Ten Facts You Should Know About Prop-19
/Newly passed Proposition 19 can be marked as a moment of change to Proposition 13, which limits property taxes. Some of the benefits of Prop-19 are the tax savings for older homeowners, savings for homeowners with sever disabilities, housing relief for victims of natural disasters, and increased inventory for first time homebuyers. The drawback, however, is that Prop-19 requires a market value reassessment of inherited properties that are not the successors’s principle residence. Below you will find 10 key facts and questions that are addressed by the California Association of Realtors.
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10 Facts:
Qualified homeowners can transfer their existing property tax base to another property regardless of the cost of the replacement home (with an adjustment upward to their tax basis if the replacement property is of greater value).
If the sale price of the replacement home costs more than the price of the existing home, qualified home- owners can blend the tax base of their original home with the tax base of the new home. The new, adjusted property tax base of the replacement home takes the tax base of the original home and adds the difference between the sale price of the new home and the original home. ("Sales price" means full cash value.)
The following 10 California counties allow intercounty base transfers: Alameda, Los Angeles, Orange, Riverside, San Bernardino, San Diego, San Mateo, Santa Clara, Tuolumne, and Ventura.
Eligible homeowners can use the transfer of property taxes if both the sale of the existing home and the purchase of the replacement home close on or after April 1, 2021, then the property will qualify for the tax savings under Proposition 19.
Transferring tax benefits to a new home across county lines is possible if the purchase price of the replacement home is equal to (or less than) the sales price of the existing home, even if the replacement home is in another county, the tax base of the replacement home will remain the same as the original residence. ("Sales price" means full cash value).
California homeowners can realize significant annual property tax savings with the Prop-19 which allows them to :
Purchase a replacement home anywhere in California and transfer the taxable value of their current home, allowing them to realize significant annual property tax savings.
Move closer to family or medical care, purchase a home that better meets their needs, replace a fire-damaged home, or retire or relocate anywhere in the state without a tax increase.
Save substantially in annual property taxes when moving to a replacement home, even if the replacement home is more expensive than the original primary residence (with an adjustment upward to their tax basis if the replacement property is of greater value).
Transfer the low property tax base of their original home to a new home up to three times.
Prop-19 generates home buying opportunities for tens of thousands of renters, young families, and first-time homeowners. As more seniors take advantage of Prop 19’s tax savings, homeownership opportunities will open up each year for renters, young families, and first-time homebuyers in communities throughout California
Prop-19 creates housing opportunities to build more senior housing and retirement communities for millions of seniors and Baby Boomers to retire with Prop 19’s tax benefits.
If the purchase price of the replacement home is equal to (or less than) the sale price of the existing home, the new taxable value of the replacement home is the same as the original residence.
It will be possible to apply for a Prop-19 homeowner property tax exemption. C.A.R. is currently working with the state, the California Board of Equalization, and local county assessors to determine the official process for Prop 19 tax base transfers.
There are quite a few changes being made with proposition 19! For some this is great news, and for others maybe not so much. I hope you found this information helpful.
