How to avoid Property Tax reassessment California prop 19?

After a vote in November 2020, California decided to implement a new law called prop 19 to change all the benefits received by those in need of real estate.

But it was not until April 2021 that all preparations were completed, and the law implemented in California. However, it depends on the component of the type of measure.

What is the famous proposition 19?

It is also known as the protection of property inheritance; it is a law to protect the homes of the elderly, disabled in serious condition, and families victims of wildfire or natural disaster.

It has the function of renewing and placing new limits for all kinds of benefits generated by the property tax, which is for inherited family property.

That is to say, by this law, a child can keep the lowest tax base on the property of his parents. But it only applies to premises that are the primary residence of the parents.

It also means that the child needs to register the property as being their main residence within one year.

What is the transfer of the tax base according to proposition 19?

It explains that a property owner over 55 years old, disabled, or who has been a victim of a natural disaster or wildfire has all the possibility to transfer the entire value of the property of lower value, after assessment.

But they can only replace it by a main residence that has been recently purchased or built. Although in some cases, they may also accept newly constructed natural disaster homes.

However, the problem is that the new proposition 19 will affect three programs that already existed previously. Parent to child transfer, grandparent and grandchild transfers, tax base transfer for elderly or intended disaster relief.

How can revaluation be avoided?

If you intend to avoid this revaluation at all costs, the first step is to be aware of all the scenarios that cause it, thus avoiding them and being able to live in peace with the law.

The first case, and the one that affects the most, is the direct transfer of a real estate property by a lifetime or testamentary donation, that is to say, inheritance. It can also be caused by sales that are considered an exchange of property.

The best advice is that both parties must have been full property owners for at least one year before death.

In turn, the property should have been their primary residence for one year before the death, and whoever is left alive must keep the entire property and not divide it between third parties.

Moreover, the owner who will keep the property must sign an Affidavit of Continuing Residence.

You could also create an LLC and transfer all the property there so that you can then gift the institution’s interest to your descendants, for them to receive the ownership of the property. But you cannot transfer more than 50% of the interest to the LLC.