Prop 19 Property Tax Advantage: The Best Move for Seniors

Over the decades, California real estate proprietors over 55 years have been in a tough predicament, whether to reduce to a smaller and manageable dwelling and risk a huge hike in property tax or remain in a house that is no longer suitable to their requirements to retain their favorite Prop 13 tax base.

With the help of Proposition 19, many people now have a thing of the past and the so-called moving penalty. This initiative, passed by the seniors in the voting process, has made a potent instrument to help the seniors by assisting them in transferring their small property tax base to a new residence. Look for a tax professional (like the best tax attorney in Los Angeles) who can help you.

The trick is to be able to negotiate the rules in order to realize this advantage. We should dissect the process of how it works and who is eligible.

Prop 19 Transfer, Your Golden Ticket

Fundamentally, under Proposition 19, qualified owners of homes are given a chance to take the current taxable value (their base year value) of their current primary home and move it to any other home within California. This may be done thrice within the lifetime of the person, and gives unmatched flexibility.

See also: A Practical End-of-Year Roofing Checklist for Home owners

What are the Eligibility Criteria?

You should be able to fulfill the following criteria in order to qualify:

1. Be 55 Years or Older, Severely Disabled, or a Victim of a Natural Disaster: This article is about the provision for seniors, but is also applicable to other groups.
2. The Move Must Be In California: You are allowed to sell the home in one county and purchase in any of the 58 counties in California.
3. It Must Be Your Principal Residence (Both Homes): Both homes that you are selling and those that you are buying must be the principal residence.
4. File within the Right Time: You should buy or construct the new house within two years after the purchase of the first one.
5. The New Home Must Be as Valued or Less: This rule is the most important, and certain terms have to be calculated.

How to Value Your Property Before Transfer?

You do not necessarily receive your old tax bill. The price of the new house will dictate your percentage of the original tax base that you can retain.

1. Assuming that the market value of the new home is, the market value of the old home: You are allowed to transfer 100% of your original property tax base.
2. When the value of the new home in the market is higher than that of the old home, the difference will be added to your current tax base.

Tips for a Successful Prop 19 Move

1. The time allowed to make purchases after selling is two years. The clock begins to tick on the date of the sale of your original home. Keeping a professional tax person (like an IRS tax attorney in San Francisco)will always help you.
2. The assessor will find out the market value of your new house as of the date of acquiring it. In the case of a building, the value is determined when the building is finished.
3. The opportunity to take this advantage 3 times in a lifetime is a potent instrument in changing to other life levels.
4. Ask a real estate lawyer or tax expert. They are able to assist you in making out the regulations of your particular case and also to submit the proper documentation (such as the Claim for Person(s) at Least Age 55 form) to your county assessor.

Proposition 19 has altered the retirement planning of homeowners in California completely. Following these rules, you will be able to make a smart choice regarding your future with your Prop 13 savings in your pocket for your new chapter.