If you are over 55 you need to know how Prop 19’s passage in November might affect you. Basically, Prop 19 allows you to move the current property tax on your home to any new home you purchase in the State of California. For example, homeowners who wanted to move closer to their family near Lake Tahoe had real problems in the past. Previously 50 out of 58 California Counties, including around the Lake, would not allow you to move your tax basis to a home in those areas. Now you can.
Current rules also force you to purchase a less expensive home in order to keep your current taxes on the new home. That has been repealed. You may now purchase a more expensive home and take your old lower taxes with you. This gives you the freedom to move and no longer feel trapped to stay where you are just because of your current lower taxes. You can move and still take lower taxes with you.
If a few years ago you bought a Mesa home for $500,000, you paid about $5,000 annual property taxes. It may now be worth $1.7 M. In the past if you then purchased a new home for $2 M, your taxes would be $20,000 per year – a $15,000 increase. That prevented many people from moving.
Here’s how the new property tax rules rules could work to save you most of that tax increase. If we use the same example with the new rules, your taxes would only increase $3,000 instead of going up $15,000. This will make moving more affordable within the State of California.
Mesa Market Report
It is important to note that new property tax rules go into effect on April 1, 2021, so this will not apply to any escrow that closes before April 2, 2021. There are more details that are helpful to know. I can discuss these with you when you give me a call. This is a great time to be planning your escrow if you want to take advantage of Prop 19.
ADU – City Now Allows Removal of ADU Covenants
Several hundred homeowners in the City who built an Accessory Dwelling Unit (ADU) between 2017 and 2019 found themselves with a problem with the City of Santa Barbara. When they got the ADU approval, the City forced them to sign a Covenant requiring that the owner occupy one of the two units. Subsequently, the state disallowed this practice, but the City maintained that those who signed in the past would have to honor their agreement.
Many people called me who had this problem. They found that it would be expensive to sue the City with no certainty of success. The Association of Realtors took up their case and successfully negotiated for months with the City to get this covenant removed. The rules are slightly different for Junior ADU’s.
Client Talk…
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