Property taxation: change in ownership: inheritance exclusion.
The bill may have significant implications for California's property tax structure by effectively preventing tax increases on familial property transfers, which could significantly benefit families looking to retain ownership of inherited properties without incurring hefty reassessment taxes. The approach taken by SB 668 aims to smooth the transition and ease the confusion stemming from the abrupt changes introduced by Proposition 19 during the COVID-19 pandemic, a period during which many sought to make critical estate planning decisions amidst restricted access to legal and governmental services.
Senate Bill 668, introduced by Senator Bates, aims to amend existing California property tax regulations, particularly regarding changes in ownership resulting from inheritance. The bill was developed in response to concerns about the impact of Proposition 19, a constitutional amendment that altered the rules around property tax exclusions for transfers between family members. The legislation seeks to clarify and reinstate exclusions for transfers of real property, specifically the principal residence of a transferor, between parents and their children, and between grandparents and their grandchildren, ensuring that certain conditions are met. The measure allows for retroactive claims as far back as February 16, 2021, although it will sunset these provisions by February 16, 2023, and repeal them completely by January 1, 2024.
The general sentiment surrounding SB 668 appears to reflect a proactive legislative effort to address the unintended consequences of Proposition 19. Supporters claim that the bill is crucial for maintaining family ownership of homes and farms across generations and alleviating potential financial burdens that could arise from property reassessments. However, there are concerns from local governments about the potential loss of tax revenues that might arise from these exemptions, emphasizing a divide between familial benefits and local fiscal health and stability.
A notable point of contention surrounding SB 668 revolves around the rights of local governments versus the needs of families trying to navigate the complexities of property inheritance. While supporters highlight the necessity of easing tax burdens for family transfers, opponents may argue that such legislation undermines local fiscal capabilities and could hamper essential services that rely on property tax revenue. The bill also introduces a requirement for claimants to certify information under penalty of perjury, further expanding the scope of local officials' duties and responsibilities in administering these property tax exclusions.