Proposition 19 passed- Important info on tax changes concerning the property tax exclusion for transfers between parent and child
With Proposition 19 recently passing (and taking effect February 16, 2021), the good news is the increased flexibility for those over age 55 to transfer their property tax base to a new residence, even if it is more expensive (but with some adjustment for a more expensive property). The downside is that Proposition 19 effectively eliminates the property tax exclusion for transfers between a parent and child (and grandchildren in certain cases).
Under current law, parents can transfer their primary residence of any value to their children without any property tax reassessment. Also under current law, a parent can transfer up to $1 million (based on the assessed value, not fair market value) of other real estate without property tax reassessment. After Proposition 19, the exclusion is eliminated entirely for real property other than a primary residence. Further, the exclusion for the transfer of a primary residence is now limited both in amount and by requiring that child use the property as his or her residence.
If you own real properties that you want to keep in your family beyond your generation, I highly encourage you to contact your Estate Attorney to see if any pre-emptive planning can be accomplished. This property tax benefit will be gone after February 15, 2021.
My wife is an estate planning attorney and is very knowledgeable on this subject and has been emphasizing to me the significance of this change in the law. If you have questions, please feel free to contact me.