Blog

How Prop 19 Helps You Save

Effective April 1, 2021, those eligible homeowners can sell their homes and take their property tax base with them to any other property they buy for the same value or less in the state of California. Knowing information about Prop 19 may be helpful if you fall into any of the categories.

Current Rules are as follows:

  1. Can be used up to 3 times
  2. Must be done after 4/21/2021 when it is in effect
  3. You have up to two years after selling to purchase the new property

 

Who qualifies for  Prop 19?

If you are a seller age 55 and older, severely disabled, or a victim of a wildfire or natural disaster, Prop. 19 could be very helpful.

What is Prop 19?

How it works is you will be able to reduce your new property assessed value based on your previous homes assessed value. Before only specific counties allowed this and without it they would pay the assumed 1% tax rate.

See below example:

In short:

  • Using the current tax assessment and assuming 1% you can calculate the current tax payment.
  • To get the new tax rate with Prop 19 you would subtract the full market value from the new property value. You will then add your old property tax assessment basis/value to that.
  • You’ll then take the tax rate times that number to get the new property tax payment.

 

There is a drawback when it comes to inheritance.

If being used as an investment property:

  • The property will be reassessed to the new fair market value resulting in higher taxes.
  • The new tax rate is based on new assessed fair market value

If this applies to you call us and see how our team can walk you through the process and help you save money.  For more information visit CAR:

https://www.car.org/en/knowledge/pubs/newsletters/Newsline/Prop19

 

***This is not to be mistaken as tax, legal or accounting advice. This blog has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.***

Comments are closed.

$1B+
IN SALES
100+
COMBINED YEARS OF RE EXPERIENCE
#1
KELLER WILLIAMS SALES GROUP IN LA
1,700+
PEOPLE & FAMILIES HELPED