California Property Tax Portability Calculator under Proposition 19

Craftsman bungalow home in Long Beach

If you are contemplating selling in California and relocating, you may be able to save money on your property taxes if you are 55 years of age or older, severely disabled, OR whose home has been substantially damaged by wildfire or natural disaster.  You may transfer the taxable value of the primary residence to a new replacement residence anywhere in the state, within two years of the sale, and up to three times, or as often as needed if your house was destroyed by fire.

The Property Tax Portability Calculator at the link below (courtesy of California Association of  Realtors) estimates the amount of annual property taxes that a home seller could save as a result of porting their current property tax base to a new property under California's Proposition 19. This measure was passed in November 2020 and became effective in 2021.

See C.A.R.'s Quick Guide for more information about Proposition 19. 

Claims are made through your local County tax assessor's office.  The link for information at Los Angeles County Assessor is here.

Tax Portability Calculator 

 

Julia Huntsman, REALTOR, Broker | http://www.abodes.realestate | 562-896-2609 | California Lic. #01188996

If You Are Over 55, Don't Forget About the California Proposition 19 Tax Transfer Benefits

Long Beach bungalow house

Are you a possible candidate for a Proposition 19 tax transfer?  California's Proposition 19 was passed in November of 2020 and made changes to property tax benefits for families, seniors, severely disabled persons, and victims of natural disaster throughout the state starting in 2021.  For a general summary of this tool, and examples of how homeowners can save, please go to Your Local Realtor Can Help You Save When Moving With a Prop 19 Tax Break. These current changes allow a homeowner who is over 55 years of age, severely and permanently disabled or whose home has been substantially damaged by wildfire or natural disaster to transfer the taxable value of their primary residence to:  

• A replacement primary residence
• Anywhere in the state
• Regardless of the value of the replacement primary residence (with adjustments if "greater" in value)
• Within two years of the sale
• Up to three times (but without limitation for those whose houses were destroyed by fire) 

As with many pieces of legislation, this bill in its original form needed clarification in order for County Assessors to properly implement it, a process that is still continuing.  While prior Propositions 60 and 90 (intracounty and intercounty legislation) had certain limitations which the new Proposition 19 has expanded upon, Prop. 19 has also had some restrictions in place that didn't exist before, and it's important for owners to understand how it will work for them.

In general though, this bill is very useful, especially considering the overall cost of living in California in residential real estate prices, in allowing property tax base transfer reductions for homeowners over age 55, and other applicable owner categories, which will save money on the property tax of the new home purchase.  And, it may be applied up to three times for standard 55+ owners, but has no such transfer limitation where homes were destroyed by fire.

If you are considering moving now or in the future, please obtain more information from your Realtor professional and/or tax person about this tax transfer process.  Be aware also that at this time many County Assessors offices are dealing with many applications and homeowners are having to be patient.  If you are in Los Angeles County, go to assessor.lacounty.gov/prop19 for more direct information, and a forms tab to submit for your application. 

I am available by phone, text or email -- if you would like additional more specific information in a Q&A format, please contact me about this or any other aspect of selling a home.

Julia Huntsman, REALTOR, Broker | http://www.juliahuntsman.com | 562-896-2609 | California Lic. #01188996

Some California Real Estate Laws for 2022

Every year a plethora of new laws comes into effect, the following are some of them which should be of interest to the consumer and professional in the real estate industry:

Appraisals -      After July 1, 2022, every contract for sale of real property shall contain a notice that all appraisals shall be unbiased, objective, and not influenced by any illegal considerations, including "race, color, religion (including religious dress, grooming practices, or both), gender (including, but not limited to, pregnancy, childbirth, breastfeeding, and related conditions, and gender identity and gender expression), sexual orientation, marital status, medical condition, military or veteran status, national origin (including language use and possession of a driver’s license issued to persons unable to prove their presence in the United States is authorized under federal law), source of income, ancestry, disability (mental and physical, including, but not limited to, HIV/AIDS status, cancer diagnosis, and genetic characteristics), genetic information, or age."  https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=202120220AB948

 Restrictive Covenants - Per California Association of Realtors, this law requires real estate brokers or agents, who have actual knowledge of possible unlawfully restrictive covenants in a declaration, governing document or deed that is being directly delivered must notify the owner or buyer of such and the ability of the owner or buyer to have it removed through the Restrictive Covenant Modification process.  https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202120220AB1466

Home Inspectors - A plumbing contractor may inspect a sewer lateral pipe connecting a residence or business to a sewer system and also offer to or perform repairs if the consumer is provided a specified disclosure before authorizing the home inspection. SB484

Duplexes and Lot Splits in Single Family Zoning - Many city and/or county rules affect this new law, but two units in a single family zone may be permitted, and subdivision into two parcels.   SB9

Emotional Support Animals - Per California Association of Realtors,  AB 468 requires a person that provides an emotional support dog to give notice to the recipient or buyer that the dog does not have the special training required to be a guide, signal or service dog; and requires a person that provides a certificate, tag, vest, leash or harness for an emotional support dog to give notice to the buyer that the material does not entitle an emotional support dog to the rights and privileges afforded to a guide, signal or service dog.  

