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There comes a point when the house that was once full of kids, pets, and busy family life starts to feel…a little too big.
Maybe you’re tired of maintaining a large yard. Maybe there are bedrooms that haven’t been used in years. Or perhaps you’d simply like a home that’s easier to care for and better fits this next chapter of life.
If that sounds familiar, you’re not alone. Downsizing is one of the most common transitions we help homeowners navigate in San Jose. And thanks to changes in California law, it’s often more financially possible than many people realize.
Disclaimer: This article is intended for general educational purposes only and should not be considered legal or tax advice. Be sure to speak with a CPA, attorney, or your county assessor about your specific situation before making any decisions.
Worried About Losing Your Low Property Taxes?
This is by far the biggest concern we hear from longtime homeowners.
Many people assume that if they sell the home they’ve owned for decades, they’ll lose their low property tax base forever.
Fortunately, that’s no longer necessarily the case.
Thanks to California’s Proposition 19, many homeowners who are 55 or older, or who meet certain disability requirements, can transfer the taxable value of their current home to a replacement home anywhere in California.
If your new home costs the same or less than the one you’re selling, you may be able to keep your existing property tax base. If you purchase a more expensive home, only the difference in value is generally added to your current tax assessment.
For homeowners who purchased their San Jose home years ago, this can result in substantial property tax savings and make downsizing much more affordable.
Don’t Forget About Capital Gains Taxes
Another common question is, “Will I owe a huge tax bill when I sell?”
In many cases, the answer is no—but it depends on your situation.
If the home has been your primary residence for at least two of the last five years, the IRS generally allows homeowners to exclude up to $250,000 in capital gains if filing individually, or $500,000 for married couples filing jointly.
Because San Jose home values have increased dramatically over the years, it’s a good idea to meet with a CPA before putting your home on the market. They can help estimate any potential tax liability and discuss strategies available to you.
Downsizing Doesn’t Mean Sacrificing Your Lifestyle
When people hear the word “downsizing,” they often picture moving into a tiny home or giving up everything they love.
In reality, most homeowners are simply choosing a home that better matches how they live today.
That might mean:
- A single-story home with fewer stairs
- A townhome or condo with less maintenance
- A smaller yard that’s easier to care for
- Living closer to children or grandchildren
- Moving to a neighborhood with more amenities and less upkeep
For many people, downsizing is less about square footage and more about simplifying life.
Unlocking the Equity You’ve Built
If you’ve owned your home for many years, you’ve likely built significant equity.
Selling a larger home can free up funds that may help you:
- Boost your retirement savings
- Travel more
- Purchase a home closer to family
- Help children or grandchildren financially
- Reduce monthly housing expenses
For many empty nesters, downsizing isn’t just a lifestyle decision—it’s an important part of their long-term financial plan.
How to Get Started
If you’re beginning to think about downsizing, taking a few simple steps now can make the process much easier.
Talk with a CPA first. Understanding how Proposition 19 and capital gains taxes apply to your situation will give you confidence before making any decisions.
Find out what your home is worth. Many longtime homeowners are pleasantly surprised by today’s home values. Knowing how much equity you’ve built can help you explore your options.
Think about your next chapter. Instead of focusing only on finding a smaller house, think about the lifestyle you want. Do you want less yard work? A walkable neighborhood? A home close to family? Easier travel? Your next home should support the life you want to live.
Create a plan for your move. Whether you buy first, sell first, or use a rent-back agreement, having a clear timeline can make the transition much less stressful.
Is Now the Right Time?
For many San Jose homeowners, the answer may be yes.
Changes to California’s tax laws have made downsizing more attractive than it was just a few years ago, and many homeowners are discovering they have more flexibility than they expected.
If your current home no longer fits your lifestyle, it may be worth exploring what your options look like today.
I’d be happy to help you understand your home’s value, discuss your goals, and create a downsizing plan that works for you—without any pressure.
After all, downsizing isn’t about giving something up. It’s about making room for the next chapter of your life.
GET YOUR FREE HOME SELLING BOOK
About the Author – Michelle Elliott
With over 20 years of experience navigating the fast-paced Silicon Valley market, I provide a strategic, results-driven approach to residential real estate. My career is built on a foundation of deep local expertise and a relentless commitment to my clients’ success, resulting in over $235 million in lifetime sales volume and a consistent ranking in the top 3% of agents in Santa Clara County and top 2% at Coldwell Banker. My expertise has been featured on KTVU Fox 2, Real Producers and the Willow Glen Resident. She is also the co-host of the San Jose Podcast “Say What You Want About Real Estate”
A Hyper-Local Expert with Global Reach
I specialize in San Jose, in the neighborhoods of Willow Glen (95125 & 95124) Cambrian Park and Almaden, Downtown San Jose/Japantown (95112) markets. As a certified Luxury Property Specialist with Coldwell Banker Realty, I combine high-end marketing strategies with granular neighborhood knowledge to help my clients achieve premium results.
The “Tiger” at the Negotiating Table
My clients have characterized me as a “tiger” at the negotiating table who remains “sweet and patient” with my clients throughout the process. I pride myself on being a fierce advocate for my buyers and sellers, ensuring the best possible terms in every transaction, and I strive to be the best Realtor in 95125! This balance, drive, and tenacity have earned me consistent 5-star ratings across Google, Zillow, Realtor.com, and Yelp.
Michelle Elliott
Michelle@michelleelliottrealtor.com
1712 Meridian Ave, Ste C, San Jose, CA
DRE 01777533
