On November 3, 2020, California Proposition 19 passed with over 51% of the 15 million votes cast. Taking effect on April 1, 2021, the passage of Proposition 19 ushers in an unprecedented tax benefit for Californians aged 55 years and older.
As you may recall from our earlier blog post “California Proposition 19: What You Need To Know”, an individual 55 years or older can take their current tax assessment with them on the purchase of a new property.
Specifically, if the taxable value of the new property is less than the taxable value of the original property, the homeowner will retain the tax assessment on the original property.
A homeowner 55 years and older will also benefit from Proposition 19, even if the taxable value of the new property exceeds the taxable value of the original property.
In this case, Proposition 19 states that the taxable value of the original property is subtracted from the taxable value of the new property, with the difference added to the taxable value of the original property. The homeowner will then be assessed on the taxable value of the original property with the added difference.
Also, these individuals can relocate anywhere in the state of California, from San Diego to Los Angeles, and still retain the benefits of Proposition 19. The proposition is not county-specific, unlike previous propositions.
Making the benefit even more lucrative to the homeowner 55 years and older is that they are permitted to utilize the benefits under Proposition 19 up to three times during their lifetime.
The question becomes: How do I benefit from Proposition 19? While the proposition applies to all residents 55 years or older, it does speak to certain groups in the state. The biggest group is the “empty nesters” who bought a large house 20 years ago and no longer need the space. It also applies to the individual out of work because of COVID-19 who seeks to downsize their home, or the individual wanting to move closer to family that were prohibited by a tax reassessment.
Clearly, Proposition 19 presents a tax advantage to Californians 55 years and older that has never been seen in this state’s history. The proposition removes the barrier of an increased tax assessment that has caused many to dismiss the idea of a move.
If you are a homeowner who has wanted to downsize, move to a new home, or you find yourself in one of the categories discussed above — now is the time to start looking! Find that dream home you have always wanted. Take advantage of the benefits of Proposition 19, as the cost to relocate can be significantly less than others in the market. Proposition 19 is an opportunity that should not be ignored.