Opinion: CA's Death Tax needs to kick the bucket
Howard Jarvis Taxpayers Association says it's about time Prop 19's “Death Tax” (which spikes up taxes on inherited/transferred property by reassessing at market value) shuffles off its mortal coil, instead of swiping more of residents' hard-earned money. In the Globe, HJTA breaks down Prop 19 and how it wrote over valuable protections in Props 58 & 193.
In 2020, Proposition 19 resurrected the Death Tax on families whose property is left to loved ones when they die, putting their homes, property and businesses at significant risk. While the initiative was cleverly disguised as a benefit for the elderly and disabled communities, Proposition 19 caused far more harm than good. …
Howard Jarvis Taxpayers Association elaborates on how Proposition 19 hurts taxpayers:
Proposition 19, had two main elements. The first was expanded “portability” of base-year property taxes. Homeowners who are 55 years of age or older, who are victims of a wildfire, or who are disabled may now move to a replacement home anywhere in the state, of any value, and take the base-year property tax assessment of the old home with them to a new home up to three times.
Now to the other part of Proposition 19. Previously under the state constitution, property transfers between parents and children, and sometimes grandparents and grandchildren, were excluded from reassessment. These family members could transfer a home of any value and up to $1 million of assessed value of other property, such as a small business property, a vacation cabin, or a rental property, without any increase in the property tax bill. This taxpayer protection was added to the state constitution in 1986 by Proposition 58 (parents and children) and in 1996 by Proposition 193 (grandparents and grandchildren) with overwhelming public support.
Proposition 58 was approved by more than 75% of California voters, and Proposition 193 was approved by nearly the same margin. Now, these taxpayer protections are gone.
Proposition 19 has replaced 58 and 193 with a very narrow exclusion for family transfers of property. Only a principal residence that the inheriting child occupies as his or her permanent primary residence is eligible for an exclusion from reassessment. Unless the new owner can move in within one year, the property is reassessed to market value. Business properties and rental properties lose the protection entirely.
This article originally appeared in the California Globe. Read the whole thing here.
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