Effective April 1, 2021 Proposition 19 replaces the previous transfer of base year value to replacement dwelling held under Prop 60 & 90.
Homeowners 55 years of age and older, severely disabled, or whose property was extensively destroyed by wildfire or other natural disasters may be eligible to transfer the taxable value of their primary residence to a replacement primary residence.
Anywhere in California (no longer county specific)
Of any value, but with upward adjustments if replacement is of greater value then previous primary residence.
Purchased or newly constructed within two years of sale
Up to three times (previously one time), but without limitation for properties
destroyed by fire
If this seems like too much to process. We get it! Let us walk you through the process to make sure you get your current property tax base transferred to your new home.
There is so much information out there and home owners can get lost on exactly what they are reading. Tax forms tend to make me glaze over. So here are the top 5 questions you should be asking.
In order to receive the Proposition 19 base year value transfer, a claim form must be filed after both transactions have been completed and you are living in the replacement home. This is not done through escrow.
As long as one transaction occurs on or after April 1, 2021, and the original home is sold within two years of the purchase of the replacement home, the base year value of the original home can be transferred to the replacement home under Proposition 19. A base year value transfer occurs as of the later of either (1) the date of sale of the original home, or (2) the purchase or completion of new construction of the replacement home. If you purchase the replacement home prior to selling your original home, you will be responsible for property taxes based on the full fair market value of the replacement home for the period between the date of purchase and date of sale. There will be no refund for this period.
If the replacement home is of equal or lesser value than the original home, then the original home's factored base year value may be transferred to the replacement home without any value adjustment. In general, "equal or lesser value" means:
However, if the full cash value of the replacement home is greater than the adjusted full cash value of the original home, the base year value of the original home may still be transferred to the replacement home, but with any excess value above the adjusted full cash value of the original home added on. Thus, the new taxable value of the replacement home would be the sum of the adjusted base year value of the original home plus the difference between the full cash values of the original home, as described above, and the replacement home.
For example, an original home was sold and had a full cash value of $400,000 and a factored base year value of $100,000 at the time of sale. If a replacement home is purchased in the first year after the sale for a full cash value of $600,000, then 105 percent of the full cash value of the original home is compared to the full cash value of the replacement home. The original home's adjusted full cash value equals $400,000 X 105% = $420,000. The difference between the full cash value of the replacement dwelling ($600,000) and the adjusted full cash value of the original property ($420,000) is added to the factored base year value ($600,000 - $420,000 = $180,000 + $100,000 = $280,000). Thus, the replacement home will have a taxable value of $280,000.
One of the requirements of the Proposition 19 base year value transfer is that the original home must be eligible for the homeowners' or disabled veterans' exemption either at the time of sale or within two years of the purchase of the replacement home. “Eligible for” means that the homeowner must own and occupy the home as a principal residence. Thus, there is no set time period for which the homeowner must occupy the original home prior to its sale; all that is required is that the original home be the primary residence at the time of sale and, thus, eligible for either the homeowners' or disabled veterans' exemption.
You can always visit the BOE site at https://boe.ca.gov/prop19/
As always, our team is here to help you through the process. Reach out by clicking on the link below.
This list will also have the BOE form 19-B that you will need to fill out once you have sold and purchased your new primary residence. If you need help one of our team members can hold your hand through the whole process. Just reach out by clicking on the "Send me the List" buttton.