What you need to know about Prop. 19

In November, California voters narrowly approved Prop. 19, which gives breaks to older homeowners and also increases taxes on some inherited and gifted family properties. Depending on your situation, it could be a cost-saving or cost-incurring tax change for you and your heirs! 

Here's a brief overview of the changes coming and when they'll go into effect:

Feb. 16 - Intergenerational transfer

• - A home gifted by parents or grandparents must be the heir’s primary residence.
• - In the case of the above, the taxable value of the property will remain the same, as long as it's not more than $1 million over the original tax basis.
• - If the heir rents out the property, they lose the inherited tax basis.

April 1 - Tax basis portability

This allows homeowners who are 55 and older, or severely disabled, or who lost their primary residence in a natural disaster to transfer the primary property’s taxable value to a replacement property anywhere in California. This will likely encourage older homeowners to sell, thus increasing the inventory of homes in markets like ours where supply is short.

If you want to learn more about Prop. 19, this is a handy guide with some more details.

As a reminder, we're not tax professionals! If you have tax-related questions about your particular situation, consult your CPA, real estate attorney, tax advisor, or estate planner.

I'd be happy to point you in the right direction if you need help!