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Proposition 19 in California
How does Proposition 19 in California work? How does the Proposition 19 Property Tax Rule Benefit Homeowners buying a new house? What are the eligibility requirements for PROP 19 in California?
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6 Replies
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Proposition 19 lets certain homeowners—like those over 55, disabled, or affected by a natural disaster—move to a new home in California without their property taxes going way up. You can take the lower property tax from your old home and apply it to your new one, even if the new place is more expensive.
This rule can save you a lot of money on property taxes when you buy a new home. If you qualify, you can move and keep paying the lower property tax you had on your old home, which is a big deal in California’s pricey housing market. It makes moving to a new home more affordable, especially for older or disabled homeowners.
To qualify, you need to be at least 55 years old, disabled, or have lost your home in a natural disaster like a fire or earthquake. You also have to be moving from your main home, and you can use this benefit up to three times in your life.
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Thank you, Chad. Thank you for the information on Prop 19 in California. Is Proposition 19 only for homeowners in California or is it for other states too? Can you please give me about 5 case scenarios as an example so I can comprehend? What lenders do Proposition 19? I heard Gustan Cho Associates is one of those lenders. How do I connect with Gustan Cho Associates?
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Proposition 19, voted in by Californians this year, offers some homeowners a lot of property tax relief. Prop 19 benefit those over 55 years old, severely disabled or victims of wildfires or natural disasters. Here’s how Proposition 19 works and who is eligible for its benefits:
What does Proposition 19 do?
It allows homeowners who qualify to take the taxable value of their current primary residence with them when they buy a replacement home anywhere in California, regardless of the new Home’s market value. This can result in substantial property tax savings.
Main benefits of Proposition 19
Property tax savings
Transfer taxable value: It lets homeowners who qualify transfer (or carry) over the assessed value (taxable value) of their existing Home into a new one. This helps to keep property taxes low even if they buy a more expensive replacement house.
Location flexibility: The property tax break is not limited to homes within the same county or certain counties but applies to any home statewide, so people can move anywhere in California without giving up their old, lower property tax base.
Move-up or downsize: People can buy replacement homes that are more expensive or cheaper than their original houses. An upward adjustment would be made to the original assessed value. This is if they purchased a costlier residence. At the same time, there would be no downward revision if they acquired a less valuable one. Still, all rights reserved shall revert entirely upon such later event that may cause said reversionary interest to vest again according to hereof binding parties hereto under specific performance obligations imposed. This holds unless otherwise provided hereinbefore mentioned above beyond limits set forth elsewhere. Also, except where prohibited by statute apart from those cases expressly permitted thereby relating directly there concerning it notwithstanding anything contained hereinabove mentioned before. Now, against each other, related hereat affecting thereof could give rise. Therefore, between them so far, only such words shall have effect whether arising during performance thereof prior reference being made to it after its commencement.
Increased transfers
Three times: Previously, only one transfer of taxable value was allowed in a lifetime. But now homeowners over 55 years old or those with severe disabilities (as certified by a medical professional) can do it up to three times.
Who is eligible for Proposition 19?
Age or disability:
- Fifty-five years old or older.
- Or severely disabled (as certified by a medical professional).
- Or the victim of wildfire/natural disaster (under specified conditions).
Primary Residence requirement:
Both the original and new properties must be the owner’s primary residence. The replacement property must be purchased or built within two years of selling the previous one.
Equal or Greater Value:
- The original assessed value will not change if the new Home is worth equal to or less than the previous one.
- However, if it exceeds this amount, then there shall be added amount which included herein by reference shall have effect as part of this agreement always provided.
- Otherwise, those mentioned above are in addition to that.
- Always provided where prohibited by law save otherwise expressly provided hereinbefore referred to beyond limits set forth elsewhere.
- Except where prohibited by statute apart from those cases expressly permitted.
- Thereby relating directly there concerning it notwithstanding anything contained hereinabove mentioned before.
- Now, against each other, there is a related hereat affecting thereof, which could give rise previously between them.
- So far, only such words shall have effect whether arising during performance thereof before reference being made to it after its commencement.
Timeframe For Sale And Purchase:
Replacement property must be purchased before or within two years following the sale of your current primary residence.
Example: Prop 19 Tax Savings
Original Home: $200,000 assessed value (and corresponding property taxes).
New Home: $600,000 fair market value.
Transfer process:
The new house is taxed at an amount equivalent to its worth in relation to the old house’s assessment for tax purposes. This means that if a house costs $200k more than another, then that’s how much higher it’ll be priced.
If the latest address isn’t calculated using full market rates while assessing it but based on lower estimates, which would be levied on these taxes, knowing they are likely lower while assessing current homes.
Proposition 19 allows eligible California homeowners to transfer their current tax base anywhere in the state when buying a replacement property. This can result in significant taxpayer savings, especially when moving to more expensive areas. Older adults, people with disabilities, and those affected by wildfires or other natural disasters who want or need a different home will find this measure particularly beneficial.
Knowing these rules could impact your decision to buy a new California house and still manage property taxes
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Proposition 19: Law Specific to California
Proposition 19 is a law that only applies in California. It gives property tax breaks to eligible homeowners within the state. Residents of other states cannot take advantage of these particular exemptions since every state has different regulations about real estate taxes.
