By Lauree Borup
Long-time member and former chamber board member Lauree Borup has been a top-producing Realtor since 1988 in the Groveland-Pine Mountain Lake-Yosemite area. Broker-Owner of RE/MAX Yosemite Gold from 1993-2020, Lauree continues as a Broker-Associate with RE/MAX Gold. One of her many specialties and certifications is as a Seniors Residential Specialist (SRES). In Lauree’s two-part series “A Realtor Writes,” she unravels some of the mystery and opportunity available to 55+ homeowners through Proposition 19.
Proposition 19 went in effect April 1, 2021, and allows people 55+ years old to transfer a low property tax assessment from the primary house they sell to the primary house they buy. For example, you sell your owner-occupied house in PML that you bought in 1998. It has a 2021 tax assessment with Tuolumne County of $160,000, and you sell it for $400,000. You buy a home anywhere in California within two years, and it costs $400,000.
Since the replacement primary residence is of equal or lesser value than the original primary residence, the current tax value (called the “factored base year value”) of the original primary residence becomes the “new” base year value of the replacement primary residence. So you will pay annual property taxes on $160,000, and not $400,000.
What if the house you buy costs $700,000? If the replacement primary residence is of greater value than the original primary residence, partial relief is available. The difference between the full cash value of the original primary residence you sold, $400,000, and the full cash value of the replacement primary residence, or $300,000 ($700,000 minus $400,000), will be added to the factored base year value ($160,000). That amount is $460,000, and that is your starting tax assessment, instead of $700,000.
Your spouse or co-owner does not have to be 55 years old–just one of you. Here is a similar scenario, looked at in a different way. A senior couple on a fixed income lives in a home valued at $600,000. They pay $2,200 in property taxes, based on the $200,000 original purchase price. They find a $600,000 home to purchase in another county, but can’t afford the new $6,600 annual property tax bill. Under Proposition 19, the senior couple can purchase the $600,000 home without a property tax increase. Prop 19 allows these homeowners to move and transfer the tax base of their original home to the replacement home, saving $4,400 in annual property taxes.
One of the reasons Prop 19 was put on the ballot was to give seniors incentive to relocate and free up more homeownership opportunities. Otherwise, seniors might feel stuck in a house that was too big, or far from family, or medical care, just to keep a low tax assessment.
Just in case you buy your new home before selling your current one, that does not disqualify you from transferring your low tax assessment.
For more information, contact the tax assessor, or google California Board of Equalization. The form to use is 19-B. Prop 19 also gives the same tax break to severely disabled persons, or people affected by a wildfire or other natural disaster loss.
Lauree is a Broker-Associate with RE/MAX Gold in Groveland.