Last year, California voters approved Proposition 19, a measure designed to give homeowners more freedom to change residences while closing tax loopholes on inherited properties. Thus Proposition 19 is two-fold, effecting tax base transfers and the requirements for retaining the tax basis in family transfers. If you are thinking of either buying or selling a home in California, it’s important to understand how Proposition 19 will affect your home transaction. Anchor Seaport Escrow is here to help buyers, sellers, and realtors understand the impact of Proposition 19 on both buying, selling, and transferring a home, as part of our mission to help you with all of your escrow needs. There is so much to consider when it comes to escrow, trust the experts at Anchor Seaport Escrow to keep you informed and in good hands from start to close.
Effective April 1, 2021, homeowners who are 55 or older, disabled, or lost their home in a natural disaster can transfer their tax base to a new home, up to three times, anywhere in California. 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. This is an update to Propositions 60 and 90 through which homeowners could only take advantage of a tax base transfer once in their lifetime, and even then only if they bought a replacement home in certain California counties.
Effective February 16, 2021, individuals who inherit a primary residence from a parent or grandparent will be able to retain the same tax base only if the property continues to be used as a primary residence. Even in this case, the residence is subject to some tax adjustments if the new property value is more than $1M over the original tax basis. However, this means that inherited homes that are not used as principal residences, such as second homes or rentals, will be reassessed at market value when transferred. Family farms are exempt from these restrictions.
Both buying and selling a home are multi-faceted processes with a lot to take into consideration. Proposition 19 will have an impact on many property transfers throughout California. At Anchor Seaport Escrow, our services extend to (but are not limited to) the areas of: Long Beach, Seal Beach, Lakewood, Los Alamitos, Huntington Beach, Cypress, Rossmoor, Rancho Palos Verdes, Signal Hill, and Cerritos. We are an Independent escrow company; as such, we are 100% neutral and our sole business is escrow. As escrow experts, we can help guide you through this complicated process. Even if you just considering buying, selling, or transferring a property, contact us to find out how Proposition 19 might impact your timeline. Our expert staff is always up-to-date on the latest laws, regulations, and real estate trends. We will work with you, and your unique circumstances, to provide the comfort and reassurance you deserve throughout the escrow process. Contact us here now to find out more about Proposition 19 and our escrow services. We however cannot provide advice around tax matters which is best discussed with your CPA and possibly your estate planning attorney.