California Property Tax Portability Calculator under Proposition 19

Craftsman bungalow home in Long Beach

If you are contemplating selling in California and relocating, you may be able to save money on your property taxes if you are 55 years of age or older, severely disabled, OR whose home has been substantially damaged by wildfire or natural disaster.  You may transfer the taxable value of the primary residence to a new replacement residence anywhere in the state, within two years of the sale, and up to three times, or as often as needed if your house was destroyed by fire.

The Property Tax Portability Calculator at the link below (courtesy of California Association of  Realtors) estimates the amount of annual property taxes that a home seller could save as a result of porting their current property tax base to a new property under California's Proposition 19. This measure was passed in November 2020 and became effective in 2021.

See C.A.R.'s Quick Guide for more information about Proposition 19. 

Claims are made through your local County tax assessor's office.  The link for information at Los Angeles County Assessor is here.

Tax Portability Calculator 

 

Julia Huntsman, REALTOR, Broker | http://www.abodes.realestate | 562-896-2609 | California Lic. #01188996

The Mills Act Program open in Long Beach for First Time Since 2020.

Historic Craftsman home

The Mills Act Property Tax Abatement Program is designed to help owners who have purchased a historic property, or have high tax burden due to transfer or property reassessment.  According to the State's Office of Historic Preservation:

"The Mills Act is the single most important economic incentive program in California for the restoration and preservation of qualified historic buildings by private property owners. The Mills Act Program is administered and implemented by local governments. Mills Act contracts are between the property owner and the local government granting the tax abatement. The Office of Historic Preservation is not a signatory to Mills Act contracts.
 
"Each local government establishes their own criteria and determines how many contracts they will allow in their jurisdiction. For answers to specific questions such as local eligibility criteria, application procedures, and contract terms, contact the city or county official for your jurisdiction."

The City of Long Beach's program for the Mills Act is hosting mandatory workshops in the near future for those interested in applying for this program, on January 28 and February 18: "Although tax savings cannot be guaranteed through entering into a Mills Act contract, estimates can be made through the application process to determine likely potential property tax savings.  The Mills Act is especially beneficial for recent buyers of historic sites, or owners who may have recently had a property transfer or tax reassessment. The program is generally less beneficial for property owners who have owned their property for more than 10 years."

The application package deadline is March 3. Please go to the City's website for more information on this process.  For properties and owners who qualify, there may be significant tax savings. "The incentive is achieved through property tax relief to owners of historic properties in exchange for the rehabilitation and restoration of the historic property pursuant to the terms of a Mills Act contract with the City." The purpose of the Mills Act is to rehabilitate and restore the historic properties, which means it is located in one of the historic districts or is a designated historic building. 

 

Julia Huntsman, REALTOR, Broker | http://www.juliahuntsman.com | 562-896-2609 | California Lic. #01188996

If You Are Over 55, Don't Forget About the California Proposition 19 Tax Transfer Benefits

Long Beach bungalow house

Are you a possible candidate for a Proposition 19 tax transfer?  California's Proposition 19 was passed in November of 2020 and made changes to property tax benefits for families, seniors, severely disabled persons, and victims of natural disaster throughout the state starting in 2021.  For a general summary of this tool, and examples of how homeowners can save, please go to Your Local Realtor Can Help You Save When Moving With a Prop 19 Tax Break. These current changes allow a homeowner who is over 55 years of age, severely and permanently disabled or whose home has been substantially damaged by wildfire or natural disaster to transfer the taxable value of their primary residence to:  

• A replacement primary residence
• Anywhere in the state
• Regardless of the value of the replacement primary residence (with adjustments if "greater" in value)
• Within two years of the sale
• Up to three times (but without limitation for those whose houses were destroyed by fire) 

As with many pieces of legislation, this bill in its original form needed clarification in order for County Assessors to properly implement it, a process that is still continuing.  While prior Propositions 60 and 90 (intracounty and intercounty legislation) had certain limitations which the new Proposition 19 has expanded upon, Prop. 19 has also had some restrictions in place that didn't exist before, and it's important for owners to understand how it will work for them.

In general though, this bill is very useful, especially considering the overall cost of living in California in residential real estate prices, in allowing property tax base transfer reductions for homeowners over age 55, and other applicable owner categories, which will save money on the property tax of the new home purchase.  And, it may be applied up to three times for standard 55+ owners, but has no such transfer limitation where homes were destroyed by fire.

If you are considering moving now or in the future, please obtain more information from your Realtor professional and/or tax person about this tax transfer process.  Be aware also that at this time many County Assessors offices are dealing with many applications and homeowners are having to be patient.  If you are in Los Angeles County, go to assessor.lacounty.gov/prop19 for more direct information, and a forms tab to submit for your application. 

I am available by phone, text or email -- if you would like additional more specific information in a Q&A format, please contact me about this or any other aspect of selling a home.

