Take advantage of one-time transfer law

In this state, you may be able to sell your home and keep low tax base


Lydia Gable

Lydia Gable

COMMENTARY

/// Propositions 60, 90, 110

In California, you may be able to sell your home and take your low tax base with you.

Want to downsize your home but think you can’t afford to do so because taxes are higher now than when you bought the house?

For those of you who have owned a home for many years, the current 1 percent property tax may make a move seem financially impossible because you’d pay significantly more in taxes and you simply cannot afford that.

But there’s a one-time real estate transfer that you can take advantage of now if you want to capitalize on this great real estate market.

Let me summarize the local real estate property tax laws:

Proposition 60, enacted into law in 1986, allows for the onetime transfer of your primary home’s current tax base to a replacement property of equal or lesser value after the age of 55 of either spouse, providing that the replacement property is within the same county.

The beauty in this legislature is that you would be able to buy a new property yet still pay the same property taxes you pay on your current property, instead of being assessed the current 1 percent.

For example, if you bought a home with a $400,000 tax base, sell it today for $1 million and buy a new one for $999,999 within two years, you may be able to keep your low $100,000 tax base.

Proposition 90, which passed in 1989, expands on Proposition 60 and allows counties to voluntarily extend the transfer into their county from all 58 California counties.

Not all counties participate, but Los Angeles and Ventura counties are reciprocal, so you can move between the two areas when taking your one-time transfer.

Proposition 110, passed in 1996, extends this tax relief to permanently disabled people, whether 55 or not.

So if you’ve been holding back on selling because you can’t afford the higher property taxes, you now have a great option to make a move happen today.

The replacement property must be purchased or built within two years of the sale of the original property. You must file a claim within three years of purchasing or completing new construction of the replacement property. If a claim is filed after the three-year period, relief will be granted beginning with the calendar year in which the claim was filed.

This is a one-time claim only but it’s great news for longtime residents of the Conejo Valley.

You should verify that you and your properties, current residence and replacement residence, qualify for this one-time tax base transfer.

You should consult with the assessor’s office of the county of your current residence and the county of your replacement residence to verify the information and eligibility, as well as consult with an accountant, tax advisor, financial advisor and other professionals with regard to your particular situation.

Happy house hunting!

For more information, call Lydia Gable with Lydia Gable Realty Group at Keller Williams Westlake Village at (818) 383-4335.