There is no shortage of resources and information about California’s Proposition 19, which took full effect on April 1, 2021. But navigating it can be a beast, especially for someone who is not attuned to real estate, real estate law, tax law and accounting.

 

Therein lies an opportunity for agents and brokers. By understanding the nuances of the amendment and positioning yourself as a resource for information and referrals, you can help new and existing clients find the benefits or avoid the pitfalls of Prop. 19.

 

 

Recapping from a previous article: Under Prop. 19, a California primary residence’s owner who is over 55 years of age, severely disabled or victim of a wildfire or natural disaster can transfer the base taxable value of their primary residence to a replacement primary residence anywhere in the state. They, therefore, avoid some or all of the higher property tax accompanying the purchase of a primary home in 2021 or later.

 

Of particular interest to many people is the topic of how Prop. 19 affects inherited property or property gifted to the adult children.

 

In this article, we’ll cover a few commonly asked questions to help you help clients navigate decisions around Prop. 19. 

 

Before that, however, now is a good time to consider expanding your professional network.

 

The Prop. 19 Concierge

 

Unless you are simultaneously a Realtor, an attorney and an account, you and your clients know that you cannot provide them all the advice that they may need when navigating the potential benefits and risks of real estate ownership(s) in Prop-19 California.

 

But you do have the ability to educate yourself so that you can point your clients in the right direction. In fact, educating yourself may even open new doors and networking opportunities for you.

 

For every few Realtors who may be guiding clients toward smart decisions around Prop 19, there could be at least one attorney, financial planner or accountant whose clients need honest, reputable real estate advice about Prop. 19.  

 

Wouldn’t it be nice to have those leads come directly to you? You can do so within LeadHax. Check out some of our recent stories on local SEO as well as personalized marketing tactics and targeted digital and social media campaigns that can position you in front of the experts – and the potential clients – you want to reach.

 

Meanwhile, you can brush up on a few nuances about Prop 19 that will help you learn what professionals to add to your network. 

 

 

Does base taxable value transfer to heirs?

 

If this question has come up between you and a seller or a buyer, there’s a chance there may be a family attorney or estate lawyer involved. Think of these people as valuable resources. Realize the benefits of these relationships and in touch with them, marketing to them much as you would to prospective clients. 

 

Now, to answer the question.

 

Remember that the base taxable value of a primary residence is defined as the property’s value during the initial purchase year, plus inflationary adjustments. What happens if the longtime owners either pass away or need to move into a senior living or elder care community and the property is transferred to their children? 

 

 

Prior to Prop. 19, parents could transfer their primary residence plus up to $1 million per parent of additional property to their children without triggering a reassessment. Under Prop. 19, this transfer benefit only applies if the child heirs use the inherited property as a primary residence. 

 

There are times when a newly inherited home’s base valuation won’t stick. Things change if the heir(s) keep the property or decide to use it as a second (vacation) home or a rental (investment) property. In both scenarios, the up to $1,000,000 exclusion of the new assessed value would not apply. 

 

 

Here’s where expanding your network of pros can help

 

When multiple heirs are involved, things can get tricky. Realtors are wise to keep out of family drama. But you can inform your clients to seek independent third parties to help them navigate the decision-making process about the inherited property. 

 

By the time you meet that client who inherited a home with her two siblings (some of whom might not get along), you’ll want a contact list of reputable real estate attorneys who are familiar with estates, trusts and/or probate.

 

 

A month or so later, when that same client and her siblings say that they’ve decided to sell the house and share the profits, you’ll want to connect her with advice on capital gains taxes, estate taxes and real estate sales taxes before they make their decision. That’s where having wealth managers, financial planners and accountants as contacts will help.

 

Over time, you’ll develop new knowledge of your own in these areas. Your social media posts and blogs can convey relatable stories and guidance, positioning you as an expert. 

 

Don’t be surprised when that client you helped – or one of the attorneys or accountants you worked with – sends new clients to you who have similar situations.