Julia Huntsman, REALTOR, Broker | http://www.juliahuntsman.com | 562-896-2609 | California Lic. #01188996

What Proposition 19 Means in PropertyTax Changes for California Homeowners and/or Heirs? Part II

The passage of Proposition 19 was won, but not by a landslide in November's election.  There are both positive and negative issues to this proposition, which puts some things on the table and takes others off.

While it allows more 55+ homeowners to sell and move on a statewide basis, as of April 1, 2021, up to three times taking advantage of the new property tax basis, widely regarded as a good thing, it eliminates past rules about a child inheriting a parent's house.  Consider your capital gains exclusion at this point in time, and whether you took title as a joint tenant or as community property with right of survivorship. 

Since the new changes for parent/child exclusions come into effect February 16, 2021, this would be the time for some people to review the new law and how it may affect them.

If a new home is purchased at same or lesser value than former home, the former home's taxable value is taken to the new home.  But, if a new primary residence is bought, and is of a greater value than the one it's replacing, the new residence's value is added to the prior residence's tax base--it is calculated by adding the difference between the full cash value of the prior home to the full cash value of the new home's taxable value.  So if the prior home, with a taxable value of $400,000, sold for $900,000, and the new home was purchased for $1,000,000, your old tax base would carry over, plus the $100,000 difference in value would be reassessed for adding onto your original tax base, making a new taxable value of $500,000 for your new home. So while your property tax will increase, you still benefit by keeping the lower tax base (especially if you bought in 1970s for example), instead of paying the entire current tax rate on a $1,000,000 home.

However, effective February 16, 2021, the parent and grandparent grandchild exclusions from property tax reassessment only apply to transfers of a family home, not investor properties*, and only if the child or grandchild moves into the home within one year of the transfer (and supposedly the way the law reads right now, if there's more than one child, then all children must live in the home to have the exclusion apply).  Additionally, under earlier Prop. 58 and Prop. 193, there was no value limit on the parent's principal residence, but NOW under Prop. 19, if the home's current value exceeds its existing tax assessment by more than $1 million, then the excess value is added to the current assessed value to compute a new tax value!! If the new value after transfer to the child does not exceed $1 million, then there's no reassessment.  In today's California market that cap of $1 million could affect a lot of properties.  

Additionally, if an aging parent moved into a facility and passes away there, not living in the primary home, that home will be assessed at full value of property taxes, so if it's worth $1.7 million in today's market at the time of the parent's death, those taxes could be over $21,000.

* Residential, industrial and commercial rentals and family vacation homes are no longer eligible under Proposition 19.  Only principal homes occupied by child or grandchild (meaning child of deceased parents) are included under this Proposition.  So if your child is living in one of your rentals, that will no longer work under this Proposition.  So while there are many good aspects to this new law, there are other consequences--current homeowners may want to make decisions now in order to minimize future effects. 

• You can gift property to your children now, i.e., rentals (but do they want to manage them?), but they will lose the stepped-up basis at the time of your transfer to them, which would mean them getting the parent's adjusted basis and paying capital gains on the new basis and the value at the time of property sale.
  
• You can do nothing.
• You can in the future buy property and put directly into an LLC.
• Put property into an irrevocable trust (not the same as a living trust).  
•  Link to Proposition 19 bill
•  Link to chart on Proposition 19 at Board of Equalization.
  
• 
  

This is the time to consult with your trust attorney and/or tax advisor.  I am not a tax advisor, and do not give legal or tax advice, but as a Realtor I sometimes have clients who need to know about these issues in advance of closing escrow on a property.  Please feel free to contact me.

 https://longbeachrealestate.blogspot.com/2020/11/what-could-passage-of-proposition-19.html

Julia Huntsman, REALTOR, Broker | www.juliahuntsman.com | 562-896-2609 | California Lic. #01188996

What Could the Passage of Proposition 19 Mean for You and Your Property Taxes? Part I

Proposition 19 has officially been declared a winner, receiving 51.1 percent of the votes cast.  Key supporters included California Professional Firefighters, as well as key endorsements from Gov. Gavin Newsom, Secretary of State Alex Padilla, State Controller Fiona Ma, the California Democratic Party, Republican legislators, labor unions, chambers of commerce, seniors, and wildfire survivor, and 1.5 million signatures were collected to put it on the ballot.  It was supposedly opposed by 16 major newspapers, including the Los Angeles Times, but endorsed by one major newspaper The San Diego Union-Tribune.  It was also strongly supported by the California Association of Realtors.

This proposition was officially named The Home Protection for Seniors, Severely Disabled, Families, and Victims of Wildfire or Natural Disasters Act.  Up until the present, for many years senior home sellers could benefit from Propositions 60 and 90, which allowed the freedom to take their property tax base either anywhere within their home county, or to one of just several reciprocating counties (they varied over time) elsewhere in California which agreed to participate in this program--but owners were restricted to a certain formula of being able to purchase a new property slightly higher in price, otherwise they had to find a lower priced property to buy.  

