Unlocking the Benefits of Selling Your California Property at Age 55 with Proposition 19
As you approach retirement age, you may be planning for a new adventure in another state, downsizing now that you’re an empty nester, or simply wanting to change neighborhoods. If you’re 55 or older, the recent changes brought by Proposition 19 could make your transition easier. Let’s explore the advantages of selling your property in California at this age and how Proposition 19 can impact your decision. Unlock the equity you've built over the years and find your next dream home.
1. What are the benefits of Proposition 19 in California?
Proposition 19, which went into effect on February 16, 2023, allows homeowners 55 years or older to transfer their primary residence's tax base to a replacement residence, potentially resulting in significant property tax savings. By selling your property at age 55 or older and using the proceeds to purchase a new home, you may be able to transfer your current property's tax base to the new residence, minimizing your property tax burden in retirement. You can transfer your tax basis (that is, the value of the property used to calculate taxes) to any other residence in the state up to three times.
2. Who can benefit?
The owner must be at least 55 years of age.
3. What are the rules for the replacement property?
Both original and replacement properties must be utilized as a principal residence. Replacement residence must be purchased or newly constructed within two years of the sale of the original property. The location of the replacement home can be anywhere in California.
3. Will this reduce my Property Tax Burden?
By selling your property at age 55, you can reduce your property tax burden and potentially save thousands of dollars each year, by maintaining your current tax basis from your original property. If you bought your home for $500,00 and sell it for $1,000,000 you get to take the $500,000 tax basis. Prop 19 Comparison Chart
Bonus: If you do a 1031 exchange, you will postpone paying any capital gains on the sale
Selling your property in California at age 55 can offer numerous benefits, from maximizing your profits to minimizing your property tax burden, and taking advantage of Proposition 19. By considering these advantages, you can make an informed decision about when to sell your property and ensure a successful transition into retirement. You should always consult with a professional financial advisor to determine the best course of action for your specific situation.
