent’s death.
- Even if the parent does not own 100%, the $1 million exemption will apply to their share.
- The child must use the home as a primary residence; however, a period of temporary absence is allowed.
- A family farm does not need to be a primary residence.
- If the date of death or transfer is before February 16, 2021, it preserves Prop 13. Of course, proper documents must be filed.
- Gift deeds signed by February 15, 2021 don’t need to be recorded by that date pursuant to a California State Board of Equalization (BOE) memo dated February 16, 2021.
- The $1 million assessed value exemption applies to inheritances and gifts.
How Can You Move and Keep Prop 13?
- Your home purchase or new construction must occur within two years of selling the prior property.
- The older property must be reassessed at the time of sale.
- If the new property costs more than the old property, the difference will be reassessed.
- The two-step transaction, or sale and purchase, only requires that one step is completed after April 1, 2021, according to the State Bar. As stated by the BOE, “The transfer of the base year value must be on or after April 1, 2021, and not the purchase or sale of either the original or replacement property. If the replacement primary residence is purchased or newly constructed on or after April 1, 2021, the primary residence may be sold either two years prior to or after the purchase or new construction of the replacement primary residence and qualify.”
Hope for the Future of Estate Planning
Still Have Questions? Contact Estate Planning Expert Joel A. Harris
For over 30 years Joel A Harris has been protecting the estates of families throughout California. If you need help navigating the ins and outs of protecting your estate, feel free to visit us online, in person or call us by phone at (925) 757-4605.