I have been asked many times by potential sellers and buyers whether they can transfer their current tax basis to their new home in XYZ county. In most cases, the answer had to be "No" either
2018 California November 6 election - Proposition 5
I have been asked many times by potential sellers and buyers whether they can transfer their current tax basis to their new home in XYZ county. In most cases, the answer had to be "No" either because the county where the new home is located does not participate in the Proposition 90 program or the new home price was going to be higher than the value of the current home. Because of this, many senior home owners wanting to downsize chose to stay in a home that no longer suit their needs. Proposition 5, on the ballot for the upcoming election on November 6, could change this. The following information is not intended to influence anyone to vote one way or the other. I just want people to be aware of Proposition 5 and understand how it could help home owners age 55 and over to finally downsize and move anywhere in the state of California without substantially increasing their property tax bill or maybe even lower their tax bill.
What would change if Prop 5 passes?
- 1. You could move to any county in California (under current law you can tax your tax basis only to those counties that opted to participate in the Proposition 90 program - only 11 of 58 counties participate as of May 2017).
- 2. You could transfer your tax basis as many times as you wish (current law allows transfer of tax basis only only once in a life time).
- 3. The new home can be more expensive than the current home (current law does not allow transfer of the tax basis if the new home is more expensive than the current home).
- 4. The property tax for the new home can be lower than the property tax for the current home if the purchase price of the new home is lower than the sale price of the current home (current law does not result in a lower tax bill unless the vaLue of the new home is less than the tax basis of the current home).
The image above is taken from the the analysis portion of the proposition. Click here to view online.
Proposition 5 would benefit those most that have owned their homes for a very long time. What will not change. The replacement property still needs to be purchased within 2 years of selling the current home and at least one home owner must be age 55 or older.
You can view the official text of Proposition 5 online (pp. 56 -74 of the Ballott).
I was born and raised in Germany, near Munich and have lived in California for more than 30 years and over 15 years in the Sacramento area. I have 25 years of combined real estate and law related exp....