Is your Los Gatos home feeling bigger than your life today? Maybe the yard work is constant, the stairs feel taller, or you’re ready to unlock equity for travel and family. You are not alone. Many longtime Los Gatos owners are weighing a move to a simpler footprint without sacrificing comfort or financial sense. In this guide, you’ll see how local prices, Prop 13 and Prop 19 rules, capital‑gains taxes, HOA tradeoffs, and real transaction costs fit together so you can make a confident plan. Let’s dive in.
Los Gatos market at a glance
Los Gatos remains a high‑value market. Recent snapshots show citywide medians in a broad band around the upper millions, roughly 1.7 to 2.5 million depending on source, zip code, and property type, with Redfin reporting about 2.22 million as of Jan 2026. Always date your numbers and verify live data when you are close to listing.
Price varies by micro‑market. The 95030 and parts of 95032 often command premiums, while more rural settings in 95033 tend to price lower. If you plan to buy smaller nearby, comparing zip‑level medians helps you set expectations and budget.
Condos and townhomes offer a popular downsizing path. Inventory is limited but available, generally from the $800,000s to around $2 million depending on size and location. One recent Los Gatos townhome example carried HOA dues near $485 per month, which illustrates the monthly tradeoff for less maintenance.
How California property taxes work (Prop 13)
Under Proposition 13, the general property tax rate is about 1% of assessed value, plus local voter‑approved add‑ons. Your assessed value typically starts at your purchase price and can rise up to 2% per year until a reassessment event like a sale. This is why long‑time owners often pay less than recent buyers. For a clear overview, see the state’s summary of California property taxes from the California Board of Equalization.
In practice, Los Gatos owners often see effective annual tax bills in the high thousands to low five figures, depending on their parcel and assessments. You can review local context using Los Gatos data from Ownwell’s Santa Clara County page. Always confirm your current assessed value and the latest bill before you estimate cash flow after a move.
Can you take your low tax base with you? Prop 19
If you are 55 or older, severely disabled, or a qualified disaster victim, Proposition 19 lets you transfer your Prop 13 base‑year value to a replacement primary residence anywhere in California, subject to timing and value tests. In general, the sale and purchase must occur within a two‑year window, you can use the benefit up to three times, and you must file a claim with the assessor. Start with the state overview at the California BOE Prop 19 page and then run local numbers with the Santa Clara County Prop 19 estimator and review the county’s Prop 19 forms and guidance.
Important callout: ask the Santa Clara County Assessor’s Office whether you qualify for Prop 19 portability before you commit to a replacement home contract. The value rules and timelines matter.
Prop 19 also narrowed intergenerational transfers. After February 16, 2021, a child can generally keep a parent’s assessed value only if the child uses the home as a primary residence, and a cap applies. Review details on the state’s Prop 19 summary and speak with your estate attorney.
Will you owe capital‑gains tax?
Federal rules let you exclude up to $250,000 of gain if single or $500,000 if married filing jointly on the sale of a principal residence, provided you owned and used the home as your main home for at least two of the last five years and have not claimed the exclusion within the past two years. If your gain exceeds the exclusion or you do not meet the tests, the excess is taxable and may be subject to the Net Investment Income Tax. See the IRS guide in Publication 523.
California taxes capital gains as ordinary income. If your gain is above the federal exclusion, consult a CPA to estimate your combined federal and state impact before you set list timing or explore a 1031 on non‑primary assets.
What will you net? A quick worksheet
Here is a simple way to calculate likely net proceeds before you list:
- Estimate likely sale price using recent Los Gatos comps.
- Subtract broker commissions and typical selling costs.
- Subtract documentary transfer tax and other closing charges. California’s documentary transfer tax is commonly computed around $1.10 per $1,000 of price, and some cities add local transfer taxes. Confirm local practice in escrow. For a general primer, see documentary transfer tax basics.
- Subtract your mortgage payoff and any liens.
- Subtract estimated capital‑gains tax above the $250,000 or $500,000 exclusion if applicable. Use the worksheets in IRS Publication 523 or consult a CPA.
Short example: If you sell at 2.20 million, a hypothetical 6% aggregate agent fee would be about $132,000. Documentary transfer tax at roughly $1.10 per $1,000 would be around $2,420. Other closing costs may add several thousand. Your net before mortgage payoff and taxes is your sale price minus those items. Commissions and who pays specific fees vary by contract, so request a written net‑proceeds estimate.
Money and lifestyle tradeoffs
Maintenance on larger homes adds up. A common rule of thumb is to budget about 1% of a home’s current market value per year for maintenance, and potentially more in high‑cost areas. See the national context in Bankrate’s guide to homeownership costs. If you are maintaining a 3,500 square foot home today, a smaller home or townhome could reduce both time and out‑of‑pocket costs.
