Are you 55 or older and thinking about relocating, downsizing, or investing in real estate? California’s Proposition 19 and other tax incentives can help you save thousands on property taxes and investments. In this guide, we’ll break down how 55+ homeowners can maximize their financial freedom through smart real estate strategies.
What is Proposition 19, and How Does It Benefit You?
Proposition 19, passed in 2020, offers significant property tax relief for homeowners aged 55 and older in California. Here’s how it works:
- Transfer Your Property Tax Base: You can transfer the taxable value of your current home to a new primary residence anywhere in California, up to three times. This means you keep your low tax rate even if you move to a more expensive home. For example, if your current home’s taxable value is $250,000, you can apply that to a $700,000 home, saving thousands annually.
- No Location Restrictions: Move to a retirement community, closer to family, or a dream coastal town without losing your tax benefits.
- Disaster Relief: If your home was damaged by a wildfire or natural disaster, you may qualify to transfer your tax base to a replacement property.
Source: Santa Clara County Assessor
Additional Tax Benefits for 55+ Real Estate Investors
Beyond Proposition 19, 55+ homeowners can leverage other tax strategies to build wealth through real estate:
- 1031 Exchange: Defer capital gains taxes by reinvesting proceeds from a property sale into a new property of equal or greater value. This allows you to grow your portfolio tax-free until you decide to cash out. (Learn more)
- Depreciation Deductions: For rental properties, deduct depreciation over 27.5 years. A $400,000 rental property could yield a $14,545 annual deduction, reducing your taxable income. (Source)
- Opportunity Zones: Invest in designated low-income areas to defer capital gains taxes until 2026 or avoid them entirely after 10 years. (Source)
- Deductible Expenses: Write off property taxes, mortgage interest, insurance, repairs, and business expenses like marketing or legal fees. (Source)
- No FICA Taxes on Rental Income: Unlike earned income, rental income avoids Social Security and Medicare taxes (15.3%), boosting your savings. (Source)
Why Act Now?
With rising property values and changing tax laws, now is the perfect time to explore these opportunities. Whether you’re downsizing, relocating, or investing, these tax benefits can enhance your retirement savings and financial security. However, navigating Proposition 19 and IRS rules can be complex, so working with a tax professional or real estate expert is essential.
How to Get Started
Ready to unlock these tax savings? Here’s what to do:
- Consult a Professional: Speak with a tax advisor or real estate agent specializing in 55+ benefits.
- Explore Properties: Look for homes or investment properties that align with your goals, from retirement communities to rental units.
- Contact Us: Our team can connect you with trusted experts and resources to maximize your savings.
Get in Touch Today
Final Thoughts
Proposition 19 and real estate tax incentives offer 55+ homeowners a powerful way to save money and build wealth. Don’t miss out on these opportunities to make your next move or investment more affordable. Share this guide with friends or family who could benefit, and let’s start planning your financial future!
