What California’s Prop 19 means for you
There’s been a lot of talk about the vote to enact Prop 19, but while most reports mention that it will help homeowners maintain lower property taxes even if they move, the details are often ignored. So, let’s look at what California’s Prop 19 means for you as a homeowner?
What California’s Prop 19 means for you and why it is needed
The California property market has been in trouble for years, after rapid property value inflation the natural movement of older residents downsizing or moving to retirement communities, freeing up larger family homes for younger families and new homeowners has stagnated. One of the key causes of this is that property taxes on the new home can be double or even tripe that of their old place, making moving simply impractical.
This same situation has caused chaos in the wake of the recent destructive fires and other natural disasters, leaving people unable to rebuild their lives due to the cost of property tax on the potential new residence.
What it does
So with that in mind, what California’s Prop 19 means for you as a homeowner is straightforward. It is designed to protect homeowners 55 years old or above, homeowners with severe disabilities and homeowners who have been victims of wildfire or other natural disasters by allowing them to transfer the property tax levels of their current home to a new one anywhere in California.
For example, a senior couple are currently living in a large family home they originally paid $300,000 for. Their current property taxes are based on that value, and they pay $3,300. The property is valued at $700,000, and because the property is getting too much for them, they decide to move to be nearer to family.
But if they buy a property for $700,000, suddenly they have to pay $7,700 in property taxes, more than double. For a couple on a fixed income this can prevent the move. However, with Prop 19, the couple can transfer their existing property tax base of the original home. They still pay the $3,300 even in the new property, saving $4,400 in taxes, but also allowing them to move to a more suitable property and leaving their old one for a new family to enjoy.
California Prop 19 also covers situations where the new property is more expensive than the current one. If we take the above example, if the couple found a home in a retirement community costing $800,000, the property tax would be their initial $3,300, plus tax on the value difference between their current home and new home, which is $100,000 ($800,000 – $700,000). That would be an additional $1,100, for a total of $4,400 in property taxes, half of the $8,800 the new property would normally attract.
Qualifying homeowners can take advantage of Prop 19 three times in total, offering a very flexible solution.
How it works
The Californian Association of Realtors has worked alongside the State Government and local assessors to make the process as streamlined as possible. We can help you every step of the way in securing your Prop 19 tax swap.
When considering your next property, remember that you can see significant savings on property taxes if you are eligible for Prop 19.
Qualifying homeowners include the over 55’s, homeowners who are recognized as severely disabled, and anyone who has been the victim of wildfires or other natural disasters. You have been able to apply for Prop 19 tax swaps from April 1, 2021 and applying is relatively easy.
Simply visit the Board of Equalization website, where you will find a range of information to help you, however applications must be filed with the Assessor for the county in which the replacement property, that is the one you wish to move to, is located.
You must file this claim within 3 years of purchasing the new property or you will lose the discount. The relevant Assessors will normally carry the application form on their website for download, or simply call their office to request one is posted to you.
Knowing what California’s Prop 19 means for you is very important if you are looking to downsize or are seeking a replacement for a property lost in a wildfire or other natural disaster. If you have any questions about Prop 19, or need any assistance with anything during the application process, you can call Gina on 408.858.6679 or Amit on 650.521.2320 and we will be happy to help.
Gina Arigna and Amit Singh have been helping Santa Clara, Alameda and San Mateo County residents purchase and sell residential real estate for the past 15 years. They currently work at Keller Williams Silicon City which is located in San Jose,Ca. They have helped many buyers realize their dream of homeownership by offering expert market knowledge, complimentary market snapshot, access to Keller Williams connections, expert negotiation and offer presentation, agent availability, responsiveness and post home purchasing assistance to name a few. They have helped many sellers sell their home for top dollar, in a short period of time with the least hassle because of their complimentary and cutting edge marketing strategies. If you have any questions regarding the San Jose or Santa Clara County real estate market, please reach out to Gina Arigna (408.858.6679) or Amit Singh (650.521.2320) or visit www.arignahomes.com