California proposition 19 was passed in November 2020 and took effect in September 2021. The proposition is becoming more unpopular as more people are affected by it or look closely at it. The Howard Jarvis Tax Payers Association calls it a death tax that should be repealed.
California Proposition 19 provides two exclusions limiting reassessments for inherited property:
- If the property is transferred between parents and children and one or more of the children occupy the home as their principal residence, the reassessment is limited. The value limit equals the property’s taxable value (factored base year value) at the time of transfer plus $1 million. If the market value exceeds this limit, the difference is added to the taxable value.
- If the property is a family farm (under cultivation) or is used for grazing or to produce an agricultural commodity, there is no requirement that the property must have a house that the transferee lives in.
Previously, California state law (propositions 58/193) did not set a value limit on the transfer of a principal residence, and the transferee did not have to use it for his principal residence. Since the proposition was promoted as “home protection for victims of wildfire”, many are now calling it bait-and-switch.
Proposition makes it more difficult for the average citizen to create a multi-generational family home or family business.