Buying and Selling Homes in San Diego 55+ Active Senior Retirement Communities

Empty Nester? 55+? Downsizing? Retiring? Maintain Low Property Taxes with Proposition 19 Formerly known as  Prop 60 / 90

Are you finally an empty nester?  Are you 55+? Has your home outgrown you?  Does the idea of moving and potentially saving hundreds to thousands a month sound ideal to you?

If you’re  55+ and considering a move from your current home to another home in California… then you need to be aware of the unique tax relief benefits state law provides when you move.

Here is a Short Overview of what you want to know!

Downsize (or “rightsize”) into the best home for your lifestyle…
Move closer to your kids, and grandkids
Build the home of your dreams!
Escape the maintenance trap—or the two-story home with stairs…
Move closer to the beach—without paying “beach home” taxes…
Reduce the position of real estate in your overall wealth portfolio…
Use the savings to take much needed vacations
Move closer to friends!!

Propositions 19, (Prop 19) formerly known as Prop 60 & 90 were designed to offset the effects of Proposition 13 which causes a reassessment at market value when the home is sold, and therefore results in additional taxes. No matter How LOW your taxes currently are!

BACKGROUND

In November 2020, California voters passed Proposition 19, which makes changes to property tax benefits for families, Individuals who are 55+, severely disabled persons, and victims of natural disaster.  These Changes became effective in February and April 2021.

“The implementation dates for Proposition 19 are fast approaching and my Office is working hard to inform the public about the changes that will occur. While there is still uncertainty about many components of the measure, this informational brochure will try and answer some of the basic elements of Proposition 19.”

Jeff Prang, Assessor

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WHAT IS PROPOSITION 19?

Inheriting Property

Proposition 19, or the Home Protection for Seniors, 55+, Severely Disabled, Families and Victims of Wildfire or Natural Disasters Act, is a Constitutional Amendment that imposes new limits on property tax benefits for inherited family property. Under Proposition 19, a child or children may keep the lower property tax base of the parent(s) ONLY if the property is the principal residence of the parent(s) and the child or children make it their principal residence within one year.

Transfer of Property Tax Base

The other component of Proposition 19 allows homeowners who are  55+ years of age, disabled, or victims of a wildfire or natural disaster, to transfer their lower assessed property value of their primary home to a newly purchased or newly constructed replacement principal residence up to three times (or once per disaster). The tax base may be transferred to a property located anywhere in the state.

Proposition 19 changes two programs currently administered by county assessors:

1. Parent-Child Transfers (Prop. 58)/Grandparent-Grandchild Transfers (Prop. 193), effective February 16, 2021; and

2. 55+/ Senior Citizen and Disaster Relief Tax Base Transfers (Prop. 60/90 /50/171 ), effective April 1, 2021.

For assistance, please call (213) 974-3441 or email [email protected]

Parent-Child Transfers & Grandparent-Grandchild Transfers

Prop. 58 & Prop. 193, allowed a parent(s), and in certain cases grandparent(s), to transfer their existing property assessments of a principal residence of any value without triggering a reassessment, which is generally required upon a change in ownership – even if the property is used as rental property by the child.

Prop. 58 & Prop. 193 also allowed for the inheritance of property assessments for up to $1 million in additional real estate, whether residential or commercial.

Under Proposition 19, in order to inherit the lower property assessment of the parent(s) or grandparent(s), the following conditions must be met:

1) The property must be the principal residence of the parent(s) or grandparent(s)

2) The property must become the principal residence of the child or grandchild within one year

3) Only the principal residence of a parent(s) or grandparent(s) qualifies for a base year value transfer. Other property, residential or commercial no longer qualify for this benefit

This provision applies to transfers starting Feb. 16, 2021 (since Feb. 15 is a holiday).

55+ / Senior Citizen Tax Base Transfers

Propositions 60/90 and 110 allowed persons 55+ or severely and permanently disabled persons to transfer the taxable value of their existing home to their new replacement home, so long as the market value of the new home is equal to or less than the existing home’s value and located in Los Angeles County or one of nine other participating counties in California. Proposition 19 allows eligible homeowners to transfer the taxable value of their existing home to their new replacement home of any value*, anywhere within the state, up to three times (rather than once as provided under current law).

* Subject to conditions.

The effective date of implementation is April 1, 2021.

