On November 3rd, 2020 California voters approved Proposition 19. This new law expands the special rules allowing eligible homeowners to transfer their property’s assessed value to the purchase of a replacement property and changes the property tax rules on family transfers of real property.
Purchase of Replacement Principal Residence
When is this law effective?
The portion of Prop 19 relating to the purchase of replacement property takes effect on April 1, 2021.
Where can I move?
Eligible homeowners could keep their lower property tax bill when moving to another home anywhere in the state of California.
Can I purchase a more expensive home?
Yes, eligible homeowners can use the special rules to move to a more expensive home. Your property tax bill will go up but not by as much as it would for other homebuyers.
How many times can I use the special rules?
Homeowners who are over 55, or severely disabled, can use the special rules three times in their lifetime.
Who is eligible?
Proposition 19 allows homeowners 55 and older, the severely disabled, and wildfire or natural disaster victims to carry their low property tax assessments with them when they purchase and move to a replacement home in California.
What property is eligible?
The original and replacement properties must both be the primary residence of the homeowner and located in California. They can be existing homes or new construction. To be considered a primary residence, it must be eligible for the property tax Homeowner’s Exemption.
How long do I have to complete the sale?
The purchase of the replacement residence must be within two years of the sale of the old residence.
How do I apply?
To obtain the tax exemption, the taxpayer must file an application with the assessor in the county where the replacement property is located.
Value of home.
The market value of the home is its fair market value. This may or may not be the same as the purchase or sale price if the assessor determines otherwise.
Lesser value replacement.
If the replacement home value is the same or less than the value of the original home, then the assessed value of the original home is transferred to the replacement.
Higher value replacement.
The homeowner may purchase a replacement residence at a higher value and still benefit from Prop 19. The old (lower) tax base carries over to the equivalent value of the replacement residence, and the excess value of the replacement residence is added to become the new tax base.
For example – if a $2.0 million home (with a low assessed value of $700,000) is sold and replaced with a higher value $2.5 million home, the assessed value of the replacement home will be $1.2 million [i.e., $700,000 ([old value) + $500,000 (excess value)]. The owner is taxed on a new assessed value of $1.2M with Prop 19 instead of $2.5M (actual purchase price) without Prop 19. The tax savings can be significant.
Most Family Transfers Will Trigger Reassessment
Starting February 16, 2021, Prop 19 narrows the special rules for transferring the assessed value of certain properties to family members. In general, real property transferred from parent to child, or grandparent to grandchild, will be reassessed and taxed at its full fair market value upon transfer (by sale, gift or inheritance).
A limited exemption from reassessment applies if the transferred property was the primary residence of the parent and continues as the primary residence of the child who claims the homeowner exemption. The transfer of family farms is also partially exempt.
High Value Property Will Be Reassessed.
However, if the fair market value of the eligible property (family residence or farm) exceeds the property’s taxable value by more than $1 million (adjusted for inflation every two years) then the property will be taxed at fair market value minus a $1 million exemption amount.
Consult Your Tax Professional.
This information is general in nature. You should consult with your tax advisor to determine if you qualify for these tax exemptions.
Sereno is pleased to announce they have joined forces with San Carlos based real estate brokerage, Dwell Realtors, led by partners Laura Bertolacci, Bob Bredel, Tatum Clarke, Joyce Romeo, Alana Corso, and their team of highly regarded agents. Dwell has been ranked number one in residential sales in San Carlos since 2015. The firm closed nearly 500M in sales over the last 12 months.
“This unification allows us to further our quest for a better client experience and expand our community reach while providing the same exceptional service clients have come to expect from Dwell,” said partner, Laura Bertolacci.
For Sereno, this is the fourth addition in less than 10 months and brings the firm to 575 experienced agents producing $6B in annual sales and furthers its goal to advance the cause and impact of the independent brokerage.
Partner Alana Coros noted, “The heart and soul of Dwell Realtors was built upon collaboration, client advocacy and community so it is amazing to unify with a company like Sereno that shares our same ethos and core mission to continue to elevate the client and agent experience.”
Dwell opened its doors in January 2015 as a completely independent brokerage and was built from scratch by a group of high-producing agents. They have ranked the #1 office every year since 2015 in total listings sold, total buyer transaction, and total gross sales volume for San Carlos sales.
“There’s a natural synergy that has occurred between these two companies and I couldn’t be more excited for our agents, clients, and our community to experience it,” said partner Tatum Clarke.
In 2019, Dwell also became the #1 office for gross sales volume for Redwood City properties.
“I am thrilled that we are able to join forces with a company that embodies the same core values that we built our company on 7 years ago. This is truly a win-win for our company, our agents and our clients,” remarked Dwell partner, Joyce Romeo.
This expansion reflects Sereno’s commitment to advancing the spirit of the independent brokerage to best serve agents, clients, and communities. This latest move follows the firm’s intentional growth into the East Bay area through its acquisition of J. Rockcliff Realtors (now branded as Sereno,) the Lake Tahoe region with the Granger Group, and the Sierra Foothills with the Margaretich Group. Sereno is Northern California’s largest, locally owned, and operated independently branded residential real estate company.
“Words cannot begin to express how honored and inspired we are to unite with the esteemed Dwell Realtors. We remain convinced that professional and caring Realtors provide the most comprehensive service to the clients they serve. Sereno intends to invest further into this reality for many years to come,” said Chris Trapani, co-founder and CEO of Sereno.
To learn more about Dwell, please visit 662 Laurel St, Ste A, San Carlos, CA 94070 or dwellagents.com.
Sereno is pleased to announce that The Watson Marshall Group, led by Philip Watson and Stephan Marshall, has joined forces with the company. The Watson Marshall Group includes 15 agents who will work from a newly renovated space in downtown Burlingame.
This expansion reflects Sereno’s commitment to preserving the spirit of the independent brokerage to better serve agents, clients, and communities. This latest move follows the firm’s advancement into the East Bay area through its acquisition of J. Rockcliff Realtors (now branded as Sereno,) the Lake Tahoe region with the Granger Group, and the Sierra Foothills with the Margaretich Group. Sereno is now Northern California’s largest, locally owned and operated independently branded residential real estate company.
“The spirit of independence is alive and well in the hearts and minds of leading agents. We believe there is no stopping the move away from larger, impersonal organizations to powerful independents,” expressed Chris Trapani, Co-founder and CEO of Sereno.
With over 40 years of combined experience in the San Francisco Bay Area real estate market, The Watson Marshall Group has over one billion dollars in combined sales and consistently ranks in the top 100 in California sales. The company is known for its hands-on client services, outside-the-box marketing strategies, and dedication to the communities it serves.
“As a local business themselves, Sereno understands and respects the importance of serving locally as well. From their charitable foundation to their highly respected group of agents, Sereno is and will continue to be immersed in the fabric of our neighborhoods and communities for years to come,” said Phillip Watson.
“Client satisfaction is our ultimate goal and transparency our top priority. We make certain that each and every client is thoroughly informed throughout every stage of their transaction. Sereno has proven to provide this same individualized service to each of their clients and it feels natural that they should be home for WMG,” commented Stephan Marshall.
To learn more about The Watson Marshall Group, visit watsonmarshall.com