With the new year comes new laws and rules that take effect. This year, the most talked-about new rules regarding real estate revolve around the approved Prop 19.
Take a quick read to see if you or your family members might be affected by the legal and tax implications.
EXPANDED SPECIAL RULES FOR ELIGIBLE HOMEOWNERS Effective April 1, 2021: Homeowners 55 years of age and older, severely disabled, or whose property was extensively destroyed by wildfire or other natural disasters may be eligible to transfer the taxable value of their primary residence to a replacement primary residence:
  • Anywhere in California
  • Of any value, but with upward adjustments, if a replacement is of greater value
  • Purchased or newly constructed within two years of the sale
  • Up to three times (previously one time), but without limitation for properties destroyed by fire
TAXATION OF INHERITED PROPERTY TRANSFERS Effective February 16, 2021: Prop 19 narrows the rules allowing properties to pass from parent to child and grandparent to grandchild without an increase in the property tax bill. The taxable value can be transferred:
  • To only those properties used as a primary home or farm by the child or grandchild
  • If homeowners’ exemption is filed within one year of transfer
  • If the value of the property is less than $1M over the original tax basis. If the property value, at the time of transfer, is more than $1M over the original tax basis, some upward adjustment in assessed value would occur.
For more information on Prop 19, visit Prop19Attorney.com or boe.ca.gov/prop19.