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Homeowners get to pass on low property taxes to heirs, is it fair?




House in Burbank, California.
House in Burbank, California.
Sharon McNary/KPCC

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Since 1978, Proposition 13 has strictly limited property tax increases in California. Under Prop 13, homeowners are allowed to keep their property tax bill low. But that is not all the perks that homeowners in the Golden State enjoy.

Thanks to an additional tax break enacted eight years later, homeowners in California get to pass low property taxes to their kids. That low property tax benefit can be extended to inherited properties, including the ones used for rental income. California is the only state to provide this property tax relief, which reporters Liam Dillon and Ben Poston recently wrote about in the Los Angeles Times.

Supporters of the inherited tax break believe the benefit protects children from losing their family homes to tax hikes. Critics, however, called this benefit an unfair provision that only serves an elite group of people. In a dissenting opinion, Justice John Paul Stevens wrote, under the provision, “Two families with equal needs and equal resources are treated differently solely because of their different heritage.” Do you think the inheritance tax break is a fair provision? We debate.

Guests:

David Chiu (D-San Francisco), California assemblyman representing the 17th district, which encompasses the eastern half of San Francisco; he leads the Assembly’s housing committee

Karl Swaidan, managing partner at the Pasadena law firm Hahn & Hahn, where he practices in the firm's business and trust and estates practice groups; he is also a certified public accountant