Additionally, AB468 prohibits a health care practitioner from providing documentation relating to an individual’s need for an emotional support dog unless the health care practitioner complies with specified requirements, including: 1. Holding a valid license; 2. Establishing a client-provider relationship with the individual for at least 30 days prior to providing the documentation, and, 3. Completing a clinical evaluation of the individual regarding the need for an emotional support dog.

Revocable Transfer on Death Deed - extended to 2032.  This deed may allow avoidance of probate, and allows a homeowner to transfer to a named beneficiary 1-4 residential unit property upon the owner's death without a probate proceeding. Two witnesses are now required to sign the deed. Stock cooperatives are excluded from the types of property that may be transferred via RTODD but agricultural land with up to four residential dwelling units are now included. The user is advised to seek legal advice before utilizing this deed.  SB315

These are just some of the real estate-related laws  coming into effect, more concern updates to Proposition 19 (exemptions on property tax reassessment), penalties on property tax ,  PACE liens and seniors, fire hazard zones and home hardening update, foreclosure sales and owner occupants, delivery of notices in homeowner associations, plus more.  For more complete information on these new laws, please contact me for a separate obtaining of informational printouts.

 

Julia Huntsman, REALTOR, Broker | www.juliahuntsman.com | 562-896-2609 | California Lic. #01188996

California April Sales and Prices, Higher Than Ever

 Inventory, Inventory, Inventory. There's less of it, and yet.... not everything is selling within 7 days. If you are interested in selling or buying and would like more in depth information about the current market in Southern California for residential properties, just contact me via phone or text. 

Why there are fewer homes on the market has more than one possible answer, but this shortage has grown since 2012, back when 6 months inventory was more the norm, not 1.6 months. 

Last September, Long Beach had 2 months supply of homes on the market, in April 2021 it was 1.1 months.  And this is the time of year when we traditionally see much higher inventory.  In the last 7 days, 79 homes and condos came on the market, but 77 closed in the same period, and 120 went into escrow.  So the new listings are not keeping up with the overall sold volume.  

To help the situation for some reluctant sellers, the passage of Proposition 19 can assist for certain age 55-and-over sellers, or disabled, or natural disaster victims, who want to minimize a change in their property taxes if they choose to move.   Or, if you plan on relocating, study in advance the areas that may be economic advantage to move to. And for certain sellers, a purchase with a reverse mortgage can be an option.  Selling first before buying is the most optimal for sellers, but if you  can't, you want to make sure that finding a new property is a #contingency in the contract with the buyer.

Buyers who are willing to accept a property that needs some work that fits in their budget may actually be able to find the right home.  Some of those properties have been sitting on the market for a while longer and without the fierce competition of multiple bids.  And feel free to use the property search tool on the site below.

 For more market information about your area of interest, please contact me via phone, text or email.

 Julia Huntsman, REALTOR, Broker | www.juliahuntsman.com | 562-896-2609 | California Lic. #01188996

What Proposition 19 Means in PropertyTax Changes for California Homeowners and/or Heirs? Part II

The passage of Proposition 19 was won, but not by a landslide in November's election.  There are both positive and negative issues to this proposition, which puts some things on the table and takes others off.

While it allows more 55+ homeowners to sell and move on a statewide basis, as of April 1, 2021, up to three times taking advantage of the new property tax basis, widely regarded as a good thing, it eliminates past rules about a child inheriting a parent's house.  Consider your capital gains exclusion at this point in time, and whether you took title as a joint tenant or as community property with right of survivorship. 

Since the new changes for parent/child exclusions come into effect February 16, 2021, this would be the time for some people to review the new law and how it may affect them.

If a new home is purchased at same or lesser value than former home, the former home's taxable value is taken to the new home.  But, if a new primary residence is bought, and is of a greater value than the one it's replacing, the new residence's value is added to the prior residence's tax base--it is calculated by adding the difference between the full cash value of the prior home to the full cash value of the new home's taxable value.  So if the prior home, with a taxable value of $400,000, sold for $900,000, and the new home was purchased for $1,000,000, your old tax base would carry over, plus the $100,000 difference in value would be reassessed for adding onto your original tax base, making a new taxable value of $500,000 for your new home. So while your property tax will increase, you still benefit by keeping the lower tax base (especially if you bought in 1970s for example), instead of paying the entire current tax rate on a $1,000,000 home.

