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Great insight into Proposition 19. I think a major concern for Black parents and grandparents should be the part of the proposition that deals with the parent-child transfer.
In my humble opinion, it inhibits generational wealth building if children cannot inherit rental property from their parents or grandparents without that rental property being completely reassessed. Not only the tax implications apply, but unless the children occupy the home as their primary residence, the benefit they would gain by keeping it as an income-producing rental property is diminished by the much higher taxes they will have to pay on it.
That alone may cause children to sell property left to them by their parents and grandparents whereas that could have been an income stream for them and their own children in perpetuity. That should concern all families of color.
We recently saw how this issue could play out when a Proposition 13-protected rental property belonging to a family member was accidentally reassessed upon their passing; there was a mix-up with processing of the parent-child exemption. The errant tax bill the children received was FOUR TIMES HIGHER under the reassessment than it should have been.
Fortunately, the problem was quickly corrected, but had that family member passed away after February 15, 2021—under the terms of Proposition 19—the children would be facing that four times higher tax bill on the rental property because they lived out of town and could not move into it. The higher tax bill would have greatly impacted their net revenue stream every year they kept the home.
I don’t think that aspect of Proposition 19 was sufficiently appreciated prior to the election. Had more families of color had this conversation with their children, they all might have considered Proposition 19 differently and made plans to protect their generational wealth opportunity.
Letter to the Editor: Black Voice News
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Feb. 21, 2021
Re: What You Should Know About Proposition 19″ Black Voice News, Published February 11, 2021
Great insight into Proposition 19. I think a major concern for Black parents and grandparents should be the part of the proposition that deals with the parent-child transfer.
In my humble opinion, it inhibits generational wealth building if children cannot inherit rental property from their parents or grandparents without that rental property being completely reassessed. Not only the tax implications apply, but unless the children occupy the home as their primary residence, the benefit they would gain by keeping it as an income-producing rental property is diminished by the much higher taxes they will have to pay on it.
That alone may cause children to sell property left to them by their parents and grandparents whereas that could have been an income stream for them and their own children in perpetuity. That should concern all families of color.
We recently saw how this issue could play out when a Proposition 13-protected rental property belonging to a family member was accidentally reassessed upon their passing; there was a mix-up with processing of the parent-child exemption. The errant tax bill the children received was FOUR TIMES HIGHER under the reassessment than it should have been.
Fortunately, the problem was quickly corrected, but had that family member passed away after February 15, 2021—under the terms of Proposition 19—the children would be facing that four times higher tax bill on the rental property because they lived out of town and could not move into it. The higher tax bill would have greatly impacted their net revenue stream every year they kept the home.
I don’t think that aspect of Proposition 19 was sufficiently appreciated prior to the election. Had more families of color had this conversation with their children, they all might have considered Proposition 19 differently and made plans to protect their generational wealth opportunity.
D.T. Poole, Riverside