Nick Dias July 25, 2024
Thinking about downsizing or relocating within California? In California, homeowners aged 55 or older have an opportunity to transfer their existing property taxes to a new primary residence, thanks to Proposition 19, also known as Prop. 19. But with any major change, understanding the ins and outs is crucial. This blog post will unpack Prop 19, its significance, how it impacts you, and where to find more information.
Proposition 19 was passed in November 2020 and became effective on February 16, 2021, bringing three vital components into play:
Prop. 19 focuses exclusively on property taxes, distinct from income taxes or capital gains. If you're 55 or older, you can transfer your current low property taxes to a new home.
Prop. 19 alters the way property taxes are handled when property is inherited within a family. This change went into effect on February 16, 2021.
Prop. 19 establishes the California Fire Response Fund, intended to support local fire staffing and emergency response, including CalFire.
To qualify for the Prop 19 property tax benefits, you must be over 55 years old age, disabled, or be a victim of a natural disaster. Parents or grandparents can pass along their primary residence and its property tax basis to their children or grandchildren. Yet, beware that there are restrictions under Prop 19.
This new law offers more flexibility for several homeowner situations:
While Prop 19 offers advantages, it's important to consider potential drawbacks: Rising Property Values. While Prop 19 provides for some tax relief, it is capped at $1,000,000. So if the home value is assessed at greater than that, yo will pay more in taxes but only on the additional portion. Additionally, if you transfer your tax base to a location with significantly higher property values, you may see a future increase in property taxes. Last, Prop 19 also eliminates all currently available Prop. 13 and Prop. 58 benefits on the transfer of non-primary residences (with some exception for agricultural property) to children.
Prop 19 offers exciting possibilities for many California homeowners. To make informed decisions, consider these resources:
Ready to explore how Prop 19 could impact your next move? Our experienced real estate team is here to answer your questions and guide you through the process. Contact us today for a personalized consultation.
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