Here’s how Prop 19 flips the script on property tax basis inheritance.
Can you still inherit a property at its existing tax basis under Proposition 19? Prior to Proposition 19, the rule was that when you inherited a property, you’d simply take on that property’s existing tax basis. There was no need for reassessment. As of 2021, however, the rules have changed; unless you intend to use that inherited property as your primary residence, you can no longer adopt its existing tax basis.
For example, if you choose to rent out that inherited property, it’ll have to be reassessed at its current market value, and you’ll then have to pay at that newly adjusted basis. Again, the only way around this is to move into the property yourself and claim it as your primary residence.
Now, there are still a few things that they’re working out with Prop 19. For instance, it’s not quite clear yet what happens if a set of siblings inherit multiple properties. Could they each move into a property and take on its existing basis respectively?
We’re working hard to gather more information regarding these ambiguities as it’s being made available, so please reach out if you have any questions or concerns. We’re always here to be your go-to real estate resource. If you have any other real estate-related needs, you know where to find us!