As market prices increased, changing homes became very difficult to achieve, and caused many people to move out of state, taking their equity with them.  The rest stayed put, which meant they may not be able to move closer to family members as they aged. The passage of Prop. 19 has changed this--not only does it help the general population over 55,  it also helps people with severe disabilities and victims of natural disasters such as wildfires by allowing them to move closer to family members or medical care who can aid them, or find a home that better fits their needs.  It limits property tax increases on wildfire victims who replace a damaged home and gives funding for fire protection and emergency response in such cases.  Last, but not least, it can open up the market for first time homebuyers and other buyers throughout the state because of the greater ability for those over 55 to move.

In the past, children who inherited their family property were not required to live in it, but could rent it out.  That is no longer possible--in order to obtain a net increase in property tax revenue to the government, and the tax advantage to heirs, the property must be occupied by an child of the deceased parent(s), so there are no more second homes, vacation homes, or income properties--but Proposition 19 will continue to allow the tax benefits of earlier Propositions 58 and 193 which allow the passing down of homes by parents and grandparents for use as a primary residence by heir(s). 

Family farms, schools, cities and counties also receive local revenue from this proposition!

 If you're interested in finding out more, and what your current home value may be, please contact me.

LA Times Article

Widipedia article 
 

Julia Huntsman, REALTOR, Broker | www.juliahuntsman.com | 562-896-2609 | California Lic. #01188996

New Measure on Ballot for Nov. 6th--Get Rid of the "Moving Penalty"

The Property Tax Fairness Initiative (Portability) has obtained enough signatures to qualify for the November ballot in California.  This is good news, because now owners over 55 years of age could have the opportunity to take their Proposition 13 tax base anywhere in the state, not just select counties, and be able to use it more than once.  The campaign to gather signatures has been successful through the efforts of the California Association of Realtors, and the many Realtors who helped to get the word out and obtain signatures.

If passed, this Initiative would allow homeowners 55 and over to transfer their Prop. 13 tax base to a home of any price (current limitation is a sale price equal or lesser than sale price of original residence), to any county in the state.  Currently, there are only a minority of counties (as per Prop. 60 and Prop. 90) which participate in this plan, creating geographic disincentives to move since moving to a non-participating county could cause a huge increase in property taxes for those in fixed-income retirement or nearing retirement mode.   Currently, a homeowner living in Los Angeles County can benefit from current Prop. 13 tax base if they sell and stay within L.A. County, or sell and go to Orange County, Riverside County, and numerous others in the group--but with the passage of the new tax portability, a homeowner would still be paying a Prop. 13 fair share tax, but would be given the benefit of moving to any county and not lose their base.

The passage of this initiative would benefit a lot of people beyond the 55+ age group, it also applies to people who are disabled and those who have lost their homes to a natural disaster.  Additionally, more movement would be created in the residential real estate market, potentially creating a lot of economic benefit to move-up and first time buyers in what has been a very tight inventory.

Sample scenarios from the California Association of Realtors:

"Buy Up Example 
Original Purchase Price: $100k Estimated
Property Taxes: $1k/annually
Existing Home Sale Price: $300k
New Home Price: $400k
New Property Taxes: $2k/annually.
The $100k difference between the $300k sales price and the $400k purchase price is added to the original Prop. 13 property tax base of $100k for a new Prop. 13 tax base of $200k.

"Buy Down Example
Original Purchase Price: $100k
Estimated Property Taxes: $1k/annually
Existing Home Sale Price: $300k
New Home Price: $200k
New Property Taxes: 1/3 of $200k = $67k or $670/year for property taxes
If a homeowner buys a less expensive home, the property taxes will be proportionally the same as for the original home. In other words, if the tax base was one-third of the sale price, the new property tax would be one-third of the new sale price."

Please follow this issue as the year progresses!!
I am available for home value information at my phone contact information, or through my website.

Update: May 8:  At their recent meetings (Sacramento, May 2 -- 5), California Association of Realtors directors voted to pursue an alternative to the ballot initiative... It would be to seek support to have the legislature place the issue on the ballot in 2020. By seeking such legislative support, CAR would be able to free up resources to address other crucial issues in 2018. Whether this alternative will be possible won't be known until late June.

Would You Like to Keep Your Calif Property Taxes Lower?

Taxes Due

Take Your Tax Base Anywhere in California

First off, July 1 is the beginning of the first installment property taxes are due by 5pm on December 11th, after which you will pay a 10% penalty, so don't be late! Your next last day to pay is the following April 10th for the second installment.

