When dividing assets in divorce, Prop 19’s property tax rules can affect your financial future—learn how to plan ahead for these changes.
If you're over 55 and going through a divorce, you might be unaware of how Proposition 19 could affect your property tax situation. Prop 19 has a major impact on homeowners over 55, seniors with severe disabilities, and those affected by wildfires. Understanding this law could save you a lot of money in the long run, especially if you're buying a new home after the divorce. Let me breakdown what exactly it is and its impact on your real estate journey:
What is Prop 19? Prop 19 is a law that changed how property tax transfers work in California. Before Prop 19, homeowners who were over 55 could transfer their low property tax rate to a new home when they moved. But now, Prop 19 limits who can take advantage of that tax break. Only one party in a divorce can keep the low property tax rate from the previous home. That means if you and your ex-spouse are both planning to buy new homes, only one of you will be able to transfer the low tax base.
"With Prop 19, the division of property taxes during divorce can significantly impact your future home purchase and finances."
How does this impact divorce? When you're dividing assets in a divorce, this tax base issue should be front and center. If one spouse gets to carry the low property tax rate, they could save thousands of dollars. But the other spouse would have to pay significantly higher property taxes on their new home, based on the new home’s purchase price (1.25% of the home value). This could affect your financial situation in the long term, so it’s essential to address it during the divorce settlement.
What to consider during a divorce settlement? If you're over 55 and going through a divorce, make sure to talk to your attorney about how Prop 19 will affect your property taxes. The decision on who will keep the tax base should be clearly outlined in the asset division. This decision can have a major financial impact, especially if you're planning to buy a new home. With property taxes potentially rising significantly, it’s worth considering how this factor plays into your overall settlement.
Understanding how Prop 19 works can help you make better decisions when dividing assets and planning for your future. If you have questions or need further information in real estate, feel free to call or text me at 562-316-2915 or email me at [email protected]. I’m here to help you navigate the housing market so you can make informed decisions.
