Will California Prop 19 Affect My Property Transfer or Taxes?

California Prop 19 takes effect on Feb. 16, 2021. If you’re considering a property transfer, you must act now to potentially save thousands in taxes.

Do you plan on leaving property to your children, or are you considering a property transfer this year? 

On Feb. 16, 2021, California Proposition 19 will take effect, and the transfer of property from parent to child will become significantly more expensive. Prop 19 was approved by voters on the November 2020 ballot and will significantly affect tax law in the state. 

You can, however, take steps to save money on your property transfer – if you act now. 

What’s CA Proposition 19?  

When California Prop 19 takes effect on Feb. 16, 2021, home owners will no longer be able to maintain the original tax rate when transferring a property from parent to child. Children who inherit property from their parents will now have to pay taxes based on the current value of the home, when previously they had been able to maintain the original tax rate paid by their parents. 

Prop 19, also known as The Family Home Protection and Fairness in Property Tax Act, changed previous law laid out by Prop 13, a popular, decades-old proposition that allowed parent-child transfers to be excluded from tax reassessment. If the family filed an exclusion with the Los Angeles County Office of the Assessor, they would be excluded from the tax reassessment and be able to maintain the original property tax rate. 

How Will Prop 19 Affect Me? 

The elimination of this provision in the tax law is going to add as much as tens of thousands of dollars to a home owner’s tax bill when inheriting property. 

For example, under Prop 13, if your parents purchased a home for $13,000 in 1932, then as their child, you could inherit the property and pay property taxes on just $13,000. After Prop 19 goes into effect, however, children will have to pay property taxes based on the current value of the house.  

What Can I Do?

If you’re considering the transfer of a property this year, we strongly urge you to contact us as soon as possible. After Feb. 16, the cost of transferring a property to a loved one rises exponentially in some cases, depending on the age and location of the property. 

Will Prop 19 Impact a Family Trust?

Generally, when a parent passes, the trust becomes irrevocable, and a tax reassessment is automatically triggered when the property passes to its inheritor. 

How We Can Help 

It’s crucial that you understand how California Prop 19 will affect you – not just in terms of your property taxes but also the potential capital gains taxes and other unintended consequences. 

The real estate attorneys at The Law Offices of Steffanie Stelnick can guide you through this discussion, but you need to act soon, as the deadline is fast approaching. 

We don’t charge for phone calls, emails or questions. So please contact us immediately.

Let’s look at all your options and determine the best course of action for you and your family.

About The Law Offices of Steffanie Stelnick 

The Law Offices of Steffanie Stelnick is a full-service civil litigation law firm in California that focuses on real estate law, with cases in estate planning, probate, landlord and tenant disputes and contract disputes. Mrs. Steffanie Stelnick represents builders, small and large property management companies, investors, brokers and all types of real property owners. In 2020, she was recognized by the American Institute of Trial Lawyers as Litigator of the Year. Mrs. Stelnick believes all landlords and tenants should know their rights, and when it comes to representation, experience matters. The Law Offices of Steffanie Stelnick has handled thousands of real estate cases with a strong, aggressive approach that ensures all clients operate on an even playing field in a litigation environment. Founded in the Santa Clarita Valley, this premiere real estate law firm has offices throughout the state of California, including Encino, San Francisco and Sacramento.