Ballot Drive - Freedom to Move
Next, did you know there is a signature drive on to expand Proposition 13 tax legislation?  Currently, there are 11 counties in California which allow senior and disabled homeowners to transfer their current property tax bases (Alameda, El Dorado, Los Angeles, Orange, Riverside, San Bernardino, San Diego, San Mateo, Santa Clara, Tuolumne, and Ventura), which is a good thing; however, the new home has to be of equal or lesser value, which in some areas may prevent some owners from moving.
To create more opportunities for potential sellers, California Association of Realtors is circulating petitions (I have already obtained signatures) to expand this rule which would "also allow them to apply their old property tax assessment to a new home that’s more expensive than the old one. The new assessment would be a blend of the old and new assessments, combining the old assessment up to the sale price of the old home with an additional assessment for the amount paid over that price on the new home."  The entire purpose of this drive to put this on the ballot for 2018 is to provide new opportunity for those older homeowners who are staying put in order to keep this tax expense down.   New scenario per article in OC Register:

• More expensive: Say a couple owned a home for 30 years and its current assessed value is $75,000, meaning they pay $750 in annual property taxes. They sell the home for $600,000 and buy a new one for $700,000. Their new tax assessment would be $75,000 plus $100,000 (the difference between the old home’s sales price and the new home’s sales price). Their new property tax would be $1,750. (vs. initial standard property tax on a new purchase of a $700,000 home of $8750 per year).
• Less expensive: Say the same couple sold their old home for $600,000, then paid $500,000 for a condo. Since the condo’s price is 83 percent of the old home’s sales price, the new assessment would be 83 percent of the old, or $62,500. Their new property tax would be $625.

Under this proposal, there would be no limit to the number of times a homeowner could transfer their assessment to any of California's 58 counties.

For more information, please contact me!

How Proposed Tax Changes Could Affect You, the Homeowner

On September 27, proposed tax reform information was released by Republican leaders known as the Big 6* which outlines the elimination of certain tax deductions while doubling the standard tax deduction and elimination personal and dependency exemptions.  The National Association of Realtors 'believes the result would all but nullify the incentive to purchase a home for most, amounting to a de facto tax increase on homeowners, putting home values across the country at risk and ensuring that only the top 5 percent of Americans have the opportunity to benefit from the mortgage interest deduction."
In other words, should such tax reform become reality, it's not good for homeowners.

• It recommends a "backdoor elimination" of the mortgage interest deduction for all except the top 5% who would still be able to itemize their deductions.
• The total effect would be a tax increase on most Americans due to a combined loss of state and local tax deductions
• Lost incentive to purchase a home could result in overall loss of home values.
• It could strongly affect new homebuyers and older Americans who rely on the equity in their homes for retirement. 

The tax code has historically favored homeownership but these proposals that would limit tax deductability of the mortgage interest deduction and property taxes would reverse that support. An analysis by PricewaterhouseCoopers states that "values could fall in the short run by more than 10 percent if a Blueprint-like tax reform plan were enacted. The drop could be even larger in high-cost areas.   It may take years for home values to rebound from such a significant decrease."  See a summary here.

The National Association of Realtors believes that repealing such deductions would in effect cause double taxation on the same income.  For further information go to the NAR site.

The discussion about tax reform has been present for much of 2017. To preserve your homeowner deductions, contact your Congressional representative.


*House Speaker Paul Ryan, Senate Majority Leader Mitch McConnell, Treasury Secretary Steve Mnuchin, National Economic Council Director Gary Cohn, Senate Finance Committee Chairman Orrin Hatch, and House Ways and Means Committee Chairman Kevin Brady

Take Advantage of Tax Savings if You're Moving to Another California Residence, Prop. 60 and Prop 90

Long Beach Queen Mary

Thinking about moving, possibly away from familiar sights? If so, some advance planning might help you to take advantage of one of these two propositions which may grant some considerable property tax savings.  **See 4/12/17 update below**

As of June 5, 2015, the following eleven counties in California have an ordinance enabling the Prop. 90 intercounty base year value transfer (CA State Board of Equalization source):

Alameda, Orange,San Diego, Tuolumne,El Dorado, Riverside,San Mateo,Ventura, Los Angeles,San Bernardino, and Santa Clara.

Proposition 60 allows transfers of base year values within the same county. Proposition 90 allows transfers from one county to another county in California and it is the discretion of each county to authorize such transfers. The County Assessors will require a copy of the tax bill from the other county and a copy of the applicant’s birth certificate to be included with the application. Also, include a copy of the grant deed for the new purchase and a copy of the closing statements of both sale and purchase.

Eligibility:

The seller of the original residence, or a spouse residing with the seller, must be at least 55 years of age as of the date that the original property is transferred. The replacement property must be of equal or lesser “current market value” than the original.  See the Los Angeles County Tax Assessor website for specific information on equal or lesser value. The base year value of the original property cannot be transferred to the replacement dwelling until the original property is sold.

The replacement property must be purchased or newly constructed within two years (before or after) of the sale of the original property. The owner must file an application within three years following the purchase date or new construction completion date of the replacement property.  This is a one-time only filing. Proposition 60/90 relief cannot be granted if the claimant or spouse was granted relief in the past. The taxpayer is not eligible for the tax relief until they actually own AND occupy the replacement dwelling as their principle residence.

