Proposition 19, which became law in 2021, can save homeowners aged 55+ thousands of dollars in property taxes on their next move. Why don’t more folks know about this? I’m here to change that!
Generally, Californians who relocate are subject to higher property taxes on their new home. There were exceptions to this, but they limited where someone could move and how expensive of a home they could purchase. As such, many older homeowners over the years have decided to remain in their old homes to avoid tax increases even if their home was too big or no longer where they wanted to reside. In November 2020, voters passed Proposition 19 that opened up property tax reassessment exclusions for nearly all circumstances where someone 55 and over moves within California.
This is a big deal, yet has gone largely unnoticed since it became law nearly a year ago. The CA Association of REALTORS (CAR) put together a YouTube video highlighting the new law’s benefits, and although there are over 6 million CA residents aged over 55, the video has received only 2,000 views.
I’m here to shed light on this new law and the opportunities it creates. Lets consider a likely scenario to point out the potential of Proposition 19…
Consider someone who lives in the same home they bought back in the early 80s where they raised their family. As such, they are now empty nesters & have a low annual property tax bill of $3000. There are a number factors that could instigate a move. Perhaps the home is too big for their needs, or the huge backyard and pool become too much of a hassle to maintain, or they want to move closer to the coast & enjoy cooler temperatures during their golden years. There are many reasons for retirees to relocate.
If they sell their $800,000 tract home & move near the coast to a $1,000,000 cottage on a small lot, then under typical property tax rules their annual bill would soar to well over $10,000. Yikes! Quite a cost increase to bear during retirement. But, thanks to Proposition 19, a simple one-page application would keep their actual tax bill closer to $5,000. Here’s how it works (somewhat simplified for illustrative purposes; click here for a more detailed breakdown from the legal department of CAR):
|Existing Tax Bill||+||Difference in old home & |
new home value
|x1%||=||New Tax Bill|
|( $3,000 )||+||($1,000,000 – $800K = $200K)||x1%||( $2,000 )||=||$5,000|
In this hypothetical, but very believable, scenario of an older homeowner moving to different county and to a more expensive home, $5,000 of property tax savings are realized every year that wasn’t possible before Proposition 19!
If you or your parent/grandparent has been considering a move within California to be closer to family, medical care, better weather, or any myriad of reasons, then have them get in touch with me to discuss how Proposition 19 can open new tax-saving opportunities. The savings could be the difference between making the move a high-priced dream and an affordable reality.