However, effective February 16, 2021, the parent and grandparent grandchild exclusions from property tax reassessment only apply to transfers of a family home, not investor properties*, and only if the child or grandchild moves into the home within one year of the transfer (and supposedly the way the law reads right now, if there's more than one child, then all children must live in the home to have the exclusion apply).  Additionally, under earlier Prop. 58 and Prop. 193, there was no value limit on the parent's principal residence, but NOW under Prop. 19, if the home's current value exceeds its existing tax assessment by more than $1 million, then the excess value is added to the current assessed value to compute a new tax value!! If the new value after transfer to the child does not exceed $1 million, then there's no reassessment.  In today's California market that cap of $1 million could affect a lot of properties.  

Additionally, if an aging parent moved into a facility and passes away there, not living in the primary home, that home will be assessed at full value of property taxes, so if it's worth $1.7 million in today's market at the time of the parent's death, those taxes could be over $21,000.

* Residential, industrial and commercial rentals and family vacation homes are no longer eligible under Proposition 19.  Only principal homes occupied by child or grandchild (meaning child of deceased parents) are included under this Proposition.  So if your child is living in one of your rentals, that will no longer work under this Proposition.  So while there are many good aspects to this new law, there are other consequences--current homeowners may want to make decisions now in order to minimize future effects. 

• You can gift property to your children now, i.e., rentals (but do they want to manage them?), but they will lose the stepped-up basis at the time of your transfer to them, which would mean them getting the parent's adjusted basis and paying capital gains on the new basis and the value at the time of property sale.
  
• You can do nothing.
• You can in the future buy property and put directly into an LLC.
• Put property into an irrevocable trust (not the same as a living trust).  
•  Link to Proposition 19 bill
•  Link to chart on Proposition 19 at Board of Equalization.
  
• 
  

This is the time to consult with your trust attorney and/or tax advisor.  I am not a tax advisor, and do not give legal or tax advice, but as a Realtor I sometimes have clients who need to know about these issues in advance of closing escrow on a property.  Please feel free to contact me.

 https://longbeachrealestate.blogspot.com/2020/11/what-could-passage-of-proposition-19.html

Julia Huntsman, REALTOR, Broker | www.juliahuntsman.com | 562-896-2609 | California Lic. #01188996

What Could the Passage of Proposition 19 Mean for You and Your Property Taxes? Part I

Proposition 19 has officially been declared a winner, receiving 51.1 percent of the votes cast.  Key supporters included California Professional Firefighters, as well as key endorsements from Gov. Gavin Newsom, Secretary of State Alex Padilla, State Controller Fiona Ma, the California Democratic Party, Republican legislators, labor unions, chambers of commerce, seniors, and wildfire survivor, and 1.5 million signatures were collected to put it on the ballot.  It was supposedly opposed by 16 major newspapers, including the Los Angeles Times, but endorsed by one major newspaper The San Diego Union-Tribune.  It was also strongly supported by the California Association of Realtors.

This proposition was officially named The Home Protection for Seniors, Severely Disabled, Families, and Victims of Wildfire or Natural Disasters Act.  Up until the present, for many years senior home sellers could benefit from Propositions 60 and 90, which allowed the freedom to take their property tax base either anywhere within their home county, or to one of just several reciprocating counties (they varied over time) elsewhere in California which agreed to participate in this program--but owners were restricted to a certain formula of being able to purchase a new property slightly higher in price, otherwise they had to find a lower priced property to buy.  

As market prices increased, changing homes became very difficult to achieve, and caused many people to move out of state, taking their equity with them.  The rest stayed put, which meant they may not be able to move closer to family members as they aged. The passage of Prop. 19 has changed this--not only does it help the general population over 55,  it also helps people with severe disabilities and victims of natural disasters such as wildfires by allowing them to move closer to family members or medical care who can aid them, or find a home that better fits their needs.  It limits property tax increases on wildfire victims who replace a damaged home and gives funding for fire protection and emergency response in such cases.  Last, but not least, it can open up the market for first time homebuyers and other buyers throughout the state because of the greater ability for those over 55 to move.

In the past, children who inherited their family property were not required to live in it, but could rent it out.  That is no longer possible--in order to obtain a net increase in property tax revenue to the government, and the tax advantage to heirs, the property must be occupied by an child of the deceased parent(s), so there are no more second homes, vacation homes, or income properties--but Proposition 19 will continue to allow the tax benefits of earlier Propositions 58 and 193 which allow the passing down of homes by parents and grandparents for use as a primary residence by heir(s). 

Family farms, schools, cities and counties also receive local revenue from this proposition!

 If you're interested in finding out more, and what your current home value may be, please contact me.

LA Times Article

Widipedia article 
 

Julia Huntsman, REALTOR, Broker | www.juliahuntsman.com | 562-896-2609 | California Lic. #01188996