Update April 12, 2017 from California Association of Realtors State Legislative Weekly Update:

AB 1322 (Bocanegra) Property Taxation: Intercounty Base Year Value Transfers - Under Proposition 60, homeowners 55 years of age and older can currently transfer the base year value of their home to another home located within the same county. In addition, under Proposition 90, these same homeowners can transfer the base year value of their home to another county if that county has opted into the Proposition 90 program; however, only about ten counties have elected to do so. C.A.R. supports AB 1322, which remedies this situation by allowing homeowners 55 years of age and older to transfer their property tax base year value to any other county in the state if the companion constitutional amendment, ACA 7 (Bocanegra), is approved by the voters. AB 1322 passed out of the Assembly Revenue and Taxation Committee this week. 

Financing Energy Efficient Property Improvements via the HERO Program (aka PACE)

The clue to how these programs work when purchasing qualifying energy efficient improvements is in the name:  Property Assessed Clean Energy (PACE).  These particular programs are NOT loans or leases, they are County-approved financing programs whereby a bond is issued to the lender for projects permanently affixed to a property, repaid through property taxes.  Homeowners repay financing annually through an assessment on their property tax bill.  The projects could be solar panels, windows, doors, air conditioning and heating, to name a few.

While the attraction is in the no-money down for specific residential improvements (there are commercial programs as well),  the prospective customer should read the fine print before purchasing.  Under these HERO/PACE programs, the are liens placed on the homeowner's real estate tax bill which, because it's a property tax assessment, takes priority over a home loan. Should the homeowner wish to sell or re-finance, be aware that FNMA and Freddie Mac--source of most conventional mortgages--are prohibited by the Federal Housing Finance Agency from purchasing a mortgage loan on that property until the entire lien is paid off or does not have priority over a first mortgage lien.  (FYI:  most mortgages are sold to those entities.)   Here are additional words of warning from Kevin Nunn, a lender in the Sacramento area:

If the system is owned make sure it is not financed through one of the PACE programs that are being promoted right now. Homeowners are led to believe these “assessments” will just transfer over to a new buyer. Fannie Mae and Freddie Mac have been very clear that they will not purchase a loan with these “assessments” in place. It often comes as a very big surprise to owners and Realtors that the PACE must be paid off or they may only be able to sell to a cash buyer.

 On a Los Angeles County property tax bill, the lien assessment would be located under "Direct Assessments" section.  Some examples of how the assessment will appear are WRCOG Hero, LACEP RES PACE, LACEP RES 2016, LACEP COMM or California Hero to name a few.

If the homeowner stops making property tax payments, the assessment becomes a priority lien in front of a new first trust deed.  Also, when selling, the seller under California Association of Realtors purchase contracts, is required to make a disclosure to the buyer during escrow of any type of lien or lease of equipment on the property.  As an involuntary lien, it will also show up on a preliminary title report passed to the buyer during escrow, at which point the buyer may decided he/she doesn't want to pay an annual $3000.00 assessment in addition to regular property taxes.  

The seller or buyer may pay off the lien before close of escrow  (assuming the buyer is willing and able), or the amount may be split between them.  

While these programs have been most popular in the Inland Empire, they are now approved in Los Angeles County and almost all cities in  LA County, including Long Beach.  

However, there are other owned or leased equipment programs which are in place based on different criteria, and may be less complicated than those under HERO/PACE programs, so be sure to check the difference.

New California Real Estate Laws for 2015

The following are some of the new real estate laws taking effect in the future in California.

California brokers are required to keep transaction records for at least 3 years. These records used to include text messages, instant messages and tweets, but per AB 2136, as of January 1, 2015, such electronic "ephemeral" records are not now required to be kept.  If you wish to maintain a good permanent record of communication with your agent, faxed documents and/or e-mail messages are a better way to go.

Many HOA associations use the services of a property manager who commonly carries out the forwarding of HOA documents to the buyer during escrow.  The fees charged by them for the gathering, production and delivery of such documents has been the subject of controversy and regulation in the past, all the more so since electronic documents do not incur the expense of actual copying and messengering to an escrow office that once was common.  To eliminate the practice engaged in by some companies where non-requested documents were included with requested documents--and charged for--document bundling is now prohibited. It is the now the responsibility for the seller to pay HOA document fees, and the fees must be itemized for mandated disclosures, i.e., CCRs, Minutes, By-laws, special assessments, financial/budget statements, rental reports, operating rules, etc.  The HOA must estimate the cost of such mandated documents prior to production, and if the seller possesses them electronically, they must be provided free of charge.  It is the responsibility of the seller to pay the HOA for any charges which the HOA is allowed to incur. The California purchase agreements have been revised to reflect this change in the law. So if you own a condominium and you are selling it, be aware that you are now legally required to pay for the mandated documents which are to be sent to the buyer, and that these documents can no longer be ordered by escrow using the buyer's deposit funds (a common practice until now).  These and other requirements are detailed in  AB 2430.