Disaster Relief Tax Base Transfers

Prop. 50 provided that the base year value of property that is substantially damaged or destroyed by a disaster, as declared by the Governor may be transferred to comparable property within the same county. Prop. 171 allows the transfer of the base year value of a principal residence to a county that has adopted the ordinance. Prop. 19 allows homeowners to purchase a replacement home of greater value than their original home and transfer their tax base with an adjustment to account for the value difference in cases of homes destroyed by wildfires or other natural disasters.

The effective date of implementation is April 1, 2021.

Proposition 19’s provisions have become operative on February 16, 2021 (for intergenerational transfer exclusion) and April 1, 2021 (for base year value transfer). Unfortunately, Proposition 19 did not have companion legislation that would have clarified a host of issues. Therefore, these frequently asked questions (FAQs) are intended to help property taxpayers navigate those new provisions in light of Proposition 19’s lack of clarity or silence. It is anticipated that these FAQs will be updated periodically with additional questions, particularly if legislation is enacted or further guidance is issued by the Board. Please check back often for updates.

  1. What is the effective date of Proposition 19?
    Proposition 19, which was passed by the California voters on November 3, 2020, became effective on December 16, 2020, the 5th day after the Secretary of State certified the election. However, the changes to the parent-child and grandparent-grandchild exclusion will become operative and apply to transactions on February 16, 2021, and the base year value transfer provisions will become operative on April 1, 2021.
  2. Does the Board of Equalization have the authority to extend or change Proposition 19’s operative dates of February 16, 2021 or April 1, 2021?
    No. The Board of Equalization does not have the authority to extend or change Proposition 19’s operative dates of February 16, 2021 or April 1, 2021.

Base Year Value Transfers

  1. Under Proposition 19, will I qualify for the base year value transfer if I purchase my replacement home now and sell my original home on or after April 1, 2021?
    Proposition 19 requires the transfer of the base year value to occur on or after April 1, 2021. It does not require that both the primary residence be sold and the replacement primary residence be purchased on or after April 1, 2021. Therefore, in most cases, as long as either the primary residence is sold or the replacement primary residence is purchased on or after April 1, 2021, the base year value of the primary residence can be transferred to the replacement primary residence under Proposition 19. However, future legislation may impact the operation of Proposition 19 and any updates will be posted on the Board’s website.
  2. Under Proposition 19, will I qualify for the base year value transfer if I sell my original home now and purchase a replacement home on or after April 1, 2021?

    As answered in the prior question, as long as either the primary residence is sold or the replacement primary residence is purchased on or after April 1, 2021, the base year value of the primary residence can be transferred to the replacement primary residence under Proposition 19.

    For example, a person over age 55+ who has already sold their original home and expect to purchase a replacement home on or after April 1, 2021 would qualify for Proposition 19 base year transfer.

  3. Is Proposition 19 retroactive and would it cause property transfers that have already received the benefit of Proposition 60/90 to be reassessed?
    The Proposition 19 operative date for the base year value transfer provisions is April 1, 2021. It is not expected that base year value transfers that have already been processed under Propositions 60/90 and Proposition 110 will be affected.
  4. If I use my one-time base year value transfer under Proposition 60/90, can I transfer that base year value three more times under Proposition 19?
    It is anticipated that three transfers under Proposition 19 will be allowed regardless of whether a property owner transferred a base year value in the past under Propositions 60/90 and Proposition 110. Future legislation may impact the operation of Proposition 19 and any updates will be posted on the Board’s website.
  5. Under Proposition 19, can I transfer my base year value to a home of any value?

    Yes; however, if the full cash value of the replacement home is greater than the full cash value of the original home, the difference in full cash values will be added to the transferred factored base year value.

    For example, an original home was sold and had a full cash value of $400,000 and a factored base year value of $100,000 at time of sale. If a replacement home is purchased for a full cash value of $600,000, the difference of $200,000 ($600,000 – $400,000) is added to the factored base year value of $100,000. Thus, the replacement home will have a new base year value of $300,000 ($100,000 + $200,000).

  6. Is Proposition 19 retroactive to disasters that occurred in 2020?
    Proposition 19 is effective on and after April 1, 2021, and also requires that a replacement primary residence is purchased or newly constructed as a person’s principal residence within two years of the sale of the original primary residence. Proposition 19 is not dependent on the date of disaster. However, future legislation may impact the operation of Proposition 19 and any updates will be posted on the Board’s website.
  7. To qualify for the base year value transfer, does the homeowner have to be (1)  55+ or over and (2) disabled and (3) a victim of a disaster (all three)?
    No, under Proposition 19, a homeowner may qualify for the base year value transfer under any one of the three categories listed; they do not need to meet all three categories in order to qualify.

