Wanting to find a home in the location of your dreams but worried about property taxes?
Coronado may be just the place you are looking for with its endless stretch of white sand and year-round enjoyable weather. Plus, Proposition 19 may make the transition more manageable for those 55 years and older.
Proposition 19, also known as “The Home Protection for Seniors, Severely Disabled, Families and Victims of Wildfire or Natural Disasters Act,” was approved on Nov. 3, 2020 and put into effect on April 1, 2021.
Put simply, this California proposition deals with the transfer of a property’s taxable value.
It applies to any homeowners who fall under the following categories: those 55 years of age or over, those who are severely disabled, those who are victims of a wildfire or a natural disaster or those who are looking to keep inherited property in the family.
Breaking down Prop 19
With the scope of information that Proposition 19 outlines, I figured I would break everything down in two separate educational pieces, the first of which I covered a few weeks ago.
Check out my ad, “What does Prop 19 say about keeping a home within the family?” to learn about the ins and outs of Proposition 19’s contingencies for inherited properties.
When it comes to the other piece of the pie—transferring a property tax base from one residence to a new one—Proposition 19 can provide serious relief for anyone 55+ looking to relocate.
This proposition nudges open the door for those considering purchasing a new property but concerned about the headache of property tax transfers.
Under previous law, the purchase price of your new home needed to be equal or less than the sale price of your old home in order to transfer existing property taxes.
Now, it is possible to transfer property taxes if your new home’s value is higher than the value of your old home.
In fact, the replacement property’s market value can exceed the original property’s value up to 105% if it is purchased within a year of the sale of the original. Its value can exceed 110% in the second year.
Here’s the formula
Here’s the formula:
- The base year value of your old home + inflationary adjustments of the new home (or the amount of increased value of the new home) = your new home’s taxable value.
Keep in mind that this transfer can be done anywhere within California!
Before Proposition 19, the transfer could only happen if the old home and new home were in the same county (or in one of the counties that allowed inter-county transfers).
Additionally, homeowners 55+ can take advantage of Proposition 19’s transfer of equal property tax rates up to three times. This is great news for anyone scared of commitment, since a transfer was previously only allowed once.
How to qualify
Qualifications:
- The replacement residence must be purchased or newly constructed within two years of the sale of the original property.
- The homeowner must be at least 55 years old at the time of the property’s sale.
- Both properties must be eligible for the homeowners’ or disabled veterans’ exemption.
I would recommend taking advantage of the possibility to transfer your old property’s base year value to the taxes you pay on your new home. In a competitive real estate market like Coronado, don’t hesitate to begin looking for your dream retirement home now.
How to reach Corey
As your trusted real estate agent, I am here to assist you with any of your needs, whether that be starting the search for a property in Coronado or learning more about the tax implications and benefits of Proposition 19.
As always, please don’t hesitate to reach out at 619-568-0568 or info@simonerealestategroup.com.
I love giving my clients the tools they need to navigate the shifting world of real estate.
