Transferring your Prop 13 base-year value to a replacement residence
One of the main reasons that California voters passed Proposition 13 in June 1978 was to protect themselves against escalating property taxes as the value of their property increased. One unintended effect of Proposition 13 was to discourage people from changing their residence as their family circumstances evolved because they would lose their Proposition 13 factored base year value.
Fred, 56, and Nelda, 53, wish to sell their four bedroom home on a large lot now that their children are grown and have homes of their own. They have lived in their current home for many years and their 1983 Proposition 13 base year value of $125,000 has only grown to $210,309 by 2012. Their property tax bill is approximately $2,300 per year. Their home today is worth $650,000. Fred and Nelda have found a townhouse with two bedrooms and no yard for $385,000 but they are unwilling to make the move because under Proposition 13 this change of ownership will establish a new base year value for the townhouse based primarily on their purchase price and their tax bill will jump from $2,300 to approximately $4,200 per year. They are on a fixed income and cannot afford the additional $1,900 per year in taxes.
To solve this problem California voters passed Proposition 60 in November 1986 that permits people over 55 years of age or anyone who is severely and permanently disabled regardless of age to sell one home and buy another of equal or lesser value in the same county within two years and take their original Proposition 13 base year value with them. In the example above, Fred and Nelda could move to the townhouse and still pay $2,300 per year in property taxes (their total bill may be larger or smaller, however, depending on the tax rate and fees charged at the new residence) plus future increases not to exceed 2%. Only one of the owners has to be over 55 or disabled on the date the original house is sold. If the original residence is sold prior to purchasing the replacement residence, equal or lesser value can mean up to 112% per cent of the sale price of the original residence depending on the time between selling the original and purchasing the replacement. However, there is no percentage adjustment allowed if the replacement residence is purchased before the original residence is sold.
To qualify for this program Fred and Nelda must file a Claim for Base Year Value Transfer with our office when they have made their move. This office will then issue a supplemental assessment notice that will transfer their base year value to the new residence. The lower base year value cannot be transferred until the original home is sold; so if the replacement home is purchased first, there may be a period when they will have to pay the higher tax. If the new residence had a higher base year value than the home they sold, they will receive a refund check to help them pay the higher taxes until the next full tax year when their former base year value will appear on the regular bill. Adjustments can be made to the transfer if the original home had additional uses such as a vineyard or multiple dwelling units so that the comparison between the original and replacement home values is fair. The over-55 base year transfer can be used only once in a person’s lifetime unless a person becomes disabled after purchasing their replacement residence in which case they move their base year value one additional time.
Effective January 1, 2007 an eligible owner who sold an original residence and purchased a replacement residence within two years of the sale of the original and did not file a timely claim for base year transfer may now file that claim as long as they still live in the replacement residence. The base year transfer from the original residence will be effective as of the year in which they file the claim.
Should you have any questions please contact Napa County Assessor-Recorder-County Clerk John Tuteur at 707.253.4459 or by e-mail firstname.lastname@example.org More articles can be found at http://www.countyofnapa.org/Assessor/
NOTE: Only these counties accept base year transfers from other counties: Alameda, El Dorado, Los Angeles, Orange, Riverside, San Bernardino, San Diego, San Mateo, Santa Clara, and Ventura.