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ALL ABOUT
PROPOSITION 19

 

Prop 19 - For All Homeowners Age 55+

PROP 19 BENEFITS

If you’re a senior, retiree or older homeowner who feels trapped in a home

that no longer fits your needs, here’s some good news —

Prop 19 makes it easier for you to move to a new home

without incurring a property tax hike.*

 

TAKE ADVANTAGE OF PROP 19:

Keep your original Prop 13 tax base when moving to a home of equal

or lesser value anywhere in California

Secure an adjusted tax rate based on your Prop 13 tax base

when moving to a more expensive home anywhere in California

Transfer your original tax base to a new home up to three times

WITH PROP 19 YOU CAN....

Downsize     Move closer to family   |   Live near medical care

 

Find a more affordable neighborhood    |   Relocate to any county you choose

.... WITHOUT HIKING YOUR PROPERTY TAXES *

*Purchasing a more expensive replacement property will result

in an adjusted tax increase based on your Prop 13 tax basis.

Prop 19 - For People With Severe Disabilities

PROP 19 BENEFITS

If you live with a severe or permanent disability,

here’s some good housing news — Prop 19 lets you move to a new,

more accessible home without incurring a tax hike.

TAKE ADVANTAGE OF PROP 19:

Keep the original tax base of your home

when moving to a home of equal or lesser value anywhere in California

Secure an adjusted tax rate based on your Prop 13 tax base

when moving to a more expensive home anywhere in California 

 

Transfer your original tax base to a new home as many times as you want

WITH PROP 19 YOU CAN....

Purchase a more accessible home     Downsize      

 

Move closer to necessary medical care    |   Find a more affordable neighborhood

 

Relocate to any county you choose

.... WITHOUT HIKING YOUR PROPERTY TAXES *

*Purchasing a more expensive replacement property

will result in an adjusted tax increase based on your Prop 13 tax basis

“Proposition 19 allows those with disabilities to move up to three times, regardless of age, without losing their property tax base. It encourages independence for our most vulnerable Californians and increases the likelihood that they will always find an ADA accessible place to call home."

                                   — Kathleen Barajas, Californians for Disability Rights

Prop 19 - For Victims of Wildfire & Natural Disaster

PROP 19 BENEFITS

If you are one of the tens of thousands of Californians

whose family home has been destroyed or substantially damaged

by wildfire, here’s some good news — Prop 19 lets you

move to a new home without incurring a tax hike.

 

TAKE ADVANTAGE OF PROP 19:

Keep your original Prop 13 tax base when moving to a home

of equal or lesser value anywhere in California

 

Secure an adjusted tax rate based on your Prop 13 tax base

when moving to a more expensive home anywhere in California

 

Transfer your original tax base to a new home up to three times or more

WITH PROP 19 YOU CAN....

Purchase a replacement home in your community   

 

Move to a different neighborhood anywhere in California

.... WITHOUT HIKING YOUR PROPERTY TAXES *

* Purchasing a more expensive replacement property

will result in an adjusted tax increase based on your Prop 13 tax basis.

Prop 19 - FACTS

As of April 1, 2021 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)

Further questions should be directed to qualified

California real estate attorney or tax advisor.

How to determine the tax basis of the new property?

 

Rule 1: If the replacement property is of equal or lesser value to the original primary residence, then the taxable value of the replacement property remains the same as that of the original primary residence.

 

Rule 2: If the replacement property is of greater value than the taxable value of the replacement property will be adjusted by adding the difference in sales price (technically, the “full cash value”) to the taxable value of the original primary residence.

 

Here is a sample calculation of the tax basis for a replacement property with a greater value than the original primary residence.

 

Original primary residence (OPR) taxable value                                         $400,000

OPR sold for                                                                                                      $900,000

Replacement primary residence (RPP) purchase                                        $1,000,000

Difference between sale price of OPR and purchase price of RPP is      $100,000

Taxable value of RPP is $400,000 plus $100,000                                        $500,000

TRANSFER OF PROPERTY TO CHILDREN 

 

Transfers of a family home or family farm between parents and their children

without causing a change in ownership for property tax purposes.

