This is a simple update on the Capital gains tax rates for 2023, see below.

This is a simple update on the Capital gains tax rates for 2023, see below.
As we have written on extensively, Proposition 19, new for 2021 (replacing older propositions 58, 193, 60 and 90), has two main components, portability and inheritance. (Review our many articles on Prop 19 starting here, link to main prop 19 page.)
These two aspects can be combined in some regards, and not combined in others.
For example, if you inherit a property and qualify for Prop 19, and therefore keep that property’s low (prop 13) tax basis, you CAN then sell that property when you are 55 or older and transfer that same low (prop 13) tax basis to a new property. More details below.
The answer to this critical question is in FLUX. The official answer, detailed below, is that the one (1) year deadline is firm, with no exceptions. HOWEVER, as of April 1, 2022, the BOE has used its “Emergency Powers” to enact a common sense answer to this question (allowing additional time to file a claim for Homeowners Exemption, with caveats).
When you inherit real estate and then subsequently sell that real estate, you will likely benefit dramatically from the step-up in basis, aka the step-up in basis or the stepped up basis.
The step-up in basis, what does this mean? If a child or grandchild later sells a gifted or inherited home, they may have to pay capital gains taxes depending on a variety of factors. If a property is inherited, there is a “step-up” in basis of the value of the property (to the value at the time of death) for purposes of calculating capital gains when the property is later sold. The “step-up” essentially provides a higher value of the property when calculating any “gains” as compared to the sales price. The “step-up” can have enormous tax benefits for the heirs that will be lost by gifting property during lifetime.
California Senate Bill 989 defers property taxes for taxpayers claiming Proposition 19 base year value transfers when the county assessor has not completed its determination of the property’s eligibility for property tax relief under that section. Additionally, the property tax bill must contain information regarding Proposition 19 base year value transfers and potential tax deferment in large counties.
The Howard Jarvis Taxpayers Association will go forward with an initiative to restore the right of parents to transfer their home and limited other property to their children without reassessment to market value.
For Prop 19 transfers, the BOE has adjusted the $1 million cap amount to $1,022,600, as required per inflation adjustments.
Simply put, absent an exclusion, an inherited property is subject to reassessment as of date of death. If the property is sold to a third party prior to the Assessor being notified of the death (which is often the case), then the Estate will receive the supplemental assessment and any escape assessments from the date of death until the date they sell the property, often long after the property is sold.
Exceptional news (but don’t hold your breath just yet) – a bill has been introduced in the California Legislature to repeal the costly property tax increases imposed on property owners’ heirs by Proposition 19 (which causes, in most cases, a reassessment of real estate upon the death of the owner, no longer allowing for the long-standing parent-child exclusions)
Yes! Indeed, many owners elect to gift or partially gift their homes to their children now, for many reasons, including current favorable gift tax allowances / exemptions. A gift of equity is a remarkably easy way to allow your child to obtain a traditional loan without any down payment….
Lucas Real Estate
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Devin Lucas BRE No. 01912302 | Courtney Lucas BRE No. 02015514
Real Estate Agents & All Forms of Real Estate Transactional Assistance | Devin Lucas, licensed Real Estate Attorney, Real Estate Broker, REALTOR® | Courtney Lucas, licensed CPA, REALTOR®