If an adult child does not live in an inherited house, they could be heavily taxed.
When California residents voted for Proposition 19 in 2020, they were told that benefits would go to wildfire victims and seniors who wanted to move to a new home.
The measure was narrowly approved by voters by 51.11 percent to 48.89 percent.
What residents did not read in the fine print is they gave up the right to transfer family property to children, without an increase in a tax bill.
The proposition eliminated the parent-to-child and grandparent-to-grandchild exemption in cases where the child or grandchild does not use the inherited property as their principal residence, and that includes using the property as a rental house or a second home.
If a property is held in a trust, it offers no protection from reassessment.
Now property that’s transferred from parent to child is reassessed to current market value as of the date of transfer. The new property tax bill is 1% of that current market value, plus all the extra charges for various bonds, fees and parcel taxes.
When the inherited property is used as the recipient’s principal residence but is sold for $1 million more than the property’s taxable value, an upward adjustment in assessed value occurs. Beginning this last February, the $1 million amount would be adjusted each year at a rate equal to the change in the California House Price Index
In 1986, California residents were angry to discover that state law treated death and inheritance as a “change of ownership” under Prop. 13, triggering reassessment to current market value just as if it was a sale. The legislature proposed a constitutional amendment that would allow parent-child transfers of a home and a limited amount of other property, such as a small business or a rental property, without reassessment.
The parent-child transfer protection passed by a unanimous vote in both houses of the legislature, and then was approved by 75% of voters statewide.
And now, it’s gone.
Susan Shelly of the Howard Jarvis Taxpayers Association, said that organization is collecting signatures to put an initiative on the ballot that would repeal the tax increase that was hidden in Prop. 19, without touching the other provisions in it.
The official petition is available at RepealTheDeathTax.com click here and can be downloaded and printed on one sheet of ordinary letter-size paper. This enables instant distribution of the petition throughout the state. Theoretically, a million people could download the petition at the same time, fill it out and sign it, and have one other registered voter in the household also sign it.
Shelly said, “What’s not a good idea is taxing families out of the property their parents worked so hard to acquire.”
“Death Tax” is a misleading nickname made up by people who oppose the bill, the very wealthy. It’s an Inheritance Tax. We’ve always had them. It’s designed to protect the offspring of deceased parents from being taxed out of their homes, as was happening before Prop 13, but after a certain point, after a certain amount of wealth, don’t ask me for the formula, the properties beyond the family home are reassessed and taxed accordingly. This is appropriate because these properties are being leveraged for income by the children that inherited them. Why shouldn’t they be taxed the same as other capitalists who are leveraging property?
This law helps keep family dynasties wealthy at the expense of civil services provided by government that needs tax money to operate the fantastic city, county that you live in.
How many homes do you need to live in? This law rightly keeps children in the family home without a tax increase while fairly taxing them on large amounts of wealth if they inherit it. Repealing the law exacerbates wealth inequality which is already at record levels and doing plenty of damage to our society and our democracy.
Another example of how our fully liberal controlled government is emboldened to blow this smoke past beguiled voters who only hear the news clips and don’t study the whole package.
How can a democracy succeed when we do not have an educated electorate?
If the child who was given a very valuable piece of real estate should not be taxed, why should the person living in a van on the street be?
Labor Unions trading political donations vs tax the public and anything that moves
Prop 19 is yet another factor that contributes to unaffordability of housing in California.
Low/middle income children won’t be able to live in inherited home. If children must rent out the home in order to keep they must charge higher rents to pay the higher property taxes. So this affects renters and owners in California.
Prop 19 pitted parents against children. Very clever proposition. One must research propositions before voting.
How do we get our signature on the initiative?
Sylvia,
Go to the link and you can print out your own petition. You can sign in and any other family member can also sign it and then send it. The Howard Jarvitz Taxpayer Association is working to make this a grassroots effort.
Sue