Taxes and Property Taxes (Proposition 13, 60, 90, 58, 193 and Proposition 19)

Proposition 19 Interplay With Inheritance and Portability (55 and Older Transfer) – A Way to Make BOTH Aspects of Prop 19 Work For You

August 16, 2023
devinlucas

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.

What Happens If I Cannot Meet the One Year Deadline to Move In and File the Claim for Homeowners’ Exemption or Claim for Reassessment Exclusion Under Prop 19?

August 16, 2023
devinlucas

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).

Image of a tax return and cup of coffee.

Step-Up In Basis Explained

August 16, 2023
devinlucas

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.

legal gavel with the words "new law" in front

New State Law Provides Deferment of Property Tax for Certain Eligible Prop 19 Transfers Awaiting A County Response

May 22, 2023
devinlucas

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.

HJTA announces initiative to “Repeal the Death Tax”

May 22, 2023
devinlucas

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.

Prop 19 Inflation Adjustment: Intergenerational Transfers Exclusion Amount Adjusted to (Only) $1,022,600

May 10, 2023
devinlucas

For Prop 19 transfers, the BOE has adjusted the $1 million cap amount to $1,022,600, as required per inflation adjustments.

Trustees and Executors Beware: Proposition 19 Supplemental Property Tax Bills and Escape Property Tax Bills Are Coming Post Sale! Ensure to Account For These Bills Prior To Distributions.

April 6, 2023
devinlucas

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.

Prop 19 Action Alert!: “Repeal the Death Tax” Bill Introduced in the Legislature (To Remove The Death Tax Increases Imposed by Proposition 19)

March 10, 2023
devinlucas

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)

Can I Sell My House To My Child (Or Anyone) Below Fair Market Value? / Can I Do A Gift Of Equity?

February 11, 2023
devinlucas

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….

tax time graphic with calculator in front

2023 IRS Taxable Gift Exclusion Amount Raised To $12,920,000 Per Person / Reportable Exclusion Raised to $17,000 Per Person – 2023 Is A Great Year To Gift Real Estate

January 25, 2023
devinlucas

Good news for those seeking to gift or inherit real estate in 2023, the IRS applicable taxable exclusion amount for gifts (the total amount exempted from gift and/or estate tax) is raised to$12,920,000 ($12.92mm) per person, or $25,840,000 ($25.84mm) for a married couple filing jointly.

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