An Overview of Prop 19 and How it Benefits Homeowners

Prop 19 in California is a tax benefit for certain homeowners. The Act has recently been expanded to be more beneficial to those who qualify for the benefits. 

What is Prop 19?

Prop 19 is the Home Protection for Seniors, Severely Disabled, Families, and Victims of Wildfire or Natural Disasters Act. This is quite the mouthful so most people refer to the Act as Prop 19. 

This is a property tax benefit that allows a homeowner of a primary residence in the state of California who is over the age of 55, severely disabled, or the victim of wildfire or natural disaster to transfer the primary residence (first home, lived in a majority of the year) taxable value to a new primary residence as long as that home is within the state of California. 

This act allows for transfer regardless of the location or value of the new primary residence home. It can be a home that is newly constructed or purchased as their new principal residence within 2 years of the sale of the first primary residence. 

Recent Prop 19 Expansions that Began in April !, 2021

The tax measure has expanded to be more beneficial for California homeowners needing to utilize the benefit. Prop 19 now allows replacement home purchases anywhere within the state of California. This means that a homeowner can retain a lower property tax bill that they paid on their first home when moving anywhere else in California to find a new or replacement home. 

The benefits also allow a homeowner to purchase a more expensive property. Eligible homeowners could make use of the new expansion rules to purchase a more expensive property. This does not mean that the homeowner's property taxes would not increase, but they will be at a lower rate than what is standard in the area.

The new expansion on rules allows for a homeowner to use this benefit more than once. For homeowners over the age of 55 or severely disabled, the benefit can be used for a total of three times within their lifetime. 

This is Great News for Homeowners Looking to Keep Property Taxes Low

One of the biggest benefits for most taxpayers over 55, is that they can take their lower tax base to the new purchase of a home anywhere in California. People with fixed incomes used to be "frozen" in their location due to having lived in their homes a long time and having a lower tax base.

If one uses an example of a tax rate of 1.1% times the sales price, the amount would be substantially higher than the rate if one purchased a home 20 years ago.

For example a place that sold approximately 18 years ago for $715,000 would have an annual tax of $7865 per year. That same house sold 18 years later for 1,440,000. At just over double the price. That tax bill will be $15,840 per year for the sale in 2022. The past maximum that the tax bill could have gone up in proposition 13 was 2% per year. The reality is it's probably more likely an average of a 1.3% increase and that equates to $9923

Either way there's a $3,000- almost $6,000 savings that one can potentially get in this example by using Prop 19

Where to Get More Information

If you have more questions about Prop 19 you can check out the information for Prop 19 on the Santa Cruz County Assessor's Office website. We are not tax professionals and advise you to get the advice of a tax professional if you have detailed questions about being able to benefit from Prop 19. 

Where Can I Find the Form to Make a Prop 19 Claim for Property Tax Transfer?

You can find the form for acceptance of a transfer for property taxes from your previous primary home to your current one at this link: https://www.co.santa-cruz.ca.us/portals/0/County/asr/forms/BOE_19-B.pdf?rev=2022

For more information on purchasing or selling a home in Santa Cruz and surrounding areas please contact us any time.