Roadmap with Irina - May 2023

Roadmap with Irina - May 2023

Hi Iren, 

We are approaching summer, and the weather is becoming more like that of California. The real estate market landscape is also undergoing some changes. When comparing the statistics of April 2023 with the same month of the previous year, it is evident that this April was significantly less active. There were 587 houses sold compared to 1,056 last year, and 242 condos sold compared to 562 in the previous April. Additionally, the median sale prices for single-family homes were 9% lower, and condos and townhouses were 11% lower compared to the same month last year.
However, these figures don't necessarily indicate a declining market. Let's take a look at the comparison between March 2023 and April 2023. In March, the average sale price for single-family homes was $1.67 million, which increased to $1.77 million in April, marking a 5.9% increase. On the other hand, condos and townhouses experienced a slight decline from $948,000 in March to $927,000 in April, representing a 2% decrease. Moreover, the total number of new listings rose from 1,232 in March to 1,352 in April.
As of May 15, there are currently 1,171 active listings on the market in Santa Clara County. With more homes available, we can hope for a better balance of prices and less competition for buyers. It's important to note that the end of May and the beginning of June tend to be less active due to the conclusion of the school year and graduations. We will revisit the statistics in a month to assess any further developments. Stay tuned!

If you are thinking about buying or selling, let’s connect, talk about your options, run some numbers, and see if this is the right time for you. Call me, I am always here for you.

This article is intended to be a general overview of Prop 19, and every situation is different so please be sure to consult with YOUR experts before you make any decisions.  Let me know if you need referrals for expert help.

Prop 19 (implemented in 2021) impacts how much property tax you (or your heirs) will pay when
a) you sell and buy a new house or
b) you pass it to your heirs.
Prop 19 addresses Property Taxes in California only and does not impact Capital Gains Taxes.

A little bit of history
Before 1978 (About when “Santa Clara Valley” started to become “Silicon Valley”) houses were appraised every 1-5 years so assessed values were kept at about market value.  But this meant that your property taxes would go up every year as home prices started to really climb:  This was hard on those with fixed incomes.
According to Proposition 13 passed in 1978:
a) Limited assessed valuation increases to 2% per year
b) Houses were only reassessed when sold or new construction completed
c) Voters could add special assessments (eg: to pay for local schools)
Prop 58 passed in 1986 which essentially allowed for exemptions to reassessments for transfers between parents and children regardless if they lived there or not.
Props 60 & 90 allows most sellers 55+ to do a ONE TIME transfer of their low Property Tax basis to the purchase of a lower price home in selected counties.
Prop 19 replaced Prop 60 & 90 and Prop 58 and became effective on February 16, 2021.

Before and After Prop 19
A homeowner could transfer their house to their children (or a few other relatives) and the property would NOT be reassessed.  This meant that the child would keep the low property tax rate whether they lived in the house or not. (The same rule applied to the first $1M in assessed valuation of NON-RESIDENCE property)
A homeowner could transfer UP TO $1MM of their house’s assessed value to their children (or a few other relatives) IF IT WILL BE THE CHILD’S Principal Residence (Non-Residence Properties will be reassessed upon transfer no matter what.)

Good and Bad news about Prop 19
Allows Sellers 55+ to transfer up to 3 times (not just once as before)
Allows transfers anywhere in the state (not just selected counties)
Can buy a more expensive house and benefit from a blended property tax assessment. 
The BAD news is that your heirs get to keep your low property taxes ONLY IF they live in the house as their principal residence (And then only $1MM is exemped).
Example of Selling and Buying UP under Prop 19 today
You bought your house in 1973 for $150,000. Over the years, the assessed valuations goes up to $250,000 today. You sell your home for $1,000,000 and then buy another home in California for $1,500,000.
Your NEW property tax will be based on:
Your current tax basis of $250,000 PLUS $500,000: the difference between the market value of your OLD home ($1M) and the NEW home ($1.5M) =$750,000

