paperboyNC
New member
I'd love this:http://www.latimes.com/politics/ess...fornia-homeowners-a-1500590561-htmlstory.html
Headline is "young" californians, but it really means all.
Headline is "young" californians, but it really means all.
Proposal to allow low property taxes to transfer
- Thread starter paperboyNC
- Start date
NEW -> Contingent Buyer Assistance Program
This previous proposal has more details:http://www.sfchronicle.com/business...A-homeowners-can-get-property-tax-6778070.php
The proposal
Under the Realtors? proposal, they wouldn?t have to worry. It would amend Props. 60 and 90 so seniors could transfer their assessed value to a more expensive home, but the difference in market value between the old and new homes would be added to their value.
For example, if a senior sold a house for $1.1 million and purchased a replacement for $1.2 million, he could carry over his tax base, but it would increase by $100,000.
It might increase taxes if it dramatically increases the move-up market. I know Prop 13 is one reason I am hesitant to move up. I'm almost better of buying a second home than moving up.
Currently to move your tax basis you have to buy something for less than or equal to what you are selling, not more.
The law was made so seniors would move and a new tax basis could be had. Otherwise they were just staying put with their 2% a year increase (and potentially passing it down to children when they die).
They get another house for their old basis but the old house gets a huge increase.
But they want to eliminate having to buy a lower priced home. Could still work out for some seniors who are in mello homes and want to buy another more expensive home without mello.
Hmmmmm. Could move from a larger home in Irvine to an older view home in Newport and maybe save on property taxes and get a tax free cap gain on the house.
Looks like this isn't entirely true. Even with the current law, the scenario I gave above would work if you sold the home for $1.5M then waited until the second year after you sold to buy your $1.6M home.
http://www.boe.ca.gov/proptaxes/faqs/propositions60_90.htm#8
Forgot about the 110% thing but if you were to do that you'd have to live somewhere else in the meantime, most likely no tax deduction and most people don't do that for that long..... they rather just stay in their old home (especially old people cuz they are reluctant to leave their lower tax home which is why they made these propositions).
So.............. could one sell their old place, take the $500K exclusion, buy some crappy low cost (for the OC) home that needs updating, fix it up (while they claim it as their primary residence) and sell that a couple years down the road, reap some of the $500K cap gains exclusion and then move that low basis to another home under this new proposed legislation?
J
jmoney74
Guest
Would suck for those who already bought. Lol
aquabliss
Well-known member
Not clear what this means, says new property tax would be a "blended rate". Is it something along the lines of:
1) Buy a house for $1M (say base tax rate is 1.0% on $1M)
2) Sell the house in 3 years for $1.5M
3) Buy new house for $1.8M
4) New base tax rate is 1.0% on $1.4M (since this is a blend of previous $1M purchase price and $1.8M new purchase price?
This will be tricky. Anyhow I'm not convinced this will ever happen. Passing a bill that means lower tax revenue to California. Ha, good luck.
1) Buy a house for $1M (say base tax rate is 1.0% on $1M)
2) Sell the house in 3 years for $1.5M
3) Buy new house for $1.8M
4) New base tax rate is 1.0% on $1.4M (since this is a blend of previous $1M purchase price and $1.8M new purchase price?
This will be tricky. Anyhow I'm not convinced this will ever happen. Passing a bill that means lower tax revenue to California. Ha, good luck.
paperboyNC
New member
aquabliss said:
This previous proposal has more details:http://www.sfchronicle.com/business...A-homeowners-can-get-property-tax-6778070.php
The proposal
Under the Realtors? proposal, they wouldn?t have to worry. It would amend Props. 60 and 90 so seniors could transfer their assessed value to a more expensive home, but the difference in market value between the old and new homes would be added to their value.
For example, if a senior sold a house for $1.1 million and purchased a replacement for $1.2 million, he could carry over his tax base, but it would increase by $100,000.
It might increase taxes if it dramatically increases the move-up market. I know Prop 13 is one reason I am hesitant to move up. I'm almost better of buying a second home than moving up.
Ready2Downsize
Well-known member
aquabliss said:
Currently to move your tax basis you have to buy something for less than or equal to what you are selling, not more.
The law was made so seniors would move and a new tax basis could be had. Otherwise they were just staying put with their 2% a year increase (and potentially passing it down to children when they die).
They get another house for their old basis but the old house gets a huge increase.
But they want to eliminate having to buy a lower priced home. Could still work out for some seniors who are in mello homes and want to buy another more expensive home without mello.
