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For many years, if you had lived in your home for many years and had a very low property tax base, you were disincentivized to move and pay significantly more in property taxes often by 10 fold. The only way you could keep your property taxes if you found a cooperating county and you purchased a home of equal or lesser value. Oftentimes that was very limiting.
Enter Prop 19 which is the new and improved version. Here are the important notes of Proposition 19:
1. Statewide participation-you no longer need to be concerned about ensuring that your county or the county you’re looking to move to, participates in this exchange.
2. If you are staying in California and over 55, you’re allowed to exercise Proposition 19 up to three times.
3. The equation is as follows: (Purchase Price of New Home) – (Sale Price of Old Home). Apply the existing property tax rate to the net difference. This amount is added to your existing property taxes on your old home for the current rate that you would pay.
For example, potential sellers are considering a change. Sale of their house for $10,000,000 and a purchase for $13,500,000. They are currently paying $57,000 in property taxes. The math is as follows:
$13,500,000-$10,000,000 = $3,500,000
$3,500,000 (.0115) = $40,250
$40,250 + $57,000 = $97,250 New Yearly Property Tax Rate on Home Purchased for $13,500,000
Property Tax Rate without Proposition 19 would have been $155,250 per year.
This works out to be a savings of $58,000. Proposition 19 has had a significant improvement on the mobility of long time property owners and have enabled more mobility.