 

It is an exclusion from change in ownership.

Allows transferee to retain the taxable value of the transferor.

“Taxable value” means the base year value plus inflationary adjustments, commonly referred to as the factored base year value.

In cases where the transferor died, the date of death is considered the date of transfer. 

 

Applies to a purchase or transfer of a family home between parents and their children

if the property continues as the family home of the transferee.

 

The transferee must live in the home as their primary residence within one year

of transfer and file for the homeowners’ or disabled veterans’ exemption within one year of transfer to qualify for the exclusion.

 

For a family farm, defined as real property under cultivation

or which is being used for pasture or grazing or

that is used to produce any agricultural commodity as used

in Government Code section 51201, there is no requirement that the family farm contain a home that the transferee lives in to qualify.
 

There is a limit to the value that can be excluded for a family home

or each legal parcel of a family farm.

 

The value limit is equal to the property’s taxable value

(factored base year value) at time of transfer plus $1 million.

If the market value exceeds this limit, the difference is added to the taxable value. (Note: The $1 million allowance will be adjusted annually by the State Board of Equalization (BOE) beginning in 2023.)

TRANSFER OF PROPERTY TO GRANDCHILDREN

Prop 19 allows transfers of a family home or family farm

between grandparents and their grandchildren under limited conditions

without causing a change in ownership for property tax purposes.

 

It is an exclusion from change in ownership.

The same conditions and requirements as the exclusion for transfers

between parents and children apply,

except in order to qualify, the parents of the grandchild,

who qualify as children of the grandparents, must be deceased.

TRANSFER OF PROPERTY FOR DISASTER VICTIMS

Operative April 1, 2021 Allows victims of a wildfire or natural disaster

to transfer the taxable value of their primary residence

to a replacement residence anywhere in the state.

The conditions and requirements are the same as the taxable value transfer

for seniors, except there is no age requirement.

 

However, the original property must have been substantially damaged

or destroyed from a wildfire or Governor declared disaster,

and with over half of the market or improvement value diminished,

to be considered “substantially damaged.”

TRANSFER OF PROPERTY FOR SENIORS AND SEVERELY DISABLED PERSONS

Operative April 1, 2021 Allows homeowners who are age 55 or older,

or severely and permanently disabled of any age, to transfer the “taxable value”

of their principal residence to a replacement property up to three times

anywhere in the state. “Taxable value” means the base year value

plus inflationary adjustments, commonly referred to as a factored base year value.

 

There is no limit to the market value of the replacement property

compared to the original property, but the amount in excess of

the original property’s market value is added to the transferred value.

 

The replacement’s market value can exceed the original’s market value

up to one hundred and five percent (105%) if the replacement is purchased

within the first year after the sale of the original,

or one hundred and ten percent (110%) in the second year

with no excess added to the transferred taxable value.

 

To qualify:

Replacement residence must be purchased or newly constructed within two years of the sale of the original property.

 

Claimant must be at least age 55 years or older at the time the original property is sold.

 

Both the original and replacement properties must be eligible for the homeowners’ or disabled veterans’ exemption.

 

The claimant must own and reside in the original property at the time of its sale or within two years of the purchase or new construction of the replacement.

 

Either one or both the sale of the original property or the purchase/completion of new construction of the replacement must occur on or after April 1, 2021.

 

The original property must be sold, and the replacement purchased for consideration. Consideration is defined as something of value such as payment of cash, creation or cancellation of debt, or exchange of other property.

HOW MUCH WILL THE NEW TAXABLE VALUE BE?

General Rule:

If a child or grandchild qualifies by continuing to use the home as a primary residence, then the original Taxable Value (TV) of the property for that child/grandchild will remain the same as the TV to the parent, unless the following applies:

 

Exception:

If the assessed value of family home is more than $1m over the original TV, then the new TV will increase.

 

For example:

- Assume the assessed value of the family home is $2m and the original TV is $500k.

- Because $2m is more than $1m above the original TV, the new TV will increase.

 

If so, the new TV will be the new assessed value minus $1 m. In this case, $2m minus $1m equals $1m, and that is the new TV.

DISCLAIMER:

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.

 

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