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

You'd Like to Move to Greener Pastures, And Keep Your California Property Tax Base?

 Propositions 60 and 90 are tools for helping sellers keep their property tax base if they are over 55: 

"(they)allow a person who is over age 55 to sell his or her principal place of residence and transfer its base year value to a replacement dwelling of equal or lesser value that is purchased or newly constructed within two years of the sale."  California State Board of Equalization. 

The number of counties participating in Prop. 90 fluctuates, it is currently at 10: 

• Alameda
• Los Angeles
• Orange
• Riverside
• San Bernardino
• San Diego
• San Mateo
• Santa Clara
• Tuolumne
• Ventura
  

 Currently this is a one-time only benefit, and one of the owners must be 55 years or over.  This is for principal residence only, not your investment properties unless you're living in one of them. There are certain guidelines if you buy one or two years after the sale in which the transfer of value may take place.  Depending on the county, a seller may have to relocate some distance to get into a new home purchase that is in a similar or lower price range, so this is not always viable.  If you stay with

in your own county, the transfer works in any county, but if you're moving out of your home county, then it applies only if you go to one of the other 10 counties.  In a rising market, this can be limiting, and some people cannot afford to move without that tax benefit.  

To find out about the Proposition 19 on the November ballot, go to this link for a summary, a yes vote allows more people to move and transfer their tax base anywhere in the State, along with other benefits.

For an estimate of current value on your home, please go to my site below for an instant estimation at the What is Your Home's Value?, or contact me directly.  I have been a licensed Realtor since 1994.

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!

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. 

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.