An In-depth look into Prop 19 (part 1)

Proposition 19: Passed November 2020

What it Means for Homeowner Tax Savings Now Everywhere in the State

 

It once was that if you were over 55 and wanted to keep your property tax base of your primary residence, you would have to move to a lesser valued home than the one you were selling and stay in the same county – or move to Alameda, Los Angeles, Orange, Riverside, San Bernardino, San Diego, San Mateo, Santa Clara, Tuolumne, or Ventura county. With the passage of prop 19, now you can move to anywhere in the state and keep your tax base. And it doesn’t have to be a cheaper home than what you sell. There are details, of course, that one must follow and abide by to take advantage of this, but it’s much easier now to downsize or retire or simply move to a new place, and keep your 30 year old tax base. 

 

Prop 19 Overview 

 

Homeowners who are 55 or over, severely disabled, or whose homes were destroyed by wildfire or natural disaster, may transfer the taxable value of their primary residence to a replacement primary residence…

✅  Anywhere in the state

✅ Regardless of the location

✅ Regardless of the value of the replacement primary residence — even if it’s greater in value (with an upward adjustment in the tax basis if the replacement property is greater in value)

✅ Within two years of the sale of the original primary residence

✅ Up to three times (although there’s no limit for those whose houses were destroyed by wildfire or natural disaster)

 

**These rules are in effect on and after April 1, 2021**

 

Currently, under Props 60 and 90, homeowners who are 55 or over or severely and permanently disabled may transfer the taxable value of their primary residence to a replacement primary residence…

✅ One time

✅ Within the same county (per Prop 60) or

✅ To another county that accepts intercounty tax basis transfers (per Prop 90) – see below

✅ To a replacement property of equal or lesser value

✅ Within two years of the sale of the original primary residence

 

Currently, (since November 7th of 2018) the following 10 counties accept inter county tax transfers under Prop 90... 

💚 Alameda 💚 Los Angeles 💚 Orange 💚 Riverside 💚 San Bernardino 💚 

💚 San Diego 💚 San Mateo 💚 Santa Clara 💚 Tuolumne 💚 Ventura 💚

**Prop 19 will create new rules beginning on April 1, 2021** 

Key Difference Between Current Law (Props 60 & 90) and Prop 19 is that Prop 19 Permits Transfer of Tax Basis... 

✅ Anywhere in the state

✅ Currently, tax basis transfer is limited to within the same county (under Prop 60) or to one of 10 counties that accepts intercounty tax basis transfers (under Prop 90).

✅ Regardless of the value of the replacement primary residence — even if the value is greater than the original property

✅ Currently, the tax basis can only be transferred to a replacement property of equal of lesser value.

✅ Up to three times (with no limit for those whose houses were destroyed by wildfire or natural disaster)

✅ Currently, the tax basis can only be transferred once.

The information contained herein is intended to provide general information and is not intended as a substitute for individual legal advice. Specific examples used are only general examples, and the actual amount of property taxes owed for any person will depend on the specific situation of the individual and a wide variety of other factors. Therefore, all persons are directed to seek the advice of an attorney regarding their specific tax and legal situation.