How Prop 19, Capital Gains Rules, and Smart Strategies Protect Your Equity
When buying or selling a home, most people focus on the sales price. But the truth is, the number that really matters is how much you keep after the transaction is done. Taxes, closing costs, and strategy all play a role in your net proceeds. The good news? With the right knowledge—and the right Realtor—you can keep thousands more in your pocket.
Here’s how.
1. Save on Property Taxes with Prop 19
California’s Proposition 19 is a game changer for many homeowners. If you’re over 55, living with a qualifying disability, or the victim of a natural disaster, you can transfer your current low property tax base to a new home—up to three times in your lifetime.
That means if you’ve owned your current home for years and pay much less in property taxes than new buyers would, you don’t have to give up that advantage when you move. Even if you buy a more expensive home, Prop 19 can save you thousands of dollars every year in property taxes.
The rules are detailed, and it’s easy to miss out on the benefit if you don’t apply correctly. This is where professional guidance is critical.
2. Take Advantage of IRS Capital Gains Rules
Selling a primary residence often comes with a big financial win, but taxes can eat into those profits if you’re not careful. Thankfully, the IRS offers a generous exemption:
Single homeowners can exclude up to $250,000 in profit.
Married couples filing jointly can exclude up to $500,000 in profit.
To qualify, you generally need to have lived in the home for at least two of the last five years. Understanding this rule ahead of time is key—otherwise, you could face an unexpected tax bill that wipes out your gain.
3. Focus on Net Proceeds, Not Just Sales Price
Too often, homeowners fixate on the sales price without looking at the bigger picture. What really matters is your net proceeds—the amount you walk away with after commissions, credits, and closing costs.
A skilled Realtor knows how to structure offers, negotiate concessions, and anticipate costs so that your net is maximized. It’s not just about selling high—it’s about selling smart.
4. Use Smart Deal Structures to Your Advantage
For buyers, affordability is a top concern. For sellers, getting top dollar is the goal. The solution often lies in creative deal structures.
For example, a seller-paid mortgage rate buydown can lower the buyer’s monthly payment and make your home stand out in a competitive market—all without reducing your net proceeds. It’s a win-win, but only if you know how to negotiate it.
5. Know the Rules for Investments and Inheritance
If you’re selling an investment property, you may be eligible for a 1031 exchange, which allows you to defer capital gains taxes by reinvesting your proceeds into another property. This strategy is widely used by investors to build wealth over time.
On the inheritance side, the IRS allows heirs to receive a “step-up in basis” on inherited property. In simple terms, this means your heirs won’t be taxed on the decades of appreciation you built up. Understanding these rules can save families a fortune.
6. Why the Right Realtor Makes All the Difference
Laws and market conditions are always shifting. Online research can give you general information, but every real estate move is unique. An experienced, educated Realtor knows how to apply the rules to your situation so you don’t leave money on the table.
When you choose the right Realtor, you’re not just getting someone to list your home—you’re getting a partner who understands strategy, tax rules, and negotiation. The right guidance can mean keeping thousands more in your pocket.
Final Thoughts
Real estate isn’t just about buying and selling—it’s about making the most of every dollar. By leveraging Prop 19, understanding capital gains rules, focusing on net proceeds, and working with a Realtor who knows the strategies that matter, you can protect your equity and maximize your financial outcome.
👉 If you’re planning a move and want to make sure you keep the most money possible, let’s talk. I’d be happy to walk you through your options and create a personalized plan for your situation.