Property tax benefit for eligible California homeowners takes effect on and after April 1, 2021.
Overview of Prop 19 in California
The Home Protection for Seniors, Severely Disabled, Families, and Victims of Wildfire or Natural Disasters Act, referred to as Proposition 19 in California.
California Prop 19 allows:
- an owner of a primary residence who is over 55 years of age
- severely disabled
- or a victim of a wildfire or natural disaster
to transfer their primary residence’s current taxable value to a replacement primary residence located anywhere in California, regardless of the location or value of the replacement primary residence, that is purchased or newly constructed as that person’s principal residence within 2 years of the sale of the original primary residence.
Prop 19 Expanded Special Rules for Eligible Homeowners.
Starting April 1, 2021, the measure expands the special rules for eligible homeowners. Specifically, the measure:
- Allows Replacement Home Purchases Anywhere in California. Eligible homeowners could keep their lower property tax bill when moving to another home anywhere in the state.
- Allows the Purchase of a More Expensive Replacement Home. Eligible homeowners could use the special rules to move to a more expensive home. Their property tax bill would still go up but not by as much as it would be for other homebuyers.
- Increases Number of Times a Homeowner Can Use the Special Rules. Homeowners who are over 55 or severely disabled could use the special rules three times in their lifetime.
Q & A on California’s Prop 19
What is the limit on the exclusion?
There is a cap of $1,000,000 on the exclusion of property tax re-assessment for eligible primary residence replacement purchase/ construction.
Prop 19 imposes higher property taxes on inherited rental/ investment properties
On or after February 16, 2021, only inherited properties used as primary homes or farms would be eligible for property tax savings.
Children who are inheriting California properties from their parents/ grandparents that they intend to use as rental/ investment properties or second homes will now have to pay higher property taxes based on the newly assessed property value.
Key Takeaway for 55 and older adults who want to move and keep their low property tax.
Prop 19 allows seniors 55 and older to move anywhere in California, up to three times, and keep their property tax basis.
There will be a slight adjustment when residents buy a more expensive property using a blended property tax re-assessment on the difference of the sold primary home and the newly purchase replacement residence.
However, the overall property taxes would still be considerably lower because of the transferred original tax value from the sold home.
Source: dreamwellhomes.com ~ Image: Canva Pro