Empty Nester? Downsizing? Retiring? Maintain Low Property Taxes with Prop 19

Are you finally an empty nester? 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 over 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!! 

Proposition 19 / formerly known as Prop 61/90 was 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! 

TAX SAVINGS FOR OLDER HOMEOWNERS

Thanks to Prop 19, seniors, retirees, and all homeowners aged 55+ can move closer to family, medical care, or to a home that better meets their needs anywhere in California without a tax penalty.

Prop 19 removed unfair location and price restrictions, allowing older homeowners to transfer the tax base of their home to a new home.*

PROP 19 ALSO PROVIDES TAX SAVINGS FOR HOMEOWNERS WITH SEVERE DISABILITIES

Prop 19 also removed unfair restrictions on Californians with severe disabilities, allowing homeowners to move to a replacement home anywhere in California without a tax penalty.*

Under Prop 19, homeowners with severe disabilities can transfer the tax base of their existing home to a replacement home up to three times.

AND

HOUSING RELIEF FOR VICTIMS OF WILDFIRE AND NATURAL DISASTER

After wildfires destroyed more than 24,000 family homes in the past few years, wildfire victims have faced massive property tax hikes when relocating to another home.

Prop 19 allows victims of wildfire or natural disaster to transfer theproperty tax base of their damaged house to a replacement home anywhere in California.*

THE BENEFITS OF PROP 19 –

INCREASED INVENTORY FOR YOUNG FAMILIES & FIRST-TIME BUYERS

Millions of older homeowners feel trapped in homes that no longer meet their needs — they want to move to senior housing or retirement communities, or downsize to smaller homes. Prop 19 lets them move without a tax penalty.*

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.

 
Can you give me an example of what you are talking about?
For the sake of example, let’s say your current home has an assessed value of $325,000 and our tax bill is  $4,063 per year, or 1.25%.

Then, If you were to sell your home for $800,000 and buy your new dream home for, say, $725,000, your property tax bill, without using the benefits of 60/90 would rise accordingly to reflect the higher value of your new home. At 1.25%, your annual bill would jump to $9,063. Please note that these calculations reflect a simplified example of how this tax relief can work and are for illustrative purposes only. They are not a reflection of any actual tax bill.

This is where the Propositions 19 comes in: if you’re eligible to transfer your current property tax rate, you’ll be able to move without increasing your property tax bill at all. It would remain at $4,063 a year. Giving you substantial savings!

Calculting your Base Transfer tax with Proposition 19

Read on to learn more about this special tax relief and whether it might be right for you, then give us a call, so we can help you Sell your current home, and find your Next Dream Home!

Question and Answers –

Can I buy/sell now and take advantage of the tax portability benefits before April 1, 2021?
Although there is no 100% definitive answer in the law, the Board of Equalization has posted FAQs stating that
the tax benefits under Prop 19 will apply to transactions where either the sale or purchase of a primary
residence takes place before April 1, 2021, as long as the subsequent sale or purchase takes place within two
years and occurs on or after April 1. WWW.BOE.CA.GOV/PROP19/#FAQS.
If you have a client who wishes to obtain the tax benefits of Prop 19 for a transaction that closes prior to April 1, 2021, whether it is buying or selling a property, the client should be encouraged to seek the advice of a qualified
California real estate attorney or tax advisor.

If the replacement property is of equal or lesser value, does the tax basis of the replacement property
change?

No. The taxable value of the original property may be transferred and become the taxable value of the new
one.

If the replacement property is of greater value, how is the new taxable value calculated?
The new taxable value is calculated by adding the difference between the full cash value of the replacement
property and the original property to the original taxable value. For example, if a seller of an original property
has a $300,000 taxable value and a full cash value of $1M and then buys a replacement property for $1.5M,
the taxable value of the replacement property would be $800,000.

Can a replacement property be purchased prior to the original primary residence being sold?
Yes. This is how the current rule under Prop 60 works, and Prop19 uses nearly identical language.

How does Prop 19 affect the rules on intergenerational transfers to children or grandchildren?
It limits the exemption to those properties where the primary residence continues to be used as a family
home by the child or grandchild transferee. If so, the taxable value will remain the same, subject to some
upward adjustments if the property value, at the time of transfer, is more than $1M over the original tax basis.

If the property is more than $1M over the original tax basis, what is the new taxable basis?
The new taxable basis will be the assessed value of the property at time of transfer minus $1M.

When do these new rules on intergenerational transfers apply?
February 16, 2021.

Where may a claim to transfer a tax basis be made?
Claims may be made with forms provided by the local county assessor’s office.

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 60/90 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
Homes in San Diego County
Coldwell Banker
858-518-2875
[email protected] 

www.homesinsdcounty.com

Also feel free to contact our 60/90 Mortgage Expert
BERJ ARAKELIAN CME,CMPS 
RETAIL BRANCH MANAGER 
NMLS: 1695267
USA Mortgage
15373 Innovation Dr Suite 395, San Diego, CA 92128
Company NMLS: 227262
Office: 858-449-0514
Cell: 858-449-0514
Email: [email protected]
Web: http://WWW.THEBERJ.COM

APPLY NOW

15373 Innovation Dr Suite 395, San Diego, CA 92128
San Diego, CA  92130
Company NMLS: 227262
NMLS: 1695267
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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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Further Reading
Frequently asked questions about California Prop19: https://www.boe.ca.gov/prop19/
Guide to San Diego County Prop 19:   https://arcc.sdcounty.ca.gov/Documents/Prop19.pdf

 
Maintain Low Property Taxes With CA Props 60 90
Maintain Low Property Taxes With CA Prop 19
Proposition 19 Tax Break
Getting Ready To Retire
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Retiring In California
Downsizing In California
Californias Proposition 19
California Home Tax Benefit
Tax Benefits For Elderly In California
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Home Tax benefits in California
Tax Benefits for Seniors in San Diego