Californians 55 and older can realize big savings on property taxes!

Transfer your existing property tax base. 

Last week in our Sacramento newspaper a person asked the question to one of the newspapers financial experts about transferring their existing property tax base to a replacement home purchase.  Here in California in 1986, Proposition 60 legislation was passed which allows a person 55 years of age or older to transfer the assessed value of their primary residence to a replacement home within the same county as long as the replacement home is of equal or lesser value than the home that is being sold.  Here is an example of how this will work.  Say a person purchased their home 20 years ago for $125,000.  At that time their home is assessed and the $125,000 purchase price becomes the basis for computing their annual property taxes.  Now we are in 2009 and the homeowner is thinking of downsizing and their home is worth $400,000, even in today's market!  If they purchase a home for $300,000  their annual tax bill will be close to 1% of the purchase price or $3,000 as compared to approx. $1,250 on their existing home.  The qualified homeowner can transfer the tax assessed base from the original home to the newly purchased home.  They purchase a replacement home for $300,000 and have an annual tax of $1250, a significant annual savings.  

The general conditions to be met are:

•1.   The original home and the replacement home must be in the same county.  (Check assessor's office for exceptions)

•2.   As of the date of sale one of the owners must be 55 years or older.

•3.   They must have or be able to have a homeowner's exemption on their first residence.

•4.   The replacement home must be of equal or lesser value and must be purchased within two years from the sale date of the first home.

•5.   The requesting taxpayer can only receive this benefit once. 

The above conditions are a summary and to get an exact determination for a persons situation one should contact their local tax assessor.  

Many people may not be aware of this tax saving and if a person is thinking of downsizing and is thinking that their taxes will be so much higher they may put off that decision. As Realtors providing helpful and  reliable information is one of our most important services.

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