I have had several seller clients ask me recently about the implementation of California Proposition 19, which passed back in November. I think most people assumed it would go into effect at the beginning of 2021, however that is not the case. I prepared a table that I hope will be a helpful reference tool for those seeking general information.
The property tax basis portability element of Proposition 19 actually goes into effect on April 1, 2021.
This allows seniors (over age 55), the victims of wildfires, and severely disabled to transfer their existing property tax base up to 3 times, anywhere in the state, and to a property of higher or lower value.
Many Sacramento home sellers have asked me if they can sell the current home and close the sale prior to April 1. Or if a home they sold in 2020 would qualify if they have not purchased another one yet. The short answer is - I do not know.
Proposition 19 (which was Assembly Constitutional Amendment 11 in the state Legislature) does not address that. A qualified homeowner has 2 years to identify and close on a replacement property to transfer the low property tax base over to, however it is unclear if that 2 years commences on April 1, or there is perhaps a 2 year lookback period commencing on April 1.
It is possible that there will be some new legislation introduced soon to eliminate that ambiguity in Proposition 19, but as of this minute there is no clarity.
For now, I suppose the safest solution is -- do not close the sale of your current home until April 1 or later. Realistically, if you want to list your Sacramento home in the near future, you should be able to do so. The closing date of your transaction is completely negotiable. And your listing agent can note in MLS that the sale must close on or after April 1.
So for example, if you were to list your home on February 17th, respond to offers received on the 24th, get into contract with your buyer on the 26th, -- closing on Friday, April 2nd would be slightly over a 30-day escrow.
I have a couple seller clients who will be employing this very strategy. It's a seller's market right now, and they'd love to list their homes asap.
Since I am not an attorney and not a CPA, it is best to get tax and legal advice from qualified professionals.