This year, voters in California passed Prop 19, which potentially can changes the financials in a positive way of your next home sale or purchase. The proposition will go into effect in mid-February of 2021, so below is a summary of details. Some things the legislature will still have to interpret some of the language.
All reassessment exemptions for inherited properties only apply if the property is used as a primary residence by the child (or sometimes grandchild) or used as a family farm. In cases in which the current market value of an inherited property exceeds the parent’s taxable value by more than $1M, the child’s taxable value will be assessed at the current market value and reduced by $1M. The State Board of Equalization will adjust the $1M amount of inflation beginning February 16, 2023, and every two years thereafter.
As of April 1, 2021, previous restrictions based on location will be removed, allowing eligible (meaning people over age 55, victims of wildfires or other natural disasters (and the severely disabled) homeowners to do a few things. First, they can utilize the transfer multiple times; they can transfer the taxable value of a property up to three times in their lifetime. Natural disaster/wildfire victims will be allowed to transfer once. The language around what constitutes a natural disaster still needs to be defined.
This group can also purchase a property of higher value, meaning the tax bill will go up but by a lower amount than for other buyers. And, finally, they can also move anywhere in California by transferring the taxable value of a primary residence anywhere in the state within two years of the sale of the original primary residence.
If you’re interested in the details of Prop 19, here’s a great resource from the California Association of Realtors that might answer all of your questions!