Proposition 19 allows statewide transfer of property taxes for those severely disabled or over 55. If you or your spouse are over 55 and planning to make a move within the State of California, there's some great new benefits. Effective April 1st. 2021:
THE 4 STEPS OF THE TYPICAL PROCESS:
1 – Ask us to provide you with all the resources you need. We’ll email you all the necessary links from the California State Board of Equalization, the County Assessors Offices, and the required forms (links also provided below). Bottom line, before making a move, make a plan. We also encourage to consult with a qualified real estate attorney or tax advisor.
2 – Sell your existing principal residence.
3 – Purchase a new principal residence within 2 years.
4 – Within 3 years of purchasing the replacement property file Board of Equalization form BOE-60-AH with the county that your replacement property was purchased. Most people file the form much sooner than the 3 year limit so they can get the property tax rate adjusted ASAP. If you file within the 3 years, a retroactive adjustment will be made and you will be refunded any previous overpayment of taxes. You can file after the 3 year deadline, but then relief will only be granted beginning with the calendar year the claim was filed.
That’s it in a nutshell. An alternative strategy is to buy first and then sell your existing residence. That’s also common, just remember both transactions have to be within two years of each other.
Feel free to email us directly and we’re happy to provide additional information email@example.com
Resources and links:
Board of Equalization Prop 19 Info
Marin Assessor Prop 60/90 Info and Forms
San Francisco Assessor Prop 19 Info and Forms
*Examples of transfers:
(1) Equal or Lesser Value: The replacement primary residence is of equal or lesser value, subject to an inflation index of 105% if purchased within one year of sale, and 110% if purchased within the second year of sale of the original property. The tax basis of the original principal residence may transfer to the replacement principal residence. (for example, if you sell your existing principal residence for $1,000,000 you can purchase a property for up to $1,100,000 1-2 years after the sale date).
(2) Greater Value: The replacement residence is of greater value. The taxable value of the replacement primary residence is calculated by adding the difference between the full cash value of the original primary residence and the full cash value of the replacement primary residence to the taxable value of the original primary residence. Example:
Original Primary Residence (OPR) taxable value . . . $400,000
OPR sold for . . . . . . . . . . . . . . . $900,000
Replacement Primary Residence (RPP) purchase . . . $1,000,000
Difference between sale price and purchase price is . . . $100,000
Taxable Value of RPP is $400,000 plus $100,000… $500,000
** Proposition 19 also addresses new rules regarding inherited properties not discussed in this article.
***This article is not intended as legal or tax advice. We encourage you to seek the advice of a qualified California real estate attorney or tax advisor prior to finalizing any decisions.