Property tax relief will be available to eligible California homeowners beginning April 1, 2021.
The Home Protection for Seniors, the Severely Disabled, Families, and Victims of Wildfire or Natural Disaster Act, also known as Proposition 19 in California.
to transfer the current taxable value of their primary residence to a replacement primary residence as long as it is located in California, regardless of the exact location or the value of the replacement primary residence. Property owners have two years from the transfer of the first property to complete the second transaction.
The bill extends the special rules for qualifying homeowners beginning April 1, 2021. To be more specific:
What is the exclusionary limit?
A cap is in place of $1,000,000 on the exclusion of property tax re-assessment for a primary residence replacement.
Only inherited properties used as primary homes or farms on or after February 16, 2021, will be eligible for property tax savings.
Children who inherit California properties from their parents or grandparents and plan to use them as rental/investment properties or second homes must now pay higher property taxes based on the newly assessed property value.
Prop 19 enables seniors 55 and up to relocate anywhere in California, up to three times, while maintaining their property tax.
When homeowners purchase a more costly home, a mixed property tax re-assessment on the difference between the sold primary home and the newly purchased replacement residence will be applied.
However, because of the transferred original tax value from the sold house, the overall property taxes would still be somewhat lower.
When seniors continue to sell their family homes, it will make larger homes in more established communities more accessible to younger buyers.
Investment properties, coastal homes and rentals will become more accessible on the market as owners and their children/grandchildren decide to sell due to increased property taxes/costs.
Homes in San Diego County with an existing ADU (accessory dwelling unit) or the ability to build or convert (i.e. a large garage) can see an increase in demand from seniors who are interested in downsizing and moving in with family while still having their own separate space.
Homes in San Diego 55+ neighborhoods are also expected to see increased demand from senior buyers.
If more seniors sell their family homes, some of them will contend with first-time or low-cost home buyers searching for smaller homes in mixed-age neighborhoods.
Prop 19 could also create an incentive for home builders to construct new 55+ homes in San Diego in order to attract cash buyers (since seniors typically own their home outright or have large equity). In fact, Auberge Del Sur and Avante Del Sur by Lennar are two recent 55+ new home projects that have seen success.
General contractors that construct all age San Diego homes and condos with single-story living or homes with bedrooms downstairs can see an increase in demand.