    For more questions and answers on base year value transfers, please refer to Letter to Assessors No. 2021/019 – Proposition 19 Base Year Value Transfer Guidance Questions and Answers.

Parent-Child and Grandparent-Grandchild Transfers

  1. Is Proposition 19 retroactive and would it cause property transfers that have already received the benefit of Proposition 58 (Parent-Child Exclusion) to be reassessed?
    No, Proposition 19 is clear that Proposition 58 applies to transfers that occur on or before February 15, 2021, and that Proposition 19 applies to transfers that occur on or after February 16, 2021.
  2. If a family home is gifted to two children, do both children have to reside in the family home as their primary residence in order to receive the parent-child exclusion?
    We believe the intent of the Legislature was to allow the exclusion as long as the parent’s family home becomes the family home of at least one of the children.
  3. Under Proposition 19, if I inherit my parent’s family home and move into it and establish it as my principal residence, must I live continually in the home to receive the parent-child exclusion? What happens if I move somewhere else?
    We believe that at least one eligible transferee must continually live in the property as his or her family home for the property to maintain the exclusion. Thus if the property is no longer your family home, it will receive a new taxable value. The new taxable value will be the fair market value of the home on the date you inherited it, adjusted each year for the inflation factor, which is published by the BOE annually.
  4. Does Proposition 19 apply to a transfer of a rental home?
    No, Proposition 19 limits the parent-child exclusion to a transfer of a family home that is the principal residence of the transferor and becomes the principal residence of the transferee.
  5. Do we need to submit our application for the parent/child exclusion prior to the February 16, 2021 operative date to qualify for the exclusion under Proposition 58/193?
    As long as the date of transfer or change in ownership of real property between parent and child occurs on or before February 15, 2021, the transfer will qualify for the exclusion under Proposition 58/193. Therefore, as long as the claim is filed with the County Assessor within three years of the date of transfer or before a transfer to a third party or within six months of the date of notice of supplemental or escape assessment. Thus, the claim does not need to be filed by February 16, 2021.
  6. Will I lose the parent-child exclusion if the value of the family home is greater than $1 million dollars?

    The value limit under Proposition 19 is the sum of the factored base year value plus $1 million. If the market value exceeds this limit, partial relief is available. The amount exceeding the excluded amount will be added to the factored base year value.

    For example, a family home has a factored base year value (FBYV) of $300,000 and a fair market value of $1,500,000. The excluded amount under Proposition 19 is $300,000 + $1,000,000 = $1,300,000. The difference, $1,500,000 – $1,300,000 = $200,000. Thus, the adjusted base year value is $500,000 (FBYV $300,000 + difference of $200,000).

  7. If a parent died prior to the February 16, 2021 operative date and the Assessor does not become aware of the death until a year later and reassesses the property as of the date of death, are the parent-child exclusion provisions applied under Proposition 58 or Proposition 19?
    The date of death is the date of change in ownership. The law in effect as of the date of death will apply. Proposition 19 is clear that Proposition 58 applies to transfers that occur on or before February 15, 2021, and Proposition 19 applies to transfers that occur on or after February 16, 2021.
  8. I have my deed signed and notarized, and have submitted it for recording at my local County Recorder’s office prior to the February 15, 2021 deadline. What if my deed does not record by the February 15, 2021 deadline? Must my deed be recorded prior to that date in order to still be under the Proposition 58/193 provisions?
    No. As long as the date of transfer is on or before February 15, 2021, the transfer will qualify for the Proposition 58/193 exclusion. Property Tax Rule 462.260 makes clear that the recordation date of a deed is rebuttably presumed to be the transfer date. This means that if evidence is shown that the transfer occurred prior to the recordation date, the assessor should accept that earlier date. Such evidence could be, for example, the date of a notarized document of transfer, such as a deed.
  9. How is a property held in a trust affected by Proposition 19?
    The administration of a trust is governed by the trust instrument itself. For properties held in trusts, Revenue and Taxation Code section 61(h) provides that a change in ownership occurs when any interests in real property vest in persons other than the trustor or the trustor’s spouse or registered domestic partner when a revocable trust becomes irrevocable (also see Property Tax Rule 462.260). This typically occurs upon the death of the trustor. Thus, the date of death is considered to be the date of change in ownership. Proposition 19 is clear that Proposition 58 applies to transfers that occur on or before February 15, 2021, and Proposition 19 applies to transfers that occur on or after February 16, 2021.
  10. How do I apply for the homeowners’ exemption or disabled veterans’ exemption within one year of the transfer to qualify for the parent-child or grandparent-grandchild exclusion, as required by Proposition 19?
    To apply for the homeowners’ exemption or disabled veterans’ exemption, a claim must be filed with the County Assessor. BOE-266, Claim for Homeowners’ Property Tax Exemption, is the claim form to apply for the homeowners’ exemption, and BOE-261, Claim for Disabled Veterans’ Property Tax Exemption, is the claim form for the disabled veterans’ exemption. Both forms can be obtained from and submitted to the local County Assessor’s office where the property is located.
  11. I still have questions on Proposition 19. Who do I contact to discuss?
    If you have further questions, you may call the Board of Equalization’s Property Tax Department, County-Assessed Properties Division at 1-916-274-3350 or by e-mail.

