Voted into law November 2020, Prop 19 changed the California Constitution with hopeful intentions. The idea was to give people, who are living at a financial disadvantage, hope. However, as we all know good intentions rarely do what we want and often cause more problems than they fix. Please refer to our blog from July 2021, titled, “Everything You Need to Know About Prop 19.”
Now it’s February 2022 and the reality of CA Prop 19 and its implementation plans are emerging. Once I waded through the regulatory language, to find the nut of information deeply buried in the State Board of Equalization’s (BOE) letters sent to County Assessors, things began to make sense.
Two areas of the California Constitution and Revenue and Tax Code (RTC) are affected and require change. The first is the Base Year Value Transfers, which basically describe the tax amount derived from the cost of selling the first house and buying a new house once you meet the qualifying conditions. . The second regarding Intergenerational Transfer Exclusions, describes property one can inherit from a parent or grandparent.
What does this mean to homeowners? If you purchased a home at a low tax basis, you can transfer that tax basis to a new home anywhere in California with a higher tax basis. So if you are in a home that is too big for now, you can downsize and not worry about taking a property tax hit. Grandparents can pass their property to their heirs, with some limitations. However, the heirs must reside on the inherited property.
To better understand how or if these changes affect you, and to guide you through these changes in the purchase or transfer of a new or existing home, please contact me. I am Stephen Burchard, The Desert Bowtie Realtor, taking the (k)nots out of real estate.
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