Five Case Scenarios for Understanding Proposition 19
Here are five examples to help you understand how Proposition 19 works:
Scenario 1: Trading Down To A Smaller Home
Background: Maria, 62, lives in a large home in Los Angeles, which is assessed at $300,000, and wants to move into a smaller $400,000 home in San Diego.
Result: Maria can transfer her $300k assessment value to the new residence. However, this new house costs more than her current one—an additional $100k worth. Only that amount gets added onto its cost basis for tax purposes ($400k). That value remains significantly below market price so she can save on property taxes.
Scenario 2: Moving To A Different City
Background: John is a 58-year-old homeowner whose house in San Francisco has been appraised at $200,000. He decides to live closer to his family, who reside in Sacramento, where properties are priced around $350K each; therefore, John buys another dwelling there.
Result: The owner keeps his original amount as it is transferred during relocation but then adds any excess amounts required due to differences between houses purchased (i.e. if SF’s highest selling point was less costly than what was bought within Sacrament). As such, it will cost him some additional dollars beyond just those after buying this new place.
How to Reach Gustan Cho Associates
Gustan Cho Associates is a nationwide mortgage lender specializing in different loan programs, including those enjoyed in California by Prop. 19 tax reforms. For now, if you want to know more about the mortgage deals offered by Gustan Cho Associates:
Website: http://www.gustancho.com is the official website of Gustan Cho Associates NMLS 2315275.
Contact Details: Their website should have contact forms, phone numbers, and email addresses so that you can talk directly with one of their loan officers. Depending on your specific requirements, they may be able to help you.
Local Representation: Anyone working under this legislation should understand the local markets and details about this law (limited to California only). Gustan Cho Associates can offer this because it is a national mortgage company with a huge presence in California.
Proposition 19 allows eligible California homeowners to save money on property taxes. Proposition Nineteen’s versatility allows for situations where one moves from point A up to Z within their state without raising an inch higher than what was initially levied against them at B. Connecting with Gustan Cho Associates will ensure that everything goes smoothly during these times. Gustan Cho Associates NMLS 2315275 is a dba of NEXA Mortgage NMLS 1660690, the largest mortgage brokerage in the nation.
If you are a homeowner considering selling your current home and upgrading to a higher-priced home in California, contact Chad Bush of Gustan Cho Associates at chad@gustancho.com. Chad is a dually licensed real estate agent and licensed loan officer in California.
https://gustancho.com/california-housing-market-forecast/
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This reply was modified 2 months, 4 weeks ago by Gustan.
gustancho.com
California Housing Market Forecast For 2025
California Housing Market Forecast for 2025 is expected to be strong despite many Californians fleeing the state due to incompetent leadership
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This reply was modified 2 months, 4 weeks ago by
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Another important point to consider is that, in the cons column, Proposition 19 can significantly affect families who inherit property. Now, if you inherit a home, you only keep the low property taxes if you actually live in the house. If you don’t, the taxes can go way up because the property gets reassessed at its current value. This could mean some families might have to sell a home they wanted to keep. Just something to think about when looking at the downsides of Prop 19.
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This reply was modified 2 months, 3 weeks ago by Chad Bush.
chadbushre.com
In November 2020, California voters passed Proposition 19. This law changed the way property taxes work in the state. The goal was to help some people, like
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This reply was modified 2 months, 3 weeks ago by
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You appropriately raised this very salient point regarding Proposition 19. Thus, requiring further clarification on this point:
Prospective measures: Proposition 19, enacted in California in 2020, has dire consequences when it comes to the inheritance of properties. The summary is as follows:
Primary Residence Inheritance:
- Children or grandchildren of a property owner can inherit the property without a higher property tax charge.
- This holds as long as the descendant occupies the property for one year.
- A formula of changed tax base, by $1,000,000, to last year’s tax base (upon which factors of inflation rate occur yearly).
- Children or grandchildren of an owner, not the head of the household or owner of the real estate.
- Reassessment will be made on the current market value upon passing the latter.
This is a very drastic property tax change, especially for families that have owned such properties for a long period of time.
Potential Consequences:
- Inherited properties may have to be liquidated.
- This is even when members of those families cannot deal with high property taxes.
- In particular, the poor and middle-income groups that come to inherit such properties where the property’s market value appreciates by a very large amount.
Limited Exceptions: There is some protection for family active agriculture as a property, though this protection has limitations.
State Revenue Impact: This change is anticipated to generate more revenue for the state from the property tax. Which pro-points will serve the schools and local services?
Contrast with Previous Law:
- Before the inception of Prop 19, there was a law that did not allow a change of tax base for inherited properties.
- It gave leeway to properties with a certain valuation.
- The restriction on investing within California considerably constrains California property tax law and property inheritance practice.
- This is expected to eliminate tax avoidance techniques that some people have exploited.
- But nonetheless, it has the effect of breaking the chain of family land ownership.
- This is especially true in zones with cerebrospinal-jumped values due to inflation and a constrained boundary.
For a family intending to make an estate plan, this battle brings new complications and routes to avoid the overheads of inheriting and keeping properties.