We have written extensively on the negative impacts of Prop 19, specifically as it pertains to inherited property and a “death tax” imposed on the new owners. We are seeing, first hand, families having to sell their inherited homes due to Proposition 19’s death tax. Prop 19, the new law in 2021, replaced older propositions 58, 193, 60 and 90, and no longer allows parents to transfer their property tax basis (i.e. the Prop 13 value) to their children, except in limited situations, resulting in dramatic property tax increases for most families who inherit real estate.
(Review our many articles on Prop 19 starting here, link to main prop 19 page.)
An update on the Prop 19 repeal efforts from The Howard Jarvis Taxpayers Association:
The Howard Jarvis Taxpayers Association announced today that nearly 560,000 signatures were collected on petitions to Repeal the Death Tax, less than the 874,641 signatures needed to qualify the initiative for the November ballot.
The results of the all-volunteer, grassroots campaign exceeded HJTA’s previous effort to restore the constitutional right for parents to transfer their home and limited other property to their children without any change to the property tax bill. The taxpayer organization’s 2022 initiative campaign collected more than 402,000 signatures, also in an all-volunteer effort without paid signature gatherers.
HJTA’s proposed initiative aimed to restore the parent-child transfer exclusion from reassessment for a home and limited other property, a right that was removed from the constitution by the fine print of Proposition 19 in 2020.
“Most voters were not aware that Proposition 19 contained a provision that would imperil their own family’s ability to transfer property between the generations without a tax increase,” said HJTA President Jon Coupal. “A $50 million advertising campaign for Prop. 19 emphasized only its benefits for wildfire victims and for seniors moving to a new home.”
The parent-child transfer exclusion from reassessment originally was added to the state constitution in 1986. By that time, eight years had passed since the enactment of Proposition 13, and families inheriting their parents’ property were shocked at the increase in the tax bill when the property was reassessed to market value at the time of inheritance.
In response to political pressure, the Legislature created the parent-child transfer exclusion, passed it unanimously, and put it on the ballot as Proposition 58. Voters passed it with over 75% approval.
“Our polling shows that the parent-child transfer exclusion would pass by the same margin today,” Coupal said. “As more Californians learn about what has occurred, and how this “death tax” provision of Proposition 19 will affect their own families, we believe the political pressure on the Legislature will intensify.”
Sen. Kelly Seyarto (R-Murrieta) previously introduced Senate Constitutional Amendment (SCA) 4, which would restore the parent-child transfer protection to the constitution. SCA 4 was voted down in its first committee hearing despite compelling testimony from witnesses including Los Angeles County Assessor Jeffrey Prang.
SCA 4 was granted reconsideration and could be heard again.
HJTA is currently reviewing all the available data from the initiative effort and considering next steps.
Sources: Howard Jarvis Taxpayers Association
– Devin Lucas
Author Devin R. Lucas is a Real Estate Attorney, Real Estate Broker and REALTOR®, specializing in Newport Beach, Costa Mesa and Orange County coastal communities, serving individuals, Trustees and investors in residential real estate.
Lucas Real Estate – Attorney Devin Lucas and CPA Courtney Lucas – are experts in California intra family transfers using all aspects of Propositions 13, 58, 193, 60, 90 and new Proposition 19. Learn more about how Lucas Real Estate may help your family transfer by clicking here.
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