The deadline for completed real estate transfers that would not be subject to the new exclusion rules lapsed several months ago.
It appears that initiatives to delay the enactment of many provisions within Proposition 19 until February 2023 have not gained significant traction among California’s lawmakers thus far.
To review, Proposition 19 caps the exclusion on paying property taxes that, through 2020, had been available to homeowners and farmers. Also, there is no longer any exclusion available for investment properties. Property other than the family home and farm are fully taxable.
Proposition 19 applies to real estate transfers between parents and their children or grandparents and their eligible grandchildren. Transfers between spouses remain fully excluded. Other property tax breaks may be available as well.
As a reminder, a transfer of real estate includes both probate and non-probate changes in ownership of real estate.
Estate planning is even more important in the wake of Prop 19
The California property tax system can be very complicated especially in the wake of Proposition 19. Someone wanting to make sure the tax burden on their loved ones is as low as possible should consider speaking with an experienced estate planning attorney.
Estate planning will still be an important task for people of all ages and states of life even after Proposition 19.
Most obviously, although real estate frequently constitutes the largest share of a Bay Area resident’s portfolio, many people have considerable wealth stored in retirement plans and other assets.
The status of Proposition 19 remain in flux. It is also still a new law that everyone in San Jose and throughout the state, including professional estate planners, still have to digest. Even so, careful estate planning, done well in advance, can minimize any negative impacts.