$300,000. If you sell the property right away, you will not owe any capital gains taxes. If you hold on to the property and sell it for $450,000 in a few years, you will owe capital gains on $150,000 which is the difference between the sale value and the stepped-up basis.
California Proposition 19: Inheritance Tax Changes
In November 2020, California voters approved Proposition 19, a significant change to the state's property tax laws. This proposition brought about notable changes, particularly regarding property taxes upon inheritance. This chapter will delve into the details of California Proposition 19 and its impact on the taxation of inherited properties. Before the passing of Proposition 19, California's property tax system was regulated by Proposition 13 (passed in 1978) and Proposition 58 (passed in 1986). Proposition 13 limited property tax increases and Proposition 58 allowed for the transfer of a property from parents to children without triggering a reassessment of the property's value for property tax purposes. This meant that children could inherit property and continue to pay property taxes based on the original purchase price, even if the property's market value had significantly increased.
Proposition 19 Overview
Proposition 19 was introduced as a measure to reform and modernize California's property tax system. It aimed to address certain inequities in the tax system while providing relief to certain groups of homeowners, particularly seniors and wildfire victims.
Inheritance Tax Changes
One of the most significant changes brought about by
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