Every time a vote is held, we as Americans and Californians have an opportunity to make our voices heard. This November 2022 we have a chance to put on the ballot a repeal to the tax burden of Prop 19. We encourage you to learn more about what this means for your estate plan and financial future.
What Is the “Death Tax”?
In the context of Prop 13 and Prop 19, the “death tax” occurs a person dies and leaving real property to his or her heirs. It requires property to be reassessed at market value when you die and pass it along to your children or grandchildren. This tax was created when Proposition 19 was approved in November 2020. That vote also repealed Prop 58 and Prop 193.
Proposition 58, passed in 1986, allowed parents to transfer property to their children without being reassessed. The proposition imposed a $1 million limit on the transfer of non-principal property but no limit on the transfer of the owner’s original property. Additionally, the new owner’s taxes were calculated on the original value, as established in Prop 13, instead of the current market value at the time of transfer.
Proposition 193 applied the transfer rules outlined in Prop 58 to property transferred between grandparents and grandchildren. It was passed in 1996.
Prior to Prop 19 going into effect, taxes on most property passed between parents and children and grandparents and grandchildren stayed the same. Since Feb. 2021, however, nearly all property is reassessed to current market value at the time of death. This results in a massive tax bill for children and grandchildren. Many people who voted for Prop 19 had no idea that this would be the result.
The Positive Components of Prop 19
As with many legislative issues and propositions, Prop 19 has several components to it. In addition to the “death tax”, the proposition states that California residents who are 55 or older, those who are disabled, and victims of wildfires or disasters can move three times (previously, the limit was once) and transfer their lower property value to their newly purchased property. This component safeguards these individuals from potential tax increases that wouldn’t allow them to move or possibly even remain in the state.
The push to reverse the negative tax affect of Prop 19 will not reverse these aspects of the proposition. It will only remove the “death tax” affect.
The Reasons to Reverse Prop 19
If the petition to reverse Prop 19 is added to the November 2022 ballot—and the vote passes—the old statutes of Propositions 58 and 193 will be reinstated. That means you can once again leave your property to your children or grandchildren without concerns about a huge property tax bill.
Here are the key provisions of the proposed “Repeal The Death Tax Act” for the November ballot:
1. Reinstates the ability to transfer your home to your children or grandchildren without reassessment.
2. Reinstates the ability to leave $1,000,000 in other real property without reassessment, scaled for inflation, would start at $2,400,000.
3. Preserves all of the positive benefits of Prop 19.
4. Make the tax “fix” retroactive to the date Prop 19 went into affect. This will allow for significant positive estate planning for our clients!
Take Action to Repeal the Death Tax and Reverse Prop 19
Your help is needed to put a stop to the death tax and reverse Prop 19. You can request the petition or donate online.
If we collect sufficient signatures this new Proposition will be on the November 2022 ballot, so we must act quickly. Every signature counts, and this is an opportunity to make your voice heard!
If you’d like to sign the petition stop by our Antioch office and we will have it posted in our waiting room.