There are several other new HOA-related laws concerning exclusive use maintenance, use of recycled water, use of low water-using plants, judicially enforceable dispute resolutions, allowance of personal agriculture in a back yard.  For specific information on these, please contact me.

If you see one in your front or back yard, the California red frog is now the state amphibian.

On July 15, the California state water board adopted emergency regulations restricting water use for outdoor landscapes. The regulations prohibit using potable water outdoors, such as watering your lawn, that results in runoff water on sidewalks, driveways, roadways and your neighbor’s property; washing a car with a hose unless the hose is fitted with a shut-off nozzle; watering down your driveway and sidewalk; and using water in a decorative fountain unless it recirculates. Violation of the regulations is an infraction and may result in a fine of up to $500 for each day the violation occurs.  Various cities, such as Long Beach and Los Angeles, also have water regulations, i.e., watering on certain days and times. Try checking with their web sites.

AB 2310 allows the city attorney in certain California cities, including Long Beach, to demand that a landlord evict a tenant, after following certain procedures, for unlawful possession of weapons or ammunition or for other illegal conduct with controlled substances, or this action may be carried out by the City.

Seniors or disabled citizens may file for a postponement of their property taxes if household income does not exceed $35,500. This program does not include mobile homes, and takes effect July 1, 2016.  Claims are filed with the State Controller and any sums approved and paid by the state will become a lien on the property.

Please contact me for more detailed summary on some of these laws, I am happy to be of assistance.
www.juliahuntsman.com

California Propositions 60 and 90, Still a Good Tax Tool

These propositions allow for the transfer of a property's tax base, meeting certain requirements, for persons over the age of 55.

Proposition 60 allows for the value of an existing residence to a replacement residence within the same county, for every county in California.  The replacement home must be of equal or lesser value, and must be acquired or constructed within two years (before or after) the sale of the original property.  Transfers between parents and children will probably not qualify, as the original property must be subject to an appraisal (or re-appraisal).

Equal or lesser value of the replacement property is determined at 100%, 105% or 110% of the original property depending on the timing of the purchase/construction: before the original property is sold, within the first year, or within the 2nd year, after the original property is sold.  The guidelines are definite, and the replacement property will not qualify for the tax base transfer if the criteria is not strictly met.

A change from the recent years is the increase in number of counties honoring intercounty transfers.  At one time there were only five counties, there are now nine: Alameda, Ventura, Santa Clara, Orange, Los Angeles, Riverside, San Mateo, San Diego and El Dorado Counties.  These nine counties have passed ordinances which all intercounty base year transfers.  These counties will accept a value transfer from any other county in California as long as all requirements are met.

For the seller thinking of relocating, this is an opportunity to move from, for example, the higher cost areas within Orange or Los Angeles Counties to a lower cost area in a county among the above group of nine. This can work well for someone leaving a condominium to purchase a house in a different area.


If you are considering such a move, I would be happy to provide a list of available properties from several of these counties! Please contact me via phone or e-mail for available properties in areas you might be considering, and also for an estimate of current home value of your current residence.

Proposition 90 Update: California Property Tax Transfer

Proposition 90 was passed in 1988 so that a California county could "opt-in" to allow transfer of property tax base of anyone over the age of 55.  Actually, only a minority of counties have participated, but recently the County of Riverside, which had opted out a number of years ago, has recently opted back in as of September 19, 2013.

Now, if anyone over the age of 55 sells in one of the participating counties and relocates to another participating county, they are allowed to keep their original tax base. 

The counties currently participating in this program are:  Los Angeles, Orange, San Diego, San Mateo, Alameda, El Dorado, Santa Clara, Ventura and Riverside Counties.

The replacement property must be a principal residence, and must be of equal or lesser value; for Los Angeles County, see these guidelines for both Proposition 60 and 90.  Proposition 60 is a state law which allows such tax base transfers within all California counties.  Proposition 90 concerns moves from one eligible county to another and was designed to encourage moves by the 55+ population, thus helping housing turnover in general.   See the link for all California counties' information sites for more information.

Note:  The homeowner should study the "equal or lesser value" guidelines carefully, or consult a tax advisor for complete information.  Partial information here includes:

• "If the replacement dwelling is purchased or built prior to the sale of the original property, then "equal or lesser value" means the full cash value (i.e., sales price) of the replacement dwelling cannot exceed the full cash value (sales price) of the original property.
• "If the replacement property is purchased or constructed during the first year after the sale of the original property, then "equal or lesser value" means that the full cash value of the replacement property cannot exceed 105 percent of the full cash value of the original property.
• "If the replacement property is purchased or constructed during the second year after the sale of the original property, then "equal or lesser value" means that the full cash value of the replacement property cannot exceed 110 percent of the full cash value of the original property." Courtesy of California Association of Realtors.

California County Tax Assessors Are Sending Notices About Property Tax Increases

Do you know about the increase of impending property tax assessments?

