Greetings all… have very much enjoyed reading your posts over the past few weeks and thought I'd seek your collective wisdom to address my own situation…
My wife and I are SoCal natives (Thousand Oaks and Palos Verdes, respectively); we bought a house in Oceanside when I was stationed there in 1998 for under 200k. Knowing that we'd eventually move back to the area, we've rented it out since we left the area in '01. One of the biggest reasons we didn't sell was the Prop 13 implications of buying again when we did return; if I'd bought my own house last year my property tax would have gone up by more than $300 / mo! (Of course, having an income tax write-off every time we came home didn't hurt either.)
It looks like that time near; I'll probably be headed back to CPen or Miramar this summer for what will likely be my last tour before retiring. We've done reasonably well – we save quite a bit and did okay on the house we owned in the interim – so I'd not be adverse to upgrading if I could find a good deal.
If we sold Oceanside and bought something bigger, I have been told (but not by a particularly credible source) that I could somehow apply the "old" Prop 13 tax savings to the new house – true? If so, how would that work, do you get to apply the sales price of the old house to the tax value of the newer one? Are there any clever, but legal, ways to save money during this exchange?
You have to be over 55, the property in question has to have been the primary residence for 2 of last 5 years, and the replacement property must have a purchase price less than or equal to the sales price of the original home.
It has to do with prop 60/90, not 13. If you’ve been depreciating the rental for tax purposes over the last 5 years, you would probably have to recapture some of that if you sold. Talk to a CPA.
.
