A California homeowner qualifies for Proposition 19 and sells an original principal residence with a base-year value of $400,000 and a fair market value of $1,000,000. Within the applicable period, she buys a replacement principal residence for $1,200,000. What is the replacement property's transferred base-year value before later annual adjustments?
Correct Answer
B) $600,000
For a qualifying replacement property of greater value, the transferred base-year value is the original base-year value plus the difference in fair market values: $400,000 + ($1,200,000 - $1,000,000) = $600,000.
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Related Topics & Key Terms
Key Terms:
Related Concepts
For a deed to be valid, it must contain several essential elements including a competent grantor, identifiable grantee, consideration, legal description, granting clause, signature of the grantor, and delivery and acceptance.
Escrow is an arrangement in which a neutral third party holds documents, funds, or other items on behalf of the buyer and seller until all conditions of the transaction are met.
A general warranty deed provides the greatest protection to the grantee by guaranteeing that the grantor holds clear title and has the right to sell the property. It includes covenants that protect against all defects in title, even those arising before the grantor owned the property.
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