A precedent setting California court case allows county assessors to recapture tax cuts as real estate values recover their losses.

Citing a practice called “value restoration” or recapture”, County Assessor's offices throughout the state are sending out notices this week.

County Assessor's offices say they can raise taxes by more than Proposition 13's two percent limit when home prices rebound for properties that had prior assessment reduction; plus two percent each  year for every year they‘ve owned the property.

Many homeowners who got tax cuts during the recession will see their taxable values rise as much as seventeen percent this year.

The California Supreme Court affirmed assessors' right to do this after Seal Beach lawyer Robert Pool lost his court fight to block the Los Angeles County Assessor (and all California assessors) from recapturing lost assessment values after the 1990s housing market crash.

This week 31,803 Orange County homeowners face that same shock via a “blue notice” in the mail.

The Assessor's Office must notify property owners by mail by July 20th. 

Property owners have until Sept. 16, 2013 to file an appeal with the Clerk of the Board of Supervisors. 

New Real Estate Laws for 2013

California new real estate laws are coming up effective January 1, 2013, and here are a few:

For transactions in homeowner associations, documents are ordered in escrow to go to the buyer, for which there are typically fees charged for the preparation of these documents.  A homeowner association cannot collect a cancellation fee for sales disclosure documents (1) when a written cancellation by the party ordering documents is received by the HOA before work is performed; and (2) when a written cancellation by the party ordering documents and HOA was compensated for any work performed--the HOA must refund all fees collected if a request is cancelled in writing and work had not yet been performed on the order.

Hazard Disclosures: Sellers must now disclose the location of gas and hazardous liquid pipelines, from information in a database.  This information would most likely be coming through hazard disclosure companies hired by the seller in escrow to make these and other disclosures.

Property owners will continue to have anti-deficiency protection on refinanced loans on their property, except for a refinance where cash is taken out. 

Month-to-month tenants of properties in foreclosure must be given 90-day notice to vacate after foreclosure--in six languages (after March, 2013, and there are 4 exceptions to this).  Lease tenants may remain until end of lease term under all terms of the agreement.

Helping Distressed Homeowners Keep Their Homes -- No dual tracking, meaning no sale of property if an alternate foreclosure prevention method has been approved in writing by all parties (investors, lienholders and mortgage insurers).  See my previous post .

Vacant REO properties must be maintained (an existing law which has not been extended indefinitely).

Foreclosure notices must have a summary of information accompanying them, in six languages.

Property taxes -- the death of a co-tenant will not trigger a reassessment of the property, providing certain conditions are met.

Buyers of foreclosed properties have opportunity to correct substandard conditions of at least 60 days before an enforcement agency can take further action.

If you would like the specific legal descriptions of any of these laws, please contact me with your e-mail and name information, I will be happy to forward you additional information!

A Lower Assessment?, or, Have You Checked Your Property Tax Data Lately?

During the 1990s recession, many property owners filed for a re-evaluation of their property taxes because of the falling market prices, which meant a lower property tax. To do that--then, as now--there were certain forms and a procedure to follow to apply for that lower assessment. That information, by the way, is posted on the County Tax Assessor's site. One thing to know right now, though, is that the Los Angeles County Tax Assessor's office has been diligently pursuing the market trends and automatically lowering property assessments during this latest downturn.

If, however, you think you are still not getting the correct assessment, you should know that deadlines must be met, or you wait until the following year to make an appeal. Review your property data for square footage, number of bedrooms and baths, etc., to make sure it compares correctly with the real configuration of the property.

If you believe your property data as entered in the tax records does not represent the property, documentation will be required in the form of an appraisal (if you have one) or other documentation. For instance, if your home shows as a 3 bedroom on the tax records, but it was later modified and is functionally a 2 bedroom, this will require documentation to present to the Tax Assessor's office.

Be able to provide recent comparable sales (usually about 3) in your area to show current market values. If you need help with this, please contact me for information on filing deadlines, or the sold listings provided through the MLS that would be a comparable for your property.

And, while you're at it, you should make sure you've taken your $7,000 Homeowner Exemption, which also saves you a little more because it lowers your tax basis by $7,000.

By lowering your assessment, you save money.

Are You Taking Advantage of Your Decline in Market Value and Homeowner Exemptions?

Do you know about your property tax reduction option? Generally, the median home price in California is about the same as 2004, so if you bought your residence after that time, you might want to apply to the Los Angeles County Assessor for a reduction. You have until the end of this month to get your application in, so there's not much time left, but basically, you need to find two comparable properties that support your application that sold close to January 1 and through March 31 of 2008. The Assessor's site has the form and directions needed for this. You can find your own comparables through this site, but if you want help from me, please e-mail me or call me, and I will gladly provide you, via e-mail, with MLS closed listings.

If you live in Orange County, please contact your tax assessor there.

