If you want to relocate to the state of California or move to another city within the state of California and you are 55 years of age or older, you may be able to take advantage of CA Prop 19, which provides you with property tax relief. This proposition is a major change to Proposition 13, which is a tax law adopted in 1978 that aimed to restrict property taxes. Homeowners who qualify for Proposition 19 can now do a tax transfer no matter where they move as long as it is within the state of California. They can transfer to another property, even it is of a higher value. Previously, there were limitations to what homeowners could do in this regard, especially, if they moved to certain cities and counties and they had to pay attention to property market value.
Transfer Tax
With Proposition 19, there is an increase in the number of times homeowners can transfer tax evaluations. If you suffer from a chronic disability at age 55 and over or you may have suffered a loss of your home during a natural disaster, then you could transfer tax evaluation up to three times instead of one time. This new legal precedence is set to help many homeowners who wanted to move but were concerned about the process.
The New Law
As a result of this new law, real estate inventory in California can now be freed up; protecting senior citizens that are homeowners to sell their existing homes, if they want to downsize. For those who have inherited a property, the law also has a market value evaluation requirement, if the home is not going to be used as the heir’s main residence. On the other hand, the Prop 19 measure offers a blended property tax benefit and savings to those who are selling their old home and buying a new and more costly home for relocation. For instance, if you are an elderly couple and you sold your home, which had a property value of $400,000 and you received $2 million for the sale and you then purchased another home within the state of California for $3 million, the assessed value of the new home would be $1.4 million, which is the additional $1 million gained from the sale plus the property value of $400,000.
Parents and Children
For some residents in the state of California, the Prop 19 law has a negative effect, especially those parent-child relationships that prompt exclusion. Before this law was passed, parents were able to transfer their main residence to their children without having to reassess fair market value; no matter, if the children decide to use the home as real property or not. This would have allowed the children to enjoy the same property tax that their parents were able to enjoy. There is a flip side. For vacation property, commercial property, or rental property, the parents are able to transfer up to a million dollars of the assessed value to their children without any property tax increase and no matter what the children are going to use the property for.
Conclusion
Have you decided to sell your home to downsize and move to another home within the same state? If so, and you want to reap the benefits of CA Prop 19 and you are 55 years and older; living in the state of California, it is recommended that you take advantage of this.
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