How to Calculate Prop Tax on an inherited property
Essentially your heirs get a $1,000,000 exclusion from the tax calculation.
Example:  Your home has an assessed value of $300,000 and it is “worth” $2,500,000 now.  You can add $1,000,000 to your current assessed value $300k (+) $1M (=) $1,300,000.  The difference between $1.3 and the $2.5 value (=) $1,200,000.  Add this to your current assessed value of $300,000 and your new property tax will be based on that number of $1,500,000.
Going Forward
Expect clarification and changes to the laws. There “might be” some workarounds but they are unproven so talk to your advisor.
For your heirs, (assuming that they don’t make your house the principal residence), their property tax will increase to market value upon your passing (may take many months to get the supplemental bill).
Calculate Property Taxes at ~ 1.25% of its value (For a $3,000,000 house, annual property taxes will be about $37,000 a year! It may change the “value” of an inherited property if the property taxes will increase dramatically.

  1. State Board of Equalization: HERE 
  2. Your County’s Tax Assessor (Larry Stone for Santa Clara County) HERE
  3. Online Estimator HERE
  4. Frequently Asked Questions (FAQs) HERE

Capital Gain Calculation
Capital Gains are calculated like this:
Sales Price (-) Selling Costs (-) Improvements (-) Purchase Price (-) Your exemption* (=) Your capital Gains.   Your taxes will be approximately ⅓ of that amount!  GN&BN!
Tax exemption is $250,000 for single homeowners and $500,000 for married couples.
Note: Cost basis changes to Market value at the date of death of the first spouse.

Capital Gain Calculations Example
You and your spouse bought your home many years ago for $500,000 and made improvements over the years of $300,000.  You sold it for $3,500,000 and it cost you $180,000 in selling costs (Staging, commissions, inspections, fix up, etc)
Here are the calculation: 
$3,500,000 minus $500,000 minus $300,000 minus $180,000 minus $500,000 equals $2,020,000.  Plan to pay about ⅓ of this amount in Capital Gains tax.
Important exemption:  If one spouse passes before the house is sold, the Cost Basis goes up to today’s value and the Capital Gains essentially goes away. Talk to your accountant for details. 

If you own a home and DON’T have a Trust, I suggest you talk to a Trust and Estates attorney to see if it makes sense to set one up.  It can be a huge help for your heirs to know and follow your wishes.  AND it avoids Probate which can be very expensive and time-consuming.


It is hard to let go of someone who you had in your life for a long time, but sometimes you have to. At the end of April, our precious Mya went to a better place leaving a big hole in our hearts. She was a member of our family for 12 years, went on many of our adventures, helped us raise the kids, so she will definitely be missed.

We are not dog people, we are cat people, so when 12 years ago our son asked for a dog, the first answer was No. We had 3 kids under 10 years old, the youngest one just got potty-trained, so I was not looking for another being that needed my attention. But if you know Georgiy, he can be persuasive, and after 3 months of asking we finally agree to a dog. Well, I agreed, my husband wasn’t happy about it.

We found Mya on Craigslist in Santa Rosa and went there after school to pick her up. She was 1.5 years old and already had a puppy, but her owners didn’t want to keep her, so we got lucky getting a young healthy dog. It took us a few weeks to adjust to each other, and I finally started to understand her. She was not trained, so I took her to dog training classes that she failed because she howled at other dogs and followed her nose more than the trainer’s commands. She finally started to listen, but then I gave up since my kids needed more attention. As you can guess, over time our son lost interest in the dog, as it usually happens, and it became our responsibility. I fed and took care of Mya, and my husband took her for night walks.

It was fun having her in our family. She guarded our backyard against squirrels and goffers, and sometimes did more damage chasing them. She noticed all the wild animals on the fence, and many times she woke all neighbors up when she saw an opossum or raccoon. A couple of times Mya escaped from our house following her nose. The first time she was found a few streets away, and the second time she checked in at the fire station across the street (they had hot dogs for lunch, so she couldn’t resist the smell). She was very friendly with everyone so she went everywhere where we could take her with us.

Mya was our first and only dog, and we will remember her forever. I hope that we were a good family for her too. Take the best possible care of your furry family members, they bring so much joy and dedicate their lives to us.

With love,

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Work With Irina

Working mainly by referrals, I do my best to provide excellent real estate services to my clients, always exceeding their expectations. Whether they are buying or selling, I walk them through every transaction step, making it transparent and smooth. My relationships are always based on open communication, loyalty, and true commitment.

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