HAVE YOU BEEN THINKING ABOUT MOVING…
BUT YOU ARE WORRIED ABOUT PROPERTY TAX INCREASES?
There are new tax benefits you could be qualified to take advantage of that will allow you to move without big tax increases.
With the passage of Proposition 19, homeowners who are 55+, severely disabled or victims of wildfire or natural disaster may transfer their property tax base of their existing home to a new home anywhere in California. This is a significant improvement from the current law that is confusing, unfair and limiting.
HOW PROPOSITION 19 WORKS:
Prop 19 new tax benefits for homeowners 55+, severely disabled, or victims of wildfire or natural disaster, as of April 1, 2021 include:
- Moving anywhere in California: Prop 19 removes location restrictions on property tax transfers allowing the transfer of the property tax base of an existing home to a new home anywhere in California.
- Moving to any home regardless of price: Prop 19 removes price restrictions on property tax transfers allowing the transfer of the property tax base of an existing home to a new home regardless of price (with an adjustment upward to their tax basis if the replacement property is of greater value).
- Transferring the low property tax base of your original home to a new home up to THREE times (or more for victims of wildfire or natural hazard).
This could result in substantial savings in annual property taxes and these new tax benefits went into effect April 1, 2021. Download the Prop 19 Fact Sheet
For Tax Savings Examples under Prop 19: Get The Facts
WHAT ABOUT INTERGENERATIONAL TRANSFERS?
Here’s how Proposition 19 impacts Intergenerational Transfers:
While Proposition 19 continues to safeguard family transfers as a right in the California State Constitution and allows children and grandchildren to receive the property tax break if the heir resides in the family home. There is a $1 million cap on the value of the exclusion but covers the vast majority of homes transferred and, thus, those heirs will not see an increase in the property tax bill that was paid by their parent/grandparent.
However, non-owner occupied property is now subject to reassessment upon transfer.
For Prop 19 Questions on the LA County Assessor site:
LA Tax Assessor
For Prop 19 Questions on the OC County Assessor site:
OC Tax Assessor
OTHER TAX SAVINGS OPPORTUNITIES:HOMEOWNER TAX DEDUCTION:
According to the Tax Assessor’s website, “If you own a home and it is your principal place of residence on January 1, you may apply for an exemption of $7,000 from your assessed value… Homeowners’ Exemptions may also apply to a supplemental assessment if the prior owner did not claim the exemption. Further instructions are included with the claim form.
Click to download the LA County forms:
Interactive Info Form
Home Exemption Application Form
For more information on this in LA County: https://assessor.lacounty.gov/homeowners-exemption/
For more information on this in Orange County: https://www.ocgov.com/gov/assessor/programs/homeowners
MORTGAGE INTEREST TAX DEDUCTION (MID)
The mortgage interest deduction allows you to reduce your taxable income by the amount of money you’ve paid in mortgage interest during the year, up to $750,000 after December 2017 (and $1 million before). If you have a mortgage, keep good records — the interest you’re paying on your home loan could help cut your tax bill.
For more information about this and other tax breaks for homeowners: https://www.irs.gov/publications/p936
If you are interested in learning more about Tax Savings Tips, including Property Tax Savings for Home Sellers as well as Mortgage Interest Tax Deductions for Home Buyers, give us a call.
This information in not intended to replace the advice of a qualified estate planning, tax professional or real estate attorney. For more Prop 19 resources, go to www.CAprop19.org.