A California homeowner over age 55 sells their primary residence, which has a Prop 13 assessed value of $250,000 and a current market value of $500,000. They purchase a replacement home for $700,000 under Proposition 19. What will the replacement property's new assessed value be?
Correct Answer
A) $450,000, reflecting the original base year value plus the amount by which the replacement home's purchase price exceeds the original home's market value at sale
Under Proposition 19 (Revenue & Taxation Code §69.6), when a qualifying homeowner over 55 purchases a replacement home worth more than the original home's market value, the new assessed value equals the original base year value plus the difference between the replacement home's purchase price and the original home's market value at the time of sale. Here: $250,000 + ($700,000 − $500,000) = $450,000. The base year value is not transferred in full when the replacement home is more expensive.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Predatory lending refers to unfair, deceptive, or abusive lending practices that impose unjustified terms on borrowers, often targeting vulnerable populations. It includes practices like excessive fees, inflated appraisals, and unnecessary refinancing.
RESPA is a federal law that requires lenders to provide borrowers with information about settlement costs, prohibits kickbacks and referral fees, and limits escrow account deposits. It applies to federally related mortgage loans.
The secondary mortgage market is where existing mortgage loans are bought and sold between lenders, investors, and government-sponsored enterprises (GSEs) like Fannie Mae, Freddie Mac, and Ginnie Mae.
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