530-993-4379
Sierra Booster
  • Home
  • Newspaper
    • Latest News
    • Letters to the Editor >
      • Submit Letter to the Editor
    • Old News Archive
    • Photo Tour
    • Events
    • About Us
    • SUBSCRIBE
  • Advertiser Directory
    • Advertiser Press Releases
    • Website Sponsors
    • Advertiser Area
  • Buy Ads - Services
  • Fishing Report
  • Contact Us
  • Admin Log In

Proposition 19 Puts Family Legacies at Risk

1/22/2021

1 Comment

 

 

By Ted Gaines
Word count 645
 
A massive change to property tax law is coming soon that could cost families thousands of dollars a year and affect how parents and grandparents pass down properties through generations. 
 
Proposition 19, passed by California voters last November, makes major adjustments to the “parent-child” and “grandparent-grandchild” exclusions, all to the harm of taxpayers. Prior to Prop. 19, parents and grandparents could transfer their principal residence to a child or grandchild with no value limit and without adjusting the property tax base-year value, meaning that the child or grandchild would not be saddled with a huge new property tax assessment when they became owner. The person receiving the property could live there, rent it out, use it as a second home, or let it sit empty – there were no restrictions on property use to qualify for the exemption.
 
Prop. 19 changes all of that. Once the new law goes into effect on February 16, 2021, the unlimited value provision disappears. The new formula will be the current taxable value of the property plus one-million dollars. This change will hit many coastal property owners in the pocketbook as they inherit or receive property that appreciated wildly in California’s multi-decade housing boom. Modest homes in Silicon Valley neighborhoods owned and transferred by middle-class families will face stratospheric tax bills under the new regime.
 
As bad as that will be, it is another provision that is more likely to cause havoc and financial loss for many Californians. Under Prop. 19, a person receiving property under one of these exclusions must now use the property as their primary residence to qualify. That means if you have moved to a different city, you would have to move back and occupy the home to receive the exemption. It means that if you are happy with your current home, you would have to give it up and move to qualify for the exemption. 
 
The date these changes go into effect is right around the corner. If you are planning on transferring property to a child or grandchild, please be aware of the very different landscape that awaits you and them after February 16. 
 
There are a thousand unanswered questions regarding these changes that are not clarified in the proposition language. What happens if multiple children receive a property but only one makes it a primary residence, for example? What happens if someone qualifies for the exclusion, then moves out of the primary residence for a time, then moves back in? Does the exemption kick back in or is it lost forever? It was an initiative written with little concern for detail.
 
Proposition 19 does provide some new and welcome benefits for California taxpayers, most notably that it allows certain property owners to transfer their base-year tax assessment to all 58 counties. This allows homeowners who want to downsize, move closer to their children, or relocate for any other reason to keep a lower property tax. Prior to Prop. 19, that benefit was only available within counties or in a handful of counties that accepted base-year transfers. Taxpayers can now also use that transfer provision three times instead of the one-time, geographically limited use in prior law. 
 
Although I favor the base-year transfer provisions, I oppose this new tax increase, which will take hundreds of millions of dollars a year from Californians inheriting their family’s biggest asset. But it’s now the law, and as a Board of Equalization Member and taxpayer advocate, I will be seeking to identify every area where Prop. 19 is unclear and am committed to working with the legislature, county assessors, tax professionals and taxpayers to ensure effective administration of this new law.
 
Visit my website at boe.ca.gov/gaines for more information on Prop. 19 and for examples of how the new law would affect passed-down properties. Please consult a qualified attorney or tax professional for advice on transferring any property.
 
Senator Ted Gaines (Ret.) was elected to represent the Board of Equalization’s First District. He is a leading taxpayer advocate and is committed to providing trustworthy and transparent representation for nearly ten million constituents in 30 counties of northern, eastern, and southern California. For more information, visit boe.ca.gov/Gaines.
 
1 Comment
Janet Hayden
2/9/2021 11:04:33 am

Hello Ted,
Is there a requirement that the replacement property be of equal or lesser value than the one being sold in order for tax base to be transferred? For instance, can a homeowner sell a $500,000 property and buy a $1 million property and transfer the tax base of the $500,000 home?

Does the sale and purchase need to be done concurrently in order for tax base to transfer? What if homeowner sells and then rents for awhile while trying to to find another place or build one? Is there a time limit between sale and purchase in order for tax base to be transferred?
Thank you,
Janet

Reply



Leave a Reply.

    Archives

    January 2023
    December 2022
    November 2022
    October 2022
    September 2022
    August 2022
    July 2022
    June 2022
    May 2022
    April 2022
    March 2022
    February 2022
    January 2022
    December 2021
    November 2021
    October 2021
    September 2021
    August 2021
    July 2021
    June 2021
    May 2021
    April 2021
    March 2021
    February 2021
    January 2021
    December 2020
    November 2020
    October 2020
    September 2020
    August 2020
    July 2020
    June 2020
    May 2020
    April 2020
    March 2020
    February 2020
    January 2020
    December 2019
    November 2019
    October 2019
    September 2019
    August 2019
    July 2019
    June 2019
    May 2019
    April 2019
    March 2019
    February 2019
    January 2019
    December 2018
    November 2018
    October 2018
    September 2018
    August 2018
    July 2018
    June 2018
    May 2018
    April 2018
    March 2018
    February 2018
    January 2018
    December 2017
    November 2017
    October 2017
    September 2017
    August 2017
    July 2017
    June 2017
    May 2017
    April 2017
    March 2017
    February 2017
    January 2017
    December 2016
    November 2016
    October 2016
    September 2016
    August 2016
    July 2016
    June 2016
    May 2016
    April 2016
    March 2016
    February 2016
    January 2016
    December 2015
    November 2015
    October 2015
    September 2015
    August 2015
    July 2015
    June 2015
    May 2015
    April 2015
    March 2015
    February 2015
    January 2015
    April 2014
    September 2009

    Categories

    All
    2015
    Sierra County News

    RSS Feed

    Vie
    ​w Old News

CONTACT US:

Sierra Booster Newspaper
PO Box 8
Loyalton, CA 96118
Phone: 530-993-4379
Fax: 844-272-8583
Email: jbuck@psln.com

Website Privacy Policy​
Picture
Local Weather
©Copyright Sierra Booster - Sierra County News - Editorial
Website by Chamber Nation