“Whenever politicians start naming tax laws after themselves, we are definitely not on the road to simplicity. It crosses some kind of line.” H.L Mencken

In November of 2020, Proposition 19 was passed. Known as the “Home Protection for Seniors, Severely Disabled, Families and Victims of Wildfire or Natural Disasters Act.” It went into affect in February of 2021.

According to James Burns, an estate planning attorney from his 2023 blog:

“One of the key provisions of Proposition 19 is that it limits the ability of children to inherit their parents’ home without triggering a reassessment of the property tax base. Under Proposition 19, if a child inherits a home from their parent(s) and does not use it as their primary residence within one year, the property tax base will be reassessed to the current market value.”

REASSESSMENT. Even though there are workarounds, you are essentially looking at a higher tax rate for the property you are leaving to your children. I am not an attorney or an accountant, so I suggest that you speak to your own attorney and accountant to see how this measure affects you. There appear to be ways to avoid the reassessment, but the best idea is to be proactive and consult with your real estate attorney and your CPA now so that you can plan for the the future inheritance of your property. You need to know how this will affect not just your residence, but your multi family investment properties as well.

WORKING WITH YOU. The Howard Jarvis Taxpayers Association has been collecting signatures to repeal this “death tax” . The Association www.hjta.org is a good source for property owners trying to get costs at bay and are always keeping up with the latest proposed legislation.

WHAT TO DO. As I said before, check with your attorney and CPA. Make sure you have your properties in the entities that are correct for you, which may involve setting up or creating an LLC , a C Corp or a living trust. I have had professionals advise me and everyone should, at the very least, know their options.

“Don’t tell me how rocky the sea is, just bring the ship in.” Lou Holtz

What we at PRS PROPERTIES CAN DO. We can give you a good idea of the current value of your building. We can suggest changes you might want to make before sale to give you an idea what type of building you would be able to exchange into. You may decide to stay in the rental business. We are always available to chat. We can give you referrals for professionals, such as lenders, contractors, and engineers, so that you can decide who you feel best with. We can supply you with rent and sale comparables in the area of your properties, so that you know what rental values are in your area. It is important that you know the true value of your rental units, so that you can get them rented right away at market value, or at least as much as possible with rent control restrictions. We can look at potential purchases that you may be interested in to make the property more desirable, and maybe look at potential issues that an insurer might require you to repair.

If you should decide to sell your building, we can help you exchange into a larger or smaller properties. We can even help you move into something with less management responsibilities. We can also help with getting the paperwork together for a refinance if that is your desire. We can also recommend experienced licensed contractors who can perform any repairs or installations you may need prior to selling. We can also look at your building for other easy and inexpensive changes that might allow you to get a higher value. We can help you to get the maximum value for your property, should you decide to sell, or the maximum return if you are planning to keep your building.

We are currently looking for “as-is” properties and are willing to purchase with low rents, deferred maintenance or even with a problem tenant in place. We can offer a 7 day escrow and all cash at closing. Give us a call. We have also put together numerous transactions over the years which involve properties that are not listed for sale. Many investors are currently in 1031 exchanges and need to identify a replacement property before their 45 day identification period runs out.

Should you decide to put your property on the market, we will put together an aggressive, targeted and professional campaign to get your property sold fast. We have been doing this for over 40 years, and we will use all the tools available to bring you the most dollars at closing. If you are thinking of selling or are just curious about the value of your property, don’t hesitate to give us a call.