[HN Gopher] Why the math on inheriting your parents' California ...
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Why the math on inheriting your parents' California home has
changed
Author : mikhael
Score : 11 points
Date : 2023-11-11 19:47 UTC (3 hours ago)
(HTM) web link (www.sfchronicle.com)
(TXT) w3m dump (www.sfchronicle.com)
| verall wrote:
| The way this article frames paying property taxes for your home
| at market valuation as an "effective inheritance tax" even though
| you can get a MILLION dollars in value exempted by living their
| as your primary residence for 1 measly year after inheriting the
| property really elucidates the issues with housing and property
| taxes in California.
| happytiger wrote:
| Absolutely. It's so lost on the author that the property tax
| system is distorting valuations in the first place that they
| don't even examine it.
| jseliger wrote:
| I read this:
|
| _"If three siblings inherit a $1.5 million house from their
| parents, and only one of them wants to keep it, she will have
| to buy out the other siblings' share for $1 million, which
| reflects the high cost of housing in the Bay Area," Alisjahbana
| said. "It's often not possible to buy out the siblings' shares,
| so in this situation it's common to sell the house."_
|
| My heart really goes out to the unfortunate people who inherit
| $500,000. Compared to those of us who inherit $0, their
| situation is so tragic.
| YeBanKo wrote:
| I know multiple people who inherited houses and has been
| sitting on it to avoid paying market-rate property tax. In my
| experience they also tend to be the shittiest landlords.
| everybodyknows wrote:
| Paywalled.
| setheron wrote:
| I couldn't get web archive link to work either.
| mavelikara wrote:
| > Under Prop. 19, the parents' tax basis does not pass to the
| child. However, if the home is the inheritor's primary residence
| for at least one year after the property transfer, they can apply
| to have up to $1 million of the home's value not reassessed. If
| the home is worth more than $1 million, anything over that amount
| would be reassessed. Even with this exemption, inheritors are
| likely to see a substantial increase in annual property taxes,
| amounting to thousands or even tens of thousands of dollars,
| Button said.
|
| Kids inheriting property need to pay property taxes, just like
| their new neighbors. Move on please, nothing to see here.
| PopAlongKid wrote:
| >Most heirs are not equipped to take on a tax bill that could
| potentially jump from $800 to $20,000 on the death of a parent,
|
| This is a misleading and extremely outlying example. No one in
| CA, even if they bought their house for $80,000 and never made a
| single capital improvement, still has only $800 property tax
| bill, because it goes up each year (just not as much as the
| market value). And to get an increase of $20K in property tax,
| the house would have to be worth $3,000,000, which is still far
| above the median.
|
| More importantly, the income tax benefit is orders of magnitude a
| bigger deal. Income tax on a $2,000,000 gain would be 23.8%
| federal at least, and probably well over 10% California (so about
| $650,000). Yet they will pay none of that, due to the basis
| adjustment to fair market value upon death of the owner(s).
|
| If the heirs can't figure out how to keep the house via a secured
| loan and their $650,000 in income tax savings, they probably have
| much more pressing money problems to deal with I imagine.
| pauldenton wrote:
| So what is the Median house value in California? Or San
| Francisco which this SFChronicle article is from?
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(page generated 2023-11-11 23:01 UTC)