Hello prop 19…good by prop 60/90, 58 and193
Let’s break down the good and ugly. I will start with what we had…The prop 60/90. Prop 60 was a same county transfer and prop 90 was intercounty. They both had the basically the same rules.
Under the 60/90 rule, you could transfer the base value from your home to a replacement property. You had to be 55+, you could buy new or resale, as long as the replacement home was of equal or lesser value of your home, your principal residence, one time deal, and you had to file within 3 years of the transaction. Counties had to co-operate with the sale. The original property had to be eligible for Homeowners or Disabled Vet’s exemptions. Here in Southern Cal, all counties allowed the intercounty base value transfers. It was pretty simple to do the transfer. When this rule was in place it was feasible to find a home of equal or lessor value. I actually help clients file the paperwork for prop 60/90.
Prop 19 replaced prop 58(transfers between parents and kids both ways, no reassessments) and prop 193(grandparents to grandkids, one time, no reassessments) what was nice about these props is that the eligible transfers were a gift, inheritance, or transfer of ownership. No value limit if it was a principle residence, and value did not exceed $1 million. Prop 19 limits the transfers. There’s more. Prop 19 also reassess the transfers of property. So when you want to give your property to your kids or grandkids, it will cost them. And in some cases lots and lots of money to receive the gift from you. Quick reference Chart
Prop 19 Allows homeowners 55+, disabled, or wildfire/ disaster victims transfer their tax base to their replacement property. The replacement property has to be of equal or lessor value. Your home had an assessed value of 250,000….good luck here in the state of Cali if you can find a replacement home of equal or lessor value. Quick guide
Here’s where about everybody in the state of Cali sits….If the replacement property is of greater value, the new taxable value is calculated by adding the difference between the full cash value of the replacement property and the original property to the original taxable value. For example, if a seller of an original property has a $300,000 assessed value and a sale price of $1M. Seller purchases a replacement property for $1.5M.The assessed value of the replacement property would be $800,000.
In other words, if your home has assessed value of $300,000. And you sell it for $1 million. You buy a home for $1.5 m. Your new tax base will be $800,000. You minus the $300,000 from the $1m you get your new and improved assessed tax base.
Perks of prop 19. Your assessed value on the new more expensive home is not supposed to be reassessed yearly. With some limits, kids who move into their parents homes as primary residence can keep the tax break. You can use it up to 3 times. Dedicated revenue for fire and emergency services.
Non perks of prop 19: eliminate tax break for investment homes and commercial properties. Heirs who inherit their parents’ properties will pay taxes based on market value.
If you must read the whole bill….here it is