Sam can carry over the tax base value up to the fair market value of the “old” home to the property tax base of his new home. His new tax base will be $400,000 on the first $800,000 of value, with the remaining $700,000 taxed at the normal rate. When he finds that classic California beach bungalow for the low, low price of $1.5 million, Prop. But Sam’s now divorced, the kids have moved out and since he’s always preferred blondes, he’s looking to spend more time at the beach. Say that Sam Sixty has a nice home he bought for $400,000 many years ago, and it’s now worth $800,000.
19 after April 1, 2021, if they’re looking to upgrade to a more expensive home. Residents over age 55, the severely disabled, and wildfire or natural disaster victims can also benefit from Prop. (Cue the cheers of real estate agents everywhere, which is precisely who championed this proposition.)įor people age 55 and older or severely disabled, this property tax base transfer can now be moved up to three times in your life anywhere in California. 19, Susie is now free to sell her home and buy another home valued at $1 million or less and have her same tax base ($200,000) - anywhere in California. To sell and downsize to a smaller home worth $500,000, unless she moved to a county with reciprocity and could transfer her property tax basis, Susie would wind up paying more than twice the property taxes she was paying, as she’d be taxed on the $500,000 tax base rather the $200,000 base in her current home. 19, if Susie Seventy bought a home in 1980 for $200,000 and the property was now worth $1 million, Susie may have resisted selling even if the house was too large and the stairs were too steep. 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.īefore Prop. The good newsįor residents age 55 and older, severely disabled, or a victim of a wildfire or natural disaster, there is much to like about Prop.
The property tax rate is 1% plus other voter-approved fees and assessments. For the examples below, I’m using the purchase price as the “property tax base,” and a 1% tax rate. It is typically the fair market value of your home at the time you bought it, adjusted annually by up to the 2% allowed under Proposition 13. Your tax base is the assessed value - the value listed on your property tax bill on which the property tax is calculated.
Let me note here that I’m going to simplify the math. As a result, 2021 will see sweeping changes in property taxes assessed on personal residences. Proposition 19, billed as “The Property Tax Transfers, Exemptions, and Revenue for Wildfire Agencies and Counties Amendment,” passed with 51.1% of California voter approval in November.