Prop 19 California – Property Tax Benefits for 55+ homeowners

Property tax benefit for eligible California homeowners takes effect on and after April 1, 2021.

Overview of Prop 19 in California

The Home Protection for Seniors, Severely Disabled, Families, and Victims of Wildfire or Natural Disasters Act, referred to as Proposition 19 in California.

California Prop 19 allows:

  • an owner of a primary residence who is over 55 years of age
  • severely disabled
  • or a victim of a wildfire or natural disaster

to transfer their primary residence’s current taxable value to a replacement primary residence located anywhere in California, regardless of the location or value of the replacement primary residence, that is purchased or newly constructed as that person’s principal residence within 2 years of the sale of the original primary residence.

Prop 19 Expanded Special Rules for Eligible Homeowners. 

Starting April 1, 2021, the measure expands the special rules for eligible homeowners. Specifically, the measure:

  • Allows Replacement Home Purchases Anywhere in California. Eligible homeowners could keep their lower property tax bill when moving to another home anywhere in the state.
  • Allows the Purchase of a More Expensive Replacement Home. Eligible homeowners could use the special rules to move to a more expensive home. Their property tax bill would still go up but not by as much as it would be for other homebuyers.
  • Increases Number of Times a Homeowner Can Use the Special Rules. Homeowners who are over 55 or severely disabled could use the special rules three times in their lifetime.

Lear more about comparison of prior laws and the new Prop 19 here.

Q & A on California’s Prop 19

What is the limit on the exclusion?

There is a cap of $1,000,000 on the exclusion of property tax re-assessment for eligible primary residence replacement purchase/ construction.

Prop 19 imposes higher property taxes on inherited rental/ investment properties

On or after February 16, 2021, only inherited properties used as primary homes or farms would be eligible for property tax savings.

Children who are inheriting California properties from their parents/ grandparents that they intend to use as rental/ investment properties or second homes will now have to pay higher property taxes based on the newly assessed property value.

Key Takeaway for 55 and older adults who want to move and keep their low property tax.

Prop 19 allows seniors 55 and older to move anywhere in California, up to three times, and keep their property tax basis.

There will be a slight adjustment when residents buy a more expensive property using a blended property tax re-assessment on the difference of the sold primary home and the newly purchase replacement residence.

However, the overall property taxes would still be considerably lower because of the transferred original tax value from the sold home.

Prop 19 Impact on Availability of Local Housing in San Diego County

It will make larger homes in more established neighborhoods available for many buyers as seniors begin selling these family homes.

Coastal homes, investment and rental properties may become more available on the market as owners and their children/grandkids decide to put up these properties for sale due to increased property taxes/ costs.

As more seniors sell their family homes, some of them will compete with first time or affordable home buyers who are looking for smaller homes in all ages communities.

Homes in San Diego 55 and over communities will also likely see a greater demand from senior buyers.

Prop 19 may also incentivize home builders to build new 55+ homes in San Diego to attract a pool of buyers who are largely cash buyers (as seniors typically own their home outright or have large equity).

Some recent 55+ new home developments that have seen success include Auberge Del Sur and Avante Del Sur by Lennar.

General builders who build all age-appropriate San Diego homes and condos with single story living or homes with bedrooms downstairs could also see an increase in demand.

San Diego County homes that have an existing ADU (accessory dwelling unit) or potential to build or convert (i.e. an oversized garage) may also see an increased demand from seniors who want to downsize and move in with family but still have their own separate space.

More information on Prop 19 from California

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