Sowmya Dubba

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California’s Prop 19 Changes Parent-Child Property Tax Assessments In November 2020, California voters passed Proposition 19, which, in part, limits the ability... to avoid property tax reassessment when property passes between parents and children. In November 2020, California voters passed Proposition 19, which, in part, limits the ability to avoid property tax reassessment when property passes between parents and children. Before Proposition 19, a principal residence of any value and up to $1,000,000 of taxable value of other real property could pass between these family members without being reassessed for property tax purposes. This reassessment exclusion could save property-owning families substantial property taxes, year-after-year, for properties passed from parent to child or child to parent. Prop 19 severely limits this benefit. After February 16, 2021, to claim a reassessment exclusion, the property being transferred must be the transferor's principal residence, and the recipient must claim it as a principal residence within one year of transfer. The exclusion will also have a value limit of the current assessed value plus $1,000,000. If the fair market value exceeds this amount, a reassessment will occur for the excess amount. Example: Parents own a vacation home worth $750,000. Each year, they pay property taxes based on the home's purchase price when they bought it in 1990--$100,000, plus an annual increase of 2%, resulting in the parents’ taxable value of approximately $200,000. Before Prop 19, when the parents transferred the vacation home to their child, there could have been no property tax reassessment, and the child would continue to pay property taxes based on the parents’ taxable value, plus the allowed annual increase. However, under Prop 19 the transfer from parent to child of a vacation home triggers a property tax reassessment. The child will pay property taxes based on the vacation home's value at the transfer date ($750,000) rather than the parents’ taxable value ($200,000). Example: A parent's principal residence has a taxable value for property tax purposes (that is, the base year value, plus annual increases) of $200,000. When the parent dies, the property passes to the parent's child and becomes the principal residence of the child. The property now has a market value of $2,000,000. Under Prop 19, the child may claim the parent-child exclusion from reassessment. Yet, because the exclusion has a value limit of the taxable value plus $1,000,000, the exclusion will not cover the increase in value above $1,200,000 (the parent’s taxable value of $200,000, plus $1,000,000), and the child’s property taxes will be based on a taxable value of $1,000,000 (that is, the $200,000 plus $800,000 not covered by the exclusion). Similar rules apply to transfers from a grandparent to a grandchild if the grandchild's parents are deceased. Contact your county assessor for instructions and forms for claiming reassessment exclusions. Effective date: February 16, 2021

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SUNNYVALE A major transformation of downtown Sunnyvale is pushing forward with the next phase of the CityLine development in the city’s urban core following a final city approval, the project’s developers said Wednesday.