Summary
SB 288 clarifies the interaction between Proposition 19 (Prop 19) and the probate process to protect grieving family members from unintended property tax reassessments. This measure ensures that individuals who inherit a family home through probate are not unfairly penalized due to delays outside their control.
Background
Prop 19 which passed in 2021, restricted the transfer of family homes between parents and their children, particularly regarding the retention of the property’s Proposition 13 (Prop 13) protected tax value. Prop 19 places several requirements to pass the Prop 13 tax base onto the next generation and avoid triggering a reassessment of the property’s tax value. The recipient must move into the home, claim it as their primary residence, and file for their basic homeowner exemption within a year of receiving the property. Even after meeting these requirements Prop 19 caps the amount of value that can be excluded to $1 million in assessed value.
Under the current application of Prop 19, beneficiaries have twelve months to identify who occupies and claims the home as their principal residence for the purpose of claiming the homeowner exemption to avoid triggering a reassessment. While beneficiaries can occupy a property under certain circumstances, they cannot take ownership until the Probate Court issues its order which generally takes between 9 to 18 months. As a result, some individuals who inherit a property that is held in probate have found themselves unable to possess the property under the one-year timeline required by Prop 19 and have lost their Prop 13 protected tax valuation.
The Legislature has previously acted to ensure that administrative delays and natural disasters should not prevent individuals from meeting Prop 19 requirements. Individuals who inherit a property through probate should not lose their Prop 19 exclusion due to circumstances outside their control.
Proposal
SB-288 gives protections for individuals inheriting a home by clarifying that the Prop 19 calendar year begins when the probate process legally determines ownership of a home.