If you’ve owned your California home for a long time, your property tax bill may be a lot lower than what a new buyer would pay for the same house.
That’s because California property taxes are generally based on your home’s assessed value, including what’s known as its factored base-year value, rather than simply resetting to today’s market value every year.
But what happens if you want to sell and move?
Normally, buying another home can mean a new assessment based on that property’s market value. For some longtime homeowners, that could mean a significant increase in property taxes.
Proposition 19 gives qualifying California homeowners age 55 and older another option.
What Is Prop 19, in Plain Terms?
Proposition 19 allows a qualifying homeowner who is 55 or older to transfer the taxable value of their original principal residence to a replacement principal residence anywhere in California.
That means you may be able to sell a home with a relatively low taxable value, buy another home and carry that favorable tax base with you instead of starting completely over at the replacement home’s full market value.
These base-year-value transfer provisions have been available since April 1, 2021.
Eligible homeowners age 55 or older can use the benefit up to three times.
Spouses may potentially qualify separately as claimants, meaning a qualifying couple could potentially make additional transfers, but eligibility is determined for each claimant rather than automatically giving every married couple six transfers.
Am I Eligible?
For the age-based provision, you generally need to meet all of the applicable requirements, including:
- You must be at least 55 years old when your original home is sold.
- The original property must qualify as your principal residence and be eligible for the homeowners’ exemption or disabled veterans’ exemption.
- Your replacement property must also become your principal residence.
- You must purchase or complete construction of the replacement residence within two years before or after selling the original property.
- Both properties must be located in California.
There isn’t a minimum number of years you must have lived in the original home just to qualify for this transfer.
Prop 19 also provides separate pathways for qualifying homeowners who are severely and permanently disabled and certain homeowners whose principal residences were substantially damaged or destroyed by a wildfire or natural disaster.
Those pathways don’t require the homeowner to be 55.
Does the New Home Have to Cost the Same?
No.
One of the biggest advantages of Proposition 19 is that your replacement home can be any value.
However, its value determines whether your old taxable value transfers without an additional amount being added.
Generally, your replacement residence can be worth up to:
- 100% of the original home’s value if you buy or complete the replacement home before selling the original home;
- 105% if you buy or complete it within the first year after selling; or
- 110% if you buy or complete it within the second year after selling.
If your replacement property falls within the applicable limit, your original home’s factored base-year value can generally transfer without an excess-value adjustment.
If the replacement home exceeds that limit, you don’t lose the entire benefit.
Instead, the amount above the applicable value threshold is added to the transferred factored base-year value.
What If I Buy My New Home Before Selling the Old One?
This is where timing can get a little tricky.
If you purchase your replacement residence before selling the original residence, the 100% comparison is based on the original property’s full cash value when that original property is later sold.
There’s another important consideration.
The base-year-value transfer doesn’t occur until the later of the two transactions. If you buy the replacement home first, you can be responsible for property taxes based on its full fair market value during the period between purchasing the replacement and selling the original home.
The state says there is no refund for that interim period.
That’s one reason it’s worth discussing the timing with the county assessor before making a move.
How Many Times Can I Use Prop 19?
A qualifying homeowner age 55 or older can transfer their base-year value up to three times under Proposition 19.
That’s a significant change from the rules that existed before Prop 19, when age-based transfers were generally much more limited.
The three-transfer provision also applies to qualifying homeowners who are severely and permanently disabled.
What Do I Actually Need to Do?
This transfer isn’t automatic.
You’ll need to file a claim with the County Assessor in the county where your replacement home is located.
For homeowners qualifying based on age 55 or older, the applicable form is generally BOE-19-B, Claim for Transfer of Base Year Value to Replacement Primary Residence for Persons at Least Age 55 Years.
The claim should be filed within three years of purchasing the replacement residence or completing new construction.
What Happens If I Miss the Three-Year Filing Deadline?
You may still be able to receive the Prop 19 transfer, but there’s an important consequence.
If you file within the three-year period, the relief can apply based on the qualifying transfer.
If you wait until after the three-year filing period expires, the state says you may receive prospective relief only.
In other words, filing late doesn’t necessarily eliminate the benefit altogether, but you could lose the ability to have the relief applied back to the original qualifying transfer date.
That’s why this deadline is worth taking seriously.
Is Prop 19 Still Available?
Yes.
Proposition 19’s base-year-value transfer provisions became operative on April 1, 2021, and they remain part of California’s property tax system.
For qualifying homeowners age 55 and older, the current rules continue to allow up to three base-year-value transfers to replacement principal residences anywhere in California.
Because property tax situations can become complicated, especially when you’re coordinating a sale and purchase, it’s a good idea to contact the assessor in the county where you’re buying before relying on a particular tax calculation.
Relief Recap
If you’re a California homeowner age 55 or older, moving doesn’t necessarily mean giving up the favorable property tax base you’ve built over the years.
Proposition 19 may allow you to transfer your home’s factored base-year value to a replacement principal residence anywhere in California.
You can buy a home of any value, although buying above the applicable 100%, 105% or 110% threshold can increase the taxable value transferred to your new property.
You’ll generally have two years before or after the sale of your original home to purchase or complete construction of the replacement residence, and you should file your Prop 19 claim with the appropriate County Assessor within three years of purchasing or completing the replacement home.
If you’re thinking about moving, checking with the County Assessor before you sell or buy can help you understand how the timing and value calculations would apply to your specific situation.
