Are you one of the many long-time homeowners who is reluctant to downsize and/or move closer to family in another city for fear of losing the affordable property taxes that you currently pay? The recently enacted Proposition 19 alleviates this problem and gives homeowners much more financial flexibility when the time comes to make a change.
At its most basic level, Prop 19 is a tax savings program for homeowners over the age of 55 who want to make a change from their current home to one that is more suitable for their needs. It allows them to essentially keep their current property tax basis in place when they sell their existing home and purchase a new one.
Targeted specifically for retirees and seniors, Prop 19 alleviates the stress of managing a home that is now too large and/or difficult and expensive for them to manage. However, any homeowner over the age of 55 can take advantage of this new law even if you are not technically downsizing or want to move to another California city perhaps to be closer to family.
This law, which has only been in effect for two years, is a major change from the previous law which only allowed seniors to keep their current tax base if the new home purchase was lower in value and within Santa Barbara County.
You can read more details about Prop 19, including its provisions for intergenerational transfers on this blog post. I would also encourage you to discuss specifics with a tax advisor before making any decisions regarding your real estate holdings.
If you are keeping apprised of the local market, you may be aware that home values are at an all-time high and there is a robust demand for Santa Barbara real estate. If you are tempted to take advantage of this extraordinary “sellers’ market” but are unaware of the tax portability that is now available to you, this may be the ideal time to simplify your life and/or relocate closer to family.