    For more questions and answers on parent-child and grandparent-grandchild (intergenerational) transfers, please refer to Letter to Assessors No. 2021/008 – Proposition 19 Intergenerational Transfer Exclusion Guidance Questions and Answers.

    Below you will find additional resources on Proposition 19.

Note: The information presented is intended to provide general and summary information about Proposition 19. It is not intended to be a legal interpretation or official guidance or relied upon for any purpose, but is instead a presentation of summary information. If there is a conflict between the information presented and the text of the proposition or its implementation, the text of the proposition or legal interpretation will prevail. It is highly encouraged that you consult an attorney for advice specific to your situation.

We have a simple and painless process to help you work through the decisions you will need to make, while we guide you through the decision making.  

LET US HELP!
It’s crucial to determine whether this benefit works for your particular situation! We can discuss this and more at a complimentary appointment. As San Diego PROP 19 Real Estate Experts, we can give you a review and make suggestions based on your retirement objectives and set a clear path of action!
Let us help you stay on top of the key issues and make a plan that can help you reach your personal retirement real estate goals.

Brad and Karen Mattonen
North County Home Pros
Coldwell Banker
858-518-2875
[email protected] 

 

Also feel free to contact our Prop 19  former 60/90 Mortgage Expert
BERJ ARAKELIAN CME,CMPS
RETAIL BRANCH MANAGER
NMLS: 1695267
USA Mortgage
11622 El Camino Real #100, San Diego CA
Company NMLS: 227262
Office: 858-449-0514
Cell: 858-449-0514
Email: [email protected]
Web: http://WWW.THEBERJ.COM

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Important Disclosures  The opinions voiced in this article are for general information only. They are not intended to provide specific advice or recommendations for any individual and do not constitute an endorsement by United Planners.

To determine which investments may be appropriate for you, consult with your financial professional. Please remember that investment decisions should be based on an individual’s goals, time horizon, and tolerance for risk. Neither diversification nor asset allocation can ensure a profit or prevention of loss in times of declining values. United Planners does not render tax advice.

Securities and advisory services offered through United Planners Financial Services, member FINRA, SIPC. Pasquale Vitucci, CA Insurance Lic. # 0758212, is an Endorsed Agent of Vitucci & Associates Insurance Services CA Insurance Lic. # 0I06319. Vitucci & Associates Insurance Services and United Planners are separate and unrelated companies.

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Maintain Low Property Taxes With CA Prop 19
Propositions 19 Tax Break
Getting Ready To Retire
Downsizing
Smaller Homes
Retiring
Retiring In California
Downsizing In California
California’s Proposition 19
California Home Tax Benefit for 55+
Tax Benefits For 55+ and Elderly In California
Tax Benefits For Senior, 55+  In California
55+, Active Adult or Senior Retirement Communities in San Diego
55+ Home Tax Benefits in CA
Property Tax Benefits for Californians over 55+

Note: The information presented is intended to provide general and summary information about Proposition 19. It is not intended to be a legal interpretation or official guidance or relied upon for any purpose, but is instead a presentation of summary information. If there is a conflict between the information presented and the text of the proposition or its implementation, the text of the proposition or legal interpretation will prevail. It is highly encouraged that you consult an attorney for advice specific to your situation.

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