Keeping Low Property Taxes & Save Big Bucks!

Keeping Low Property Taxes when Selling your Home Under Prop 19

So you bought your San Carlos CA home a long time ago and have super low property taxes. You’d like to move within California, but you want to keep your low property taxes? Well, if you (or your spouse if you’re married) is 55+ years old, then you can do it for your primary residence. Under Prop 19 you transfer your low property taxes 3 times during your lifetime or 6 times if you’re a married couple.

A few rules for keeping low property taxes: the new house you’re buying must be of equal or lesser value if you intend on keeping low property taxes. Technically, you can buy something 5% more expensive during the first year after you sold your primary residence and then 10% more expensive after the first year.

However, two years after you sold your home you lose the benefit of keeping low property taxes if you have not bought a replacement home. If the home you’re buying is more expensive than the one you’re selling, then you will be reassessed on the difference in value between the two homes; which is still a great deal because just prior to 2021 this was not allowed at all.

Example for Buying a More expensive Home Under Prop 19

Keep in mind that your home has two different values:

Fair Market value: what it would sell for today on the open market.
Assessed Value: from Prop 13; the county assessor assigns a value to your home based on the initial purchase price plus an incremental value that it’s allowed to increase each year. This is the value then used to calculate your property taxes. If you bought your home a long time ago, then this value is much lower than the fair market value.

Example

Current Home has a fair market value of $1,200,000 and a property tax assessed value of $300,000
New home is worth $1,800,000
Assessed Value of new Home = New Home Value – Old home fair market Value + Old home property tax assessed value
New Tax Base = $1,800,000 – $1,200,000 + $300,000 = $900,000

So, your new assessed value for property taxes is $900,000 assessment value.

Please consult a tax professional for keeping low property taxes before selling your home because certain paperwork has to be filed in a timely manner to take advantage of these Prop 19 savings!