In
California, Persons over 55 Years May Transfer Low Property Tax
Assessment of Old Home to New Home Under Certain Circumstances
10/30/05
Dear
Mr.
Duman:
My
question
concerns Prop 13 and a clearer understanding of its benefits.
If
you are
over 55, can you take it with you to another property after selling an
existing
property?
Do you
know
of the other counties that accept a transfer of Prop 13?
Can
you
please clarify this situation?
B.
F., Livermore
Dear B. F.:
California
law provides that homeowners, who are 55 years of age or older may
transfer the
property tax basis from their existing residence to a new home
purchased in the
same county. However, a transfer of property tax basis to a new home in
a
different county will only be recognized, if the county in which the
replacement property is located has specifically opted to recognize
such
inter-county transfers.
Generally
speaking, as many of our readers may be aware, California’s present
system of
property taxation is rooted in the l978 voter initiative, Proposition
l3, which
had the effect of rolling back the assessed values of real property to
l976
rates, and limited any annual increases in assessments to no more than
two
percent of the prior year's assessed value.
Proposition l3 was codified in the California Revenue and
Taxation Code,
Section 63 et. seq.
Pursuant to
this law, the value of real property may be reassessed to full market
value
upon a "change of ownership”, which frequently results in increased
annual
property tax for new purchasers and transferees of real property.
There
are, however, a number of statutory
exceptions, which exclude certain types of transfers from the
definition of
"change of ownership", and therefore exempts eligible real property
transfers from property tax reassessment.
One example is California Revenue & Taxation Code, Section
69.5, et
seq., which permits eligible property owners over the age of 55 years
to sell
their present home, and "transfer" the assessed value of their
present home to a new home of "equal or lesser value" (as set forth
in the law) in the same county as the prior home.
Eligibility
for the "over 55" exemption requires the applicant to have actually
resided at the prior property, and requires that the subsequent home
have been
purchased no more than two (2) years from the sale of the previous home
(either
before or after).
Generally,
the "Over-55" exemption for seniors is limited to those who are
transferring homes from one location to another within the same county. However, as a result of another voter
initiative, Proposition 90 (passed in 1988), each individual county was
given
the right to decide for itself whether to recognize transfer exemptions
for
seniors, whose previous homes were located in another county.
Presently,
only seven counties currently recognize exemptions for out-of-county
transfers. They are Alameda, Los
Angeles, Orange, San Diego, San Mateo,
Santa Clara, and Ventura counties, which are among the most
populous
counties in the state.
Readers with
questions regarding the topic of property taxes should address them
directly
with their own attorneys, for specific guidance.
FD767 10/21/05
4\column\prop90.tx6
Readers may address their
questions to The Real Estate
Lawyer, Fred M. Duman, 2807 Castro Valley Boulevard, Castro Valley, California
94546. Mr. Duman will answer those of
general
interest in his column. He reserves the
right to edit the letter for brevity and clarity.
Each real estate problem
usually has its own distinct
circumstances, and frequently is more complicated than realized by a
layperson. Readers are also encouraged
to consult with their own lawyers to obtain guidance concerning their
problems
when they first arise.
Readers are cautioned that
these answers are not intended
to be the basis for any action or reliance by the reader.
You are welcome to
visit our web site at “www.dumanlaw.com”.
© 2005, Fred M. Duman All Rights Reserved. Please see our disclaimer.
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