In November 2020, voters approved Proposition 19 (Prop 19) in California and contained two relevant California property tax changes that may impact your estate planning and ownership of real estate.
Lost a home in a natural disaster? Transfer your tax assessment to a new home beginning April 1, 2021
Proposition 19 expands the class of people who qualify for tax transfer of their taxable assessment value from their current home to a new property. The new law, which takes effect on April 1, 2021, expands the class of homeowners who can transfer their taxable value to include wildfire victims or victims of other natural disasters, regardless of age or disability status, as well as with taxpayers who are age 55 or older The new home’s tax value will be added to the current tax assessment if the new home is more expensive. A transfer like this can be done three times, and homeowners have two years to sell their current home and buy a new one.
How Moskowitz LLP can help you: Homeowners must apply for the benefit by filing a claim with the assessor that provides the statutorily required information.
Further, if you have been the victim of a natural disaster, you may be eligible for certain tax positions. Please find more information: California Wildfire Tax Tips and Disaster Casualty Losses. Also, any rules enacted by the California State Board of Equalization must be followed and we can assist you to make sure you’re in compliance.
- What California’s Proposition 19 means to your Estate Planning: Parent-Child real property transfers Prior to proposition 19, family members could transfer real estate, and the property value would not be reassessed. They could also transfer other rental or commercial properties and exempt up to $1 million of the assessed value. Beginning February 16, 2021, the effective date for this portion of proposition 19, children who inherit real property from their parents will be subject to property tax reassessment. If the child chooses to keep the real property and uses it as the primary residence, up to $1 million of the reassessed value will be excluded from the new property tax basis. However, if the child chooses to keep the property as a second home, vacation home, or rental property, there is no exclusion and property taxes will be reassessed at current market value.
How Moskowitz LLP can help you: Those intending to transfer ownership of California real property utilizing the parent-child exclusion from property tax reassessment should consider completing such transfers before February 16, 2021. Numerous irrevocable trusts and estate planning structures that would have allowed a parent-child exclusion from property tax reassessment will no longer be valid after February 16, 2021. With transfer exclusions severely limited after February 16, 2021, you should consider consulting with your tax and estate planning attorneys who can advise you on alternative planning structures, such as the use of business entities to acquire, hold and transfer real property that are unaffected by Proposition 19 and may allow for continued property tax savings. We can assist you to plan a strategy that is right for you.
Real Estate Tax Attorneys at Moskowitz LLP
Our Real Estate Tax Group is headed by Joseph M. Bray. When dealing with the county assessor’s office and recorder’s office it is important that the proper documentation is prepared and filed correctly to reflect the relevant property tax exclusions that may be applicable to your matter in order to avoid a potential re-assessment. If a dispute over a re-assessment does arise or you believe that your property has not been assessed correctly whether due to a change in ownership, new construction, or an increase in your annual assessment we can review your matter and advise you on how best to proceed. If necessary, we can file an appeal with the assessment appeals board and represent you before the appeals board.
Moskowitz LLP is a tax law and accounting firm that has dedicated over 30 years to representing individuals and businesses with civil and criminal tax problems, cleaning up accounting and tax messes, providing estate planning, and real estate tax law and tax and accounting advisory services. We make it easy and affordable for you to set yourself up for lower taxes and success.
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