I voted NO on this proposition, it sucks. I did not like the prop 19 negative impact on inheritance to begin with, and realize taxpayers are again getting played with another pitch of ‘do it for first responders, the kids, the schools’… This one seems to be a Prop 13 overkill and I bet there’s more to come.
Mom and Pop landlords who plan for their kids to be the same may consider raising rents more aggressively to absorb any future property tax consequences. This would depend on asset planning though. Low rents to minimize turnover may not be considered as much. Therefore, I think SD will be more expensive due to prop 19. Higher rents may cause more renters to become home buyers, reduce MOI etc… When we normalize after Cov 19, I predict in 18 months most will realize this prop 19 impact.
Here is an email I just received from a law firm I used recently, which I’ll contact soon because of prop 19. Figured some of you may find this bit information to be useful:
Urgent! California Property Tax Laws Changing and What You Can Do to Protect Your Family
Do you have appreciated California real estate that you plan to leave to your children? If you’re hoping they will keep your low property tax basis, please read on – this is extremely time sensitive.
California’s Proposition 19, passed earlier this month, has dramatically changed how you can leave or give California real estate to your children. Effective February 15, 2021, most gift, trust, or inheritance transfers of real property will trigger reassessment, resulting in your children incurring much higher property taxes for all the years they will own the property. We can help you protect your property from this costly reassessment if you schedule an appointment with us as soon as possible.
This change affects both your principal residence and your investment property.
If your home is worth less than a million dollars over its assessed value AND you’re sure one of your children will live there, you don’t need to make a change. But if your home has appreciated by more than a million dollars OR if your children might not want to make it their primary residence, it is urgent that you make an appointment with us.
If you have investment property — regardless of its value — that you’d like your children to keep, it’s important that you meet with us to preserve their ability to benefit from the rental income without paying the bulk of it to the county each year in property taxes.
If you expect that your children will liquidate whatever real estate you leave them, you don’t need to make a change. But if you expect that they will keep it, please contact our office as soon as possible to discuss your options. WE NEED TO FILE ALL CHANGES BY JANUARY 30, 2021, SO TIME IS OF THE ESSENCE. The attorney in our firm who will be counseling on this issue is (OMITTED). Her counseling fees will be billed hourly at $375/hour, billed to the tenth of the hour, and then the transfers will be done on a flat fee basis.
Our office is closed for Thanksgiving, but will reopen on November 30, 2020. In the meantime, have a wonderful Thanksgiving…even though this has been a tough year, I hope you find plenty to be thankful for. We are very thankful for your trust and confidence in our firm!
