Amendment 9: An Attempt to Reinstate the Tax Protections for Inherited Property
Amendment 9: An Attempt to Reinstate the Tax Protections for Inherited Property
By: D. Keith Dunnagan, Esq. and Allison Blake, 2L
June 8, 2021
Many people who inherit their family homes, businesses, and investment properties will no longer be able to afford the property taxes. Proposition 19, passed in November 2020, limits the protections provided by Proposition 58 and 193 for those who inherit property from their parents and grandparents. Assembly Constitutional Amendment 9 seeks to reinstate the protections given by Proposition 58 and 193.
History
In 1978, Proposition 13 was enacted to protect California property owners from the rise of property taxes. The proposition allows property taxes to be assessed by their 1976 value and restricts the annual increase in property taxes to an inflation factor that cannot exceed 2%. It further declared that a reassessment of property taxes can only be made when there is a change in ownership of the property, or when there is construction done to the property.
However, children who inherited their parent’s property struggled to pay the increase in property taxes when they received the property. The passage from a parent or grandparent to the child was a change in ownership, so the property taxes would be reassessed upon the transfer.
Propositions 58 and 193, passed around 20 years ago, were enacted to protect children receiving property from their parents and grandparents from the increased property taxes. Proposition 58 declared that change in ownership did not include the transfer of property between parents and children. Proposition 193 had the same effect but was for the transfer of property from grandparents to their grandchildren. These two propositions allowed people to enjoy their inherited family homes, businesses, and investment properties without having to pay the increased property taxes.
Proposition 19
On February 19, 2021, Proposition 19 came into effect. Although part of the proposition protects seniors, victims of wildfires, and disabled persons from paying increased property taxes after moving to a new property, the proposition essentially gets rid of the protections provided by Propositions 58 and 193. One of the unintended consequences was that transfers of property between parent and child and grandparent and grandchild would be reassessed for property tax purposes if the property was not the primary residence of both the transferor and transferee.
Consequently, businesses, investment properties, and homes that the person does not plan to live in will be subject to property tax reassessment upon transfer. This may severely affect the person’s ability to keep the transferred property, as the property taxes may be too high.
Assembly Constitutional Amendment 9
Amendment 9 seeks to reinstate Propositions 58 and 193. Any property transferred from a parent/grandparent and their child/grandchild would not be subject to property tax reassessment. This allows more people to keep their family businesses and investment properties. People will be able to hold onto their family businesses, investment properties, and homes they do not live in without facing the ever-increasing property taxes in California.
The information presented in this article is not to be taken as legal advice. Every situation is different. If you are facing a legal issue of any kind, get competent legal advice in your state immediately so that you can determine your best options.
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Amendment 9: An Attempt to Reinstate the Tax Protections for Inherited Property
By: D. Keith Dunnagan, Esq. and Allison Blake, 2L
June 8, 2021
Many people who inherit their family homes, businesses, and investment properties will no longer be able to afford the property taxes. Proposition 19, passed in November 2020, limits the protections provided by Proposition 58 and 193 for those who inherit property from their parents and grandparents. Assembly Constitutional Amendment 9 seeks to reinstate the protections given by Proposition 58 and 193.
History
In 1978, Proposition 13 was enacted to protect California property owners from the rise of property taxes. The proposition allows property taxes to be assessed by their 1976 value and restricts the annual increase in property taxes to an inflation factor that cannot exceed 2%. It further declared that a reassessment of property taxes can only be made when there is a change in ownership of the property, or when there is construction done to the property.
However, children who inherited their parent’s property struggled to pay the increase in property taxes when they received the property. The passage from a parent or grandparent to the child was a change in ownership, so the property taxes would be reassessed upon the transfer.
Propositions 58 and 193, passed around 20 years ago, were enacted to protect children receiving property from their parents and grandparents from the increased property taxes. Proposition 58 declared that change in ownership did not include the transfer of property between parents and children. Proposition 193 had the same effect but was for the transfer of property from grandparents to their grandchildren. These two propositions allowed people to enjoy their inherited family homes, businesses, and investment properties without having to pay the increased property taxes.
Proposition 19
On February 19, 2021, Proposition 19 came into effect. Although part of the proposition protects seniors, victims of wildfires, and disabled persons from paying increased property taxes after moving to a new property, the proposition essentially gets rid of the protections provided by Propositions 58 and 193. One of the unintended consequences was that transfers of property between parent and child and grandparent and grandchild would be reassessed for property tax purposes if the property was not the primary residence of both the transferor and transferee.
Consequently, businesses, investment properties, and homes that the person does not plan to live in will be subject to property tax reassessment upon transfer. This may severely affect the person’s ability to keep the transferred property, as the property taxes may be too high.
Assembly Constitutional Amendment 9
Amendment 9 seeks to reinstate Propositions 58 and 193. Any property transferred from a parent/grandparent and their child/grandchild would not be subject to property tax reassessment. This allows more people to keep their family businesses and investment properties. People will be able to hold onto their family businesses, investment properties, and homes they do not live in without facing the ever-increasing property taxes in California.
The information presented in this article is not to be taken as legal advice. Every situation is different. If you are facing a legal issue of any kind, get competent legal advice in your state immediately so that you can determine your best options.
Recent and Popular Articles From Our Blog:
2020 Blogs:
- April 28 – A New Reality – Temporary or Permanent – Virtual Showings and Disclosures
- May 22 – Servant Leadership
- June 8 – Paycheck Protection Program Flexibility Act is Enacted
- June 10 – Impact to Credit Score After Filing Chapter 7 Bankruptcy
- June 26 – SBA Rolls Out Updated PPP Loan Forgiveness Application
- July 2 – Understanding the Home Equity Sales Contract Act 2020
- July 14 – Governor Rolls Back Re-Opening
- August 4 – August 2020 COVID-19 Update
- August 18 – Status Of Selected California State Operations re: COVID-19
- September 1 – COVID Update on Foreclosures and Evictions
- September 3 – State Passes AB 3088
- September 15 – Update on PPP Forgiveness and Impacts
- November 10 – Changes to the Fair Housing and Discrimination Advisory CAR Form
- November 24 – In a Season of Difficulty – We Choose Gratitude
- December 15 – Cal/OSHA Issues New COVID Prevention Rule
2021 Blogs:
- January 5 – Introduction to New Laws 2021
- January 26- Rain and the Prevalence of Failure to Disclose Claims
- February 2 – California Enacts COVID Tenant Relief Act (SB 91)
- March 9 – Understanding the Trust Exception to Real Estate Disclosures
- April 20 – Cash for Keys and SB 91
- May 4 – Help! Tenant Won’t Cooperate with Sale of Home
- May 11 – California Passes AB 80