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“Repeal the Death Tax” Initiative Will Protect Apartment Owners and Tenants
CA Howard Jarvis Taxpayer Association Ballot Proposal to Fix 2020’s Proposition 19
By Susan Shelley, Howard Jarvis Taxpayer Association
alifornia now has a death tax on reassessed to current market value, no exceptions. property, and many Californians are That means a parent who hoped to leave income just finding out about it. Previously, property to the next generation will also be leaving a primary residence and up to $1 them a new, much higher property tax bill, effectively million of assessed value of other an estate tax that has to be paid every year. property could be transferred
from parent to child without reassessment, so the property tax bill stayed the same. No more. Effective on February 16, 2021, property transferred between parents and children is now reassessed to market value upon transfer, with
only limited exceptions.
The new law is the result of a little-known provision in Proposition 19, which passed narrowly in November 2020 after a costly ad campaign touting its benefits for wildfire victims and seniors. The fine print of the measure held an ugly surprise, especially for apartment owners and their tenants. Multi-family housing transferred from parent to child will be
That’s a nightmare scenario for families that inherit older buildings where tenants are paying below- market rents under longstanding rent-control ordinances. The Proposition 13-controlled base-year property tax assessment is lost at the moment of transfer, replaced by a new base-year assessment. The new tax bill will be 1% of the current market value, plus charges for local bonds, taxes and fees. That sharply higher cost could push many apartment owners so deep into red ink that they choose to get out of the business of providing housing.
For that reason, Proposition 19 was a bad deal for tenants, too, especially those who live in older buildings that will be inherited by the children of a
APARTMENT MANAGEMENT MAGAZINE - JANUARY 2022 CS-17