What is Prop 13 in real estate?

What is Prop 13 in real estate?

California’s system of property taxation under Article XIIIA of the state Constitution, commonly referred to as Proposition 13, values property at its 1975 fair market value with annual increases limited to the inflation rate, as measured by the California Consumer Price Index, or 2%, whichever is less.

Can you transfer Prop 13 to another property?

​ Propositions 60/90: Under certain conditions, persons aged 55 and older may transfer the Prop 13 base year value of their principal residence to a replacement residence.

How does Prop 13 affect inherited property?

Under Prop 13, an unlimited “principal residence exclusion” allows a child to inherit the house along with its $200,000 assessed value and the low $2,500 tax bill. If the kids decide not to move into the inherited home and make it their primary residence, the property taxes will jump even more.

Do California property taxes go up every year?

California property taxes are based on the purchase price of the property. From there, the assessed value increases every year according to the rate of inflation, which is the change in the California Consumer Price Index. Remember, there’s a 2% cap on these increases.

How does Prop 13 affect house prices?

Proposition 13, adopted by California voters in 1978, mandates a property tax rate of one percent, requires that properties be assessed at market value at the time of sale, and allows assessments to rise by no more than 2 percent per year until the next sale.

How do I avoid capital gains tax on inherited property in California?

Can you avoid capital gains tax?

1. Sell your inherited house at least a year after inheriting it to pay the lower capital gains tax.
2. Offset your capital gains with any capital losses in your investment portfolio.
3. Try to sell the house when your income is lower to qualify for lower tax brackets.