Why prop19 should pass

But under Prop. Provost is hardly alone. Tax and estate lawyers are fielding calls from California clients whose plans have been upended by Prop. Assets transferred before death lose this potentially large tax break. President-elect Joe Biden has proposed eliminating the step-up in basis, although whether he could do so, especially if Congress remains divided, is questionable.

Kathleen Pender is a San Francisco Chronicle columnist. Email: kpender sfchronicle. Most Popular. Yalonda M. More on Prop. Here are the details. No easy answers to questions on Prop. Top of the News. Remember, if no gifting of property occurred, the property taxes would only increase in value when the second parent dies. Until then, Proposition 19 has no impact on families. Therefore, gifting now could save the children from paying increased property taxes after the second parent dies, but these property tax savings may never equal the additional income taxes that would need to be paid upon the sale of the property by the children.

If one parent has already died and, as a result, the property received a step up in basis, a lifetime gift could be a very good choice. Also, if we know that a California non-income producing property that is being gifted will never be sold during the lifetime of the child for example, vacation homes and cabins that will remain in the family for decades , then lifetime gifting would be most appropriate prior to February 16, However, if a property is an income-producing property that is never going to be sold, the decision becomes a little more difficult because getting a step up in basis will give the child the ability to shelter more rental income using the higher depreciation number.

Avoiding the increase in property taxes will probably win out in this scenario when the math is actually performed. But it is a case by case analysis.

Lara Gilman. Anthony Vecino. Mark Weaver. Published In: Fair Market Value. Property Owners. Property Tax. Property Valuation. Real Estate Transfers. Tax Assessment. Commercial Real Estate. Residential Real Estate.

A If a transfer by deed is completed before Feb. The appraisal must be done by the time the gift tax return is filed April 15, D You will not be able to take the property tax basis of your transferred home with you to your next home. They can evict you. H Your children will not get the step-up in income tax basis at your death.

This can be significant. Maggie bought the home next door for the same price and it has the same value. A A sale of property to your child in exchange for a promissory note is a change of ownership for property tax purposes and the current parent-child exemption applies to avoid property tax reassessment.