For many Californian’s, their home is an essential component of their estate plan. However, maintaining an effective estate plan becomes more complicated the more changes occur to to the assets within an estate, and modifications or additions to your home may change how you approach this asset and its tax implications.
The tax implications of your home can greatly affect how your structure your estate plan, so be sure to get a clear picture of those changes before your sign a deal with a contractor. This is especially true if you plan to build a guest house.
In general, your property taxes increase if you choose to build a home on a piece of property that already contains a home. However, this increase is limited, so it is certainly possible to account for the increase well ahead of time and keep your estate plan up to date.
When you add a guest home to a property, the property must be reassessed. However, the reassessment does not apply to the entire property, but rather only accounts for the increase in value to property as a whole. It is also important to stay on top of how the assessor approaches your property reassessment, to ensure that you do not suffer over-assessment.
If you worry that your plans to add a guest house may wreak havoc on your estate plan, be sure to enlist the help of an experienced attorney to help walk you through each step of the process and ensure that your rights remain secure throughout the construction and assessments process.
Source: Mansion Global, “Will My Taxes Go Up In My California Home if I Build a Guest House?,” Brenda G. Wong, June 02, 2017
