Under Prop 19 you can buy first and sell within two years, or sell first and buy within two years. What timing does to the price limit, and what you pay in the gap.
3 min read
Most homeowners over 55 who think about moving worry about the same awkward gap. Do they have to sell first and rent while they look, or can they buy the next place and then sell? Prop 19 allows both orders.
Two years, in either direction
The California Board of Equalization (BOE) states the timing rule plainly. The replacement home has to be bought or newly built within two years of the sale of the original home. That works whether the purchase comes first or second. If you buy first, the original home must sell within two years of that purchase. If you sell first, you have two years to buy.
The transfer of the old taxable value takes effect on the later of the two dates: the date the old home sells, or the date the new home is bought or finished.
How the order moves the price limit
The order matters because it sets the price limit the new home is compared to. Bought before the old home sells, the new home is measured against the old home's sale price exactly. Bought in the first year after the sale, it is measured against that price times 1.05. Bought in the second year, times 1.10.
As a hypothetical, for a home that sold at $800,000 the first-year limit would be $840,000 and the second-year limit $880,000. At or below the limit, the old taxable value carries over without change. Above it, the old taxable value still carries over, and the amount above the limit is added. The full example is in buying a more expensive home and keeping your tax base.
What you pay during the gap
BOE is direct about the cost of buying first. You are responsible for property taxes based on the full fair market value of the new home for the period between the date you buy it and the date the old home sells, and there is no refund for that period. That is the price of not moving twice, so it belongs in the budget before you make an offer. The supplemental tax bill guide explains the bill a new purchase triggers.
The old home still has to qualify
The home you sell has to be your principal residence, the kind that qualifies for the homeowners' exemption, at the time of the sale or within two years of buying the new one. BOE says there is no minimum time you must have lived there. Rentals and second homes do not qualify. If you buy first and move out of the old home before it sells, confirm with the assessor how that affects the old home's status, because the answer depends on how long it sits unsold.
What to keep in mind before you start
This is a general summary of BOE's published rules, not tax or legal advice. The real question for most people is not whether the order is allowed but whether the numbers work, including the income tax on the sale. A short conversation with a CPA before you list or make an offer is cheap compared with unwinding a sequence that does not fit. To see what your current home could sell for, start with the home value tool.
Quick questions
Can I buy the new home first and sell the old one later?
Yes, as long as the old home sells within two years of the purchase. The transfer takes effect on the later of the two dates.
Does the order change how much the new home can cost?
Yes. Buying before the sale uses the old sale price as the limit. Buying in the first year after uses that price times 1.05, and the second year times 1.10.
What do I pay on the new home while the old one is still unsold?
BOE says you pay property tax on the new home's full fair market value from the purchase date until the old home sells, with no refund for that period.
What if both transactions happen more than two years apart?
Then the transfer is not available. The purchase and the sale have to fall within two years of each other.
Source: California Board of Equalization, Proposition 19
Selling and buying your next home? Talk to Zarko.
Zarko can walk through the sale and the purchase together. He can also point you to a CPA for the tax questions.
Call (831) 246-7773Zarko Maletin, Insider Realty · DRE #02440138 (CA) · hello@insider.realty