Hmmmmm. Could move from a larger home in Irvine to an older view home in Newport and maybe save on property taxes and get a tax free cap gain on the house.
aquabliss
Well-known member
Ready2Downsize said:
Looks like this isn't entirely true. Even with the current law, the scenario I gave above would work if you sold the home for $1.5M then waited until the second year after you sold to buy your $1.6M home.
http://www.boe.ca.gov/proptaxes/faqs/propositions60_90.htm#8
Ready2Downsize
Well-known member
aquabliss said:
Forgot about the 110% thing but if you were to do that you'd have to live somewhere else in the meantime, most likely no tax deduction and most people don't do that for that long..... they rather just stay in their old home (especially old people cuz they are reluctant to leave their lower tax home which is why they made these propositions).
So.............. could one sell their old place, take the $500K exclusion, buy some crappy low cost (for the OC) home that needs updating, fix it up (while they claim it as their primary residence) and sell that a couple years down the road, reap some of the $500K cap gains exclusion and then move that low basis to another home under this new proposed legislation?
Ready2Downsize
Well-known member
https://ballotpedia.org/California_Proposition_13_Tax_Transfer_Initiative_(2018)
I don't see anywhere any restriction on how frequently one could buy and sell but I assume maybe 2 years?
In my case I would have been better off selling in Irvine and buying lower with this bill but if it passes anyone over 55 (and it's only one spouse who has to qualify) can buy/sell with property tax basis change an unlimted amount of times.
So.......... is this math correct?
Sell a house with $800K assessed value for $1.5 million
Buy something else (fixer upper, lower cost area, way smaller place etc) for $750K
The new assessed value for the homeowner would be: ($800,000) ? [($750,000) ? ($1,500,000)] = $400,000
*****
OTOH if the same people decide to buy a $2M house (maybe moving from mello to no mello)
The new assessed value would be: ($800,000) + [($2,000,000)-($1,500,000)] = $1,300,000 This would be $500K (plus costs) oop but property taxes could go down if there were no mello.
Sometime later the homeowners sell the $2M home for $2.5M and buy another house for $1.5M (smaller than the one they started with or a lower cost area).
The new assessed value would be ($1,400,000) ? [($1,500,000) ? ($2,500,000)] = $840,000 (I adjusted the basis upward since prop taxes go up 2% per year.
Net net, I think the homeowners buying/selling twice make no more capital gains than if they had stayed in the first house and sold when the second one would be sold, but their tax basis would be about the same as if they stayed and if they moved from mello to no mello they'd save in property taxes by moving.
******
But say the homeowners went hog wild and moved from the $1.5M home to a $3M home.
Their basis would now be $2.3M
($800,000) + [($3,000,000)-($1,500,000)] = $2,300,000
They decide to sell at $3.3M (probably no profit) and move back to a house for $1.5M
($2,300,000) ? [($1,500,000) ? ($3,300,000)] = $1,045,454 (I adjusted the basis up due to property taxes rising 2% per year)
Last one was not a good move as far as property taxes go unless it's moving from mello to no mello and even then there was a big property tax bill with that $3M house even without mello.
I don't see anywhere any restriction on how frequently one could buy and sell but I assume maybe 2 years?
In my case I would have been better off selling in Irvine and buying lower with this bill but if it passes anyone over 55 (and it's only one spouse who has to qualify) can buy/sell with property tax basis change an unlimted amount of times.
So.......... is this math correct?
Sell a house with $800K assessed value for $1.5 million
Buy something else (fixer upper, lower cost area, way smaller place etc) for $750K
The new assessed value for the homeowner would be: ($800,000) ? [($750,000) ? ($1,500,000)] = $400,000
*****
OTOH if the same people decide to buy a $2M house (maybe moving from mello to no mello)
The new assessed value would be: ($800,000) + [($2,000,000)-($1,500,000)] = $1,300,000 This would be $500K (plus costs) oop but property taxes could go down if there were no mello.
Sometime later the homeowners sell the $2M home for $2.5M and buy another house for $1.5M (smaller than the one they started with or a lower cost area).
The new assessed value would be ($1,400,000) ? [($1,500,000) ? ($2,500,000)] = $840,000 (I adjusted the basis upward since prop taxes go up 2% per year.
Net net, I think the homeowners buying/selling twice make no more capital gains than if they had stayed in the first house and sold when the second one would be sold, but their tax basis would be about the same as if they stayed and if they moved from mello to no mello they'd save in property taxes by moving.
******
But say the homeowners went hog wild and moved from the $1.5M home to a $3M home.
Their basis would now be $2.3M
($800,000) + [($3,000,000)-($1,500,000)] = $2,300,000
They decide to sell at $3.3M (probably no profit) and move back to a house for $1.5M
($2,300,000) ? [($1,500,000) ? ($3,300,000)] = $1,045,454 (I adjusted the basis up due to property taxes rising 2% per year)
Last one was not a good move as far as property taxes go unless it's moving from mello to no mello and even then there was a big property tax bill with that $3M house even without mello.