Condos and townhomes reduce exterior responsibilities, but you will pay HOA dues and should review financials closely. In California, HOA fees commonly run from the low to mid hundreds monthly and can exceed $500 in some buildings. Read the reserve study and recent special assessments, as outlined in this overview of average HOA fees in California.
Smaller single‑family homes keep privacy and yards but may not lower your tax bill unless you qualify for Prop 19 portability. If your current assessed value is decades old, a new purchase resets the assessment unless transferred.
Selling a Los Gatos home can also free capital. Owners often redeploy proceeds to eliminate debt, diversify investments, or fund lifestyle goals, while buying a right‑sized home that fits the next chapter.
Alternatives to selling right now
If you prefer to stay put and need liquidity, a Home Equity Conversion Mortgage is a reverse mortgage program for eligible homeowners 62 or older. It can provide a line of credit or payments while you remain in the home. HECMs have costs, counseling requirements, and ongoing obligations to pay taxes and insurance. Review basics on the HUD HECM program page and the CFPB’s consumer guide to reverse mortgages, and speak with a financial planner.
Decision checklist: 4 smart checks
Check A: Net proceeds
- Build a written estimate that includes likely sale price, commissions, escrow/title costs, transfer tax, payoff amounts, and estimated taxes above the federal exclusion. Ask your agent and CPA to review.
Check B: Property‑tax footing after the move
- Do not assume your taxes will fall. If you are 55 or older or otherwise eligible, run scenarios using the Santa Clara County Prop 19 estimator and review county Prop 19 guidance and forms.
Check C: Lifestyle and health
- Weigh stairs, accessibility, yard upkeep, proximity to medical care, and how you want to spend time. A right‑sized home should fit your routines as well as your finances.
Check D: Alternatives analysis
- Compare selling and buying smaller, selling and renting for a season while you shop, using part of proceeds for long‑term care or income strategies, or a reverse mortgage if eligible. Use HUD and CFPB resources for reverse‑mortgage basics and get advice from a CPA or planner.
A simple 3‑step timeline
- 3 to 6 months before listing: Gather your latest property tax bill, mortgage statements, and trust documents. Request a comparative market analysis, interview two to three local agents with downsizing experience, and start a home‑prep checklist.
- 6 to 8 weeks before moving: Get quotes for staging and light repairs, ask your agent for a seller net‑proceeds worksheet, and begin decluttering. If you plan to hire movers, check local options and price ranges using a resource like HireAHelper’s Los Gatos page.
- Close and move: Expect 30 to 45 days for a typical escrow. Coordinate temporary housing or a rent‑back if you are buying before selling, and file any needed Prop 19 claim forms promptly.
Ready to run your numbers with a trusted local advisor?
You deserve a plan that balances lifestyle and financial clarity. Our boutique team pairs 40+ years of combined experience, $250M+ in sales, and $105M+ in assets under management with discreet, white‑glove service in Los Gatos and neighboring Silicon Valley communities. If you want a confidential valuation, a Prop 19 game plan, or a tailored list of right‑sized homes, start a private conversation with Nikil Balakrishnan.
FAQs
How does Prop 19 portability work for Los Gatos downsizers?
- If you are 55 or older, severely disabled, or a qualified disaster victim, you can generally transfer your Prop 13 base‑year value to a replacement primary residence anywhere in California within a two‑year window, up to three times; review the BOE Prop 19 overview and run local numbers with the Santa Clara County Prop 19 estimator.
What changed for parent‑to‑child transfers under Prop 19?
- After February 16, 2021, a child can generally keep a parent’s assessed value only if they occupy the inherited home as a primary residence, and a cap applies; see the state’s Prop 19 summary and consult your estate attorney.
How does the $250k/$500k home‑sale exclusion apply in high‑price markets?
- You may exclude up to $250,000 of gain if single or $500,000 if married filing jointly if you meet the 2‑out‑of‑5‑year ownership and use tests and have not used the exclusion in the past two years; details are in IRS Publication 523.
What HOA costs should I expect when buying a Los Gatos condo or townhome?
- Many California condos and townhomes have dues in the low to mid hundreds monthly and some exceed $500; review the reserve study and any special assessments as outlined in this California HOA fees overview.
How do I estimate property taxes after moving within Santa Clara County?
- If you qualify for Prop 19, use the county’s Prop 19 estimator to model your transferred base‑year value; otherwise, assume a reassessment to your new purchase price under Prop 13 plus local adders.
What are typical closing costs and transfer taxes for sellers?
- Expect negotiable commissions, escrow and title fees, potential repair credits, and California’s documentary transfer tax, commonly computed around $1.10 per $1,000 of price; see a primer on documentary transfer tax basics and confirm local practice in escrow.