Also, some people may not be filing their Homeowner's exemption -- you may obtain a $7000 reduction in your assessed tax value (that's usually based on the selling price of your home). Originally, $7000 was a significant amount when the home values were $35,000. Today, you may get about $50-$70 off your total tax dollars owed, but a penny saved is a penny earned. You can download the form from the Los Angeles County site, for this and other exemptions including those for veterans, instititutions, real property transfer exclusions between parent/child and grandparent/child, seniors' exclusions, and disaster relief.

Historic Renovation and Property Tax Benefits

The Mills Act was enacted in California in the 1970's, but is now much more widely known due to its 40-60% reduction in property taxes for qualified properties.

Effective March 7, 1973, Chapter 1442 of the Statutes of 1972 (also known as the Mills Act) allows an owner of qualified historical property to enter into a preservation contract with local government, which establishes its own criteria and determines how many contracts they will allow. When property is placed under such a contract, the owner agrees to restore the property if necessary, maintain its historic character, and use it in a manner compatible with its historic characteristics. the authority to enter into contracts, which are for 10 years at a time and stay with the property when transferred, with owners of qualified historic properties who actively participate in the restoration and maintenance of their historic properties while receiving property tax relief.

"A qualified historical property is privately-owned property that is not exempt from property taxation and that also meets either of the following criteria:

• The property is listed in the National Register of Historic Places, or is located within a registered historic district; or

• The property is listed in any official state, county, city, or city and county official register of historical or architecturally significant sites, places or landmarks, including the California Register of Historical Resources, California Historical Landmarks, State Points of Historical Interest, local landmarks, and local survey listings of historical properties."

Long Beach is one of the cities which participates in this program, here is a contact list for all California cities: http://www.parks.ca.gov/pages/1074/files/mills%20act%20contacts.pdf

For more information or a map of local historic districts, please contact me at 562-896-2609.

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Property Tax Reduction

Don't pay more property taxes than what your current market valuation indicates. If you bought property 2 years ago, or less, then you probably want to keep close track of your local selling prices for properties similar to yours. For information on how to apply for property tax reduction, go to the Los Angeles County Tax Assessor's site located at the right column and download the form. You will need to provide certain information about sales within a certain time period for this year, plus get the form submitted by the date stated. For sales information to help you in this process, contact me, I will be happy to help you in your market sales information.

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California's Updated Property Tax Withholding Laws

California's property tax withholding laws have been revised recently, and below are some basics per the legal counsel of California Association of Realtors.

An important thing for buyers and sellers to note is that the REALTOR is not the person charged with informing the buyer and seller, it is the escrowholder (although it certainly helps if your REALTOR is knowledgeable and prepares you beforehand).

If the escrow officer does not inform the buyer of their requirements to withhold, then the buyer is not obligated to withhold the money from the seller. (This concerns California law only; the IRS also has additional requirements.)

"Buyers must withhold 3 1/3 percent of the gross sales price on sales of California real property interests from both individuals (e.g., "natural" persons) and non-individuals (e.g., corporations, trusts, estates) and pay this amount to the Franchise Tax Board (FTB), unless an exemption applies (Cal. Rev. & Tax Code §§ 18662(e)(1)(A), (B), (2)(A)). Escrowholders must give buyers written notice of these withholding requirements. If the escrowholder fails to give the buyer this written notice, then the buyer is off the hook for the withholding tax liability. ( (Cal. Rev. & Tax Code §§ 18662(e)(3)(B).) Typically, the escrowholder submits both the form and money withheld to the FTB.

The exemptions include:

the sale of property for less than $100,000 (Cal. Rev. & Tax Code § 18662(e)(3)(A)); for individuals,

the sale of a principal residence or a property last used as a principal residence (Cal. Rev. & Tax Code § 18662(e)(3)(D)(i));

the sale of a decedent's principal residence by the estate (Cal. Rev. & Tax Code § 18662(e)(3)(D)(i));

the sale of property by a corporation with a permanent place of business in California (Cal. Rev. & Tax Code § 18662(e)(3)(D)(v));

an Internal Revenue Code (IRC) § 1031 exchange (without any recognized gain)(Cal. Rev. & Tax Code § 18662(e)(3)(D)(ii));

an involuntary conversion under IRC § 1033 (Cal. Rev. & Tax Code § 18662(e)(3)(D)(iii));

the sale of property at a net loss (or a net gain not required to be recognized) for California income tax purposes (Cal. Rev. & Tax Code § 18662(e)(3)(D)(iv));

seller's tax liability, calculated at the maximum rate regardless of seller's actual rate, will be less than 3 1/3% and seller certifies that fact under penalty of perjury. (For tax rate for corporations, see Cal. Rev. & Tax Code § 23151 or 23186; for maximum tax rate for other sellers, see Cal. Rev. & Tax Code § 17041.) (Cal. Rev. & Tax Code § 18662(e)(2)(B).)"

The required amount withheld in escrow must be transmittd to the FTB within 20 days after the close of escrow, and during escrow, the escrow officer should provide the buyer with an instruction form for the escrow officer to transmit those funds.

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