The Proposition 19 constitutional amendment bills came to pass on November 3, 2020, by a simple 51% vote in California. The home protection policy aims to safeguard property tax portability. It will allow homeowners to pass their Prop. 13 base-year) within California. Prop. 13 had earlier the property tax rates at 1% with limited yearly increases
This law aims to protect the disabled, natural disaster act victims, senior citizens, and families. We expect it to change the home-owning landscape significantly. The most significant change will be evident among the San Diego older homeowners looking to sell their properties. It will also affect people seeking to inherit both residential and private homes.
It is important to note that this property tax rule has both winners and losers in equal measures. The beneficiaries are long-term homeowners seeking to relocate to California. The losers, on the other hand, are people looking to inherit family properties.
It doesn’t go unnoticed the overwhelming support the California Association of Realtors gave to this bill. The real estate body believes that the move will promote home sales and purchases. The optimism saw them spend a whopping $35 million in support of the motion.
How will Prop. 19 work?
The new legislation has two major deadlines. The first deadline comes on February 16, when the new rule on inherited properties will begin. The second deadline comes on April 1, 2020, when we expect to take a favorable assessment on a property purchase to start. The deadline, however, will not apply to homes already transferred as inheritances to families.
From next year the law will allow homeowners above 55 years of age to move anywhere with California. They will not have to follow any significant property take increases whenever they buy homes with equal or lesser market value. The senior citizens face some restrictions as one can only use it no more than thrice.
Prop. 19 looks to outdo the initial rule where families had to downsize the value of a more expensive home to preserve their status. Now, an older homeowner can buy a more expensive property and maintain a practical assessment.
For instance, if an older property owner wants to sell their property for $1.2 million with a tax assessment value of $500,000 to move to a $1.9 million house, they will have to face a higher tax bill. However, the next assessment will factor in the difference between the new home’s purchase price and the old property’s selling price.
For inherited property, the way forward is not yet exact. State officials and local experts are still completing a formidable route plan to implement Prop. 19. However, one thing is exact; inherited homes will have higher tax assessments.
People moving to family homes after transfer can expect a higher tax bill with the new law. However, it will depend on the market value of the subject property compared to its asset value.
In this context Prop. 19 looks to eliminate the exemptions for inherited vocational and rental homes. It will see the reassessment of these properties at market value when they change ownership.
Downsizing SD can help you understand all the details of Prop. 19
Understanding all the aspects of Prop. 19 can be difficult without help from experienced professionals. Luckily, you can always turn to Downsizing SD and get all the help you might need. We are here to help you get to grips with everything Proposition 19 brings. Contact us today!