Who doesn’t love a good blog about taxes? But wait there’s more! Ok there isn’t, but this is actually good stuff. We often work with potential downsizing clients who have been “Golden Handcuffed” to their current home. They have owned their home for a long time and have a relatively low base for property tax because of the Prop 13 benefits. For example, they bought their home in 1985 for $250k and now it's worth $1.5m. They would like to move to be closer to family, to a single level home, to downsize, or just for the sake of change. Their property tax is probably ~$3k-4k a year. But buying a new home at even $800k would potentially double their current property tax burden making the move less affordable.
Enter Prop 19. Prop 19 has been a gift to homeowners in this situation, giving them newfound freedom to move. It allows 55+ homeowners (and a few other groups) to transfer their current tax basis to a new home, helping to maintain this part of home ownership. For example, regardless of what you bought your home for, if you sell for, let's say $1mil, you can buy at a $1m or less and have the same property tax. For a number of years this was true only within a county or between a few counties. But with Prop 19, all counties are required to allow this transfer. There are more conditions if you are buying a more expensive home, but there are still many benefits.
Give us a call or email, if you or a family member has been thinking about moving but are unsure of the costs involved or would like more information about how Prop 19 will affect you.
