If you’re a homeowner in California and you’re 55 years old or older, you may have heard about Proposition 19, also known as the “Home Protection for Seniors, Severely Disabled, Families, and Victims of Wildfire or Natural Disasters Act.” This proposition was passed in November 2020, and it made some significant changes to the way that property taxes are calculated for certain groups of people.
One of the main changes that Proposition 19 brought about is related to the property tax exemption that is available to homeowners who are 55 years old or older.
Under the old rules, homeowners in California who were at least 55 years old could transfer the assessed value of their primary residence to a new home if they moved within the same county or to certain other counties in California. This was known as the “base year value transfer” or the “Proposition 60/90” transfer.
Proposition 19 expands on this exemption by allowing eligible homeowners to transfer the assessed value of their primary residence to a new home anywhere in California, regardless of the location.
This means that if you’re 55 years old or older and you want to move to a new home in a different county, you can still keep your old property tax assessment and avoid a significant increase in property taxes.
In addition to the expanded base year value transfer, Proposition 19 also made some changes to the rules for inheriting property. Under the old rules, when a parent or grandparent passed away and left their home to their children or grandchildren, the new owners could also keep the old property tax assessment. This was known as the “parent-child transfer” or the “Proposition 58/193” transfer.
Proposition 19 made some changes to this rule as well.
Under the new rules, the parent-child transfer is still available, but only for properties that are used as the primary residence of the new owner.
If the new owner decides to use the property as a rental or vacation home, the property will be reassessed at its current market value and property taxes will likely increase.
So, what does all of this mean for you?
If you’re 55 years old or older and you’re thinking about moving to a new home in California, Proposition 19 could save you a significant amount of money on property taxes.
In addition to the tax benefits, Proposition 19 also includes some provisions to help homeowners who have been affected by natural disasters, such as wildfires. If your home is damaged or destroyed by a natural disaster, you may be able to transfer your old property tax assessment to a new home anywhere in California.
If you’re 55 years old or older and you own a home in California, Proposition 19 could provide some significant tax benefits if you’re looking to move to a new home.
Make sure to consult with a tax professional to see if you qualify for the base year value transfer, and take advantage of this opportunity to save money on property taxes.
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.
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.
Action Steps: These Property Tax Transfers Do Not Happen Automatically
- After successfully purchasing your new home, there is an application form (example form here) that you would need to fill out to get the tax benefits of Prop 19. Please click on the link below depending on where your home is located to learn more about how to apply for for Prop 19 Tax Benefits. San Diego County: Email address is Prop19@sdcounty.ca.gov.
- Please watch the video below for an explanation of Prop 19 by San Diego County Chief Deputy Assessor. The video includes examples of tax property tax calculations based on buying a replacement home below the $1 Million sales cap, or above.
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.
Where to get the form?
Please contact and visit the San Diego County Assessors website for the updated form – Here is a link to the San Diego County website (form example here).
Prop 19 Potential Impact on Availability of Local Housing in San Diego County
In the next several years, it could help 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.
Great news! There is a new San Diego 55+ community project called The Junipers, 55+ community in Rancho Penasquitos and will consist of 536 detached and attached homes for 55 and over adults to be built by Lennar. Learn more about The Junipers here.
Also, Haddington at Côta Vera in Chula Vista will soon have new 55+ homes for sale!
Current San Diego 55+ homes fo sale.
Please contact Ken Tritle, Realtor® SRES® Senior Real Estate Specialist at DreamWell Homes Realty, by filling out this form, calling, or texting 760-798-9024 for more information or visit our The Junipers Rancho Penasquitos 55+ community page for any updates.
Please be sure to also follow our DreamWell Homes Realty Facebook page for regular updates and we highly recommend that you subscribe to our Youtube Channel for our new home video tours.
More information on Prop 19 from California
Sign up for our 55+ Newsletter Guide to Relocating and Retiring to San Diego.
Please call or text DreamWell Homes Realty at this telephone number 760-798-9024.
or
email jeanken@dreamwellhomes.com
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