Real Estate Tax Tips To Help You Retire

Prop 13 incentivized living in the same place for the rest of your life by limiting how much your property taxes could increase each year. So, you've been diligent. You live below your means, work hard and the next thing you know your boss is asking about your retirement.

But what happens if, as you begin to think about what your post work life will be like, you realize that your house - great as it is - is too far from what you love to do. All of a sudden you want to move to the ocean, or the mountains, or the golf course!

This is where doing a little planning has saved my clients a ton of dough!

There are two propositions that were passed that allow you to "take your tax base with you". So you can move to your ocean condo and just pay taxes on your original tax base.

The first one is for same county moves. You sell your house in San Jose and move to your mountain retreat in the Santa Cruz Mountains - but still in Santa Clara County. The home you sold was worth MORE than the home you bought and the purchase was within 24 months of the sale. Larry Stone, our assessor, will ask for some paperwork and voila', you keep your old tax base. Click Here For Details

The second one is for moving to another county. The same general guidelines apply - see above - but you have to move to a "cooperating county". These counties are always changing so make sure to check to see if the county that you want to move to is on board.
When I checked today, these are the cooperating counties:

APPROVED EFFECTIVE DATE
Alameda           November 9, 1988
El Dorado         February 15, 2010
Los Angeles      November 9, 1988
Orange              November 9, 1988
San Diego         November 9, 1988
San Mateo         November 9, 1988
Santa Clara       November 9, 1988
Ventura             May 4, 1992

So, lets say you have lived in your home for a long time and even though the house is worth $850,000, with prop 13 the assessed value is $250,000.

You find an $850,000 house, on the golf course and an hour from Tahoe, in Cameron Park [because El Dorado County is on our list]. You know, in that track that has it's own airport where you can taxi the plane up to your house.
Or, even better, you buy a $500,000 house, take your 121 IRS Exclusion and put that in your pocket, then do the paperwork to transfer your $250,000 base to the new $500,000 house.

There is a nominal fee to do this. In Santa Clara County it's $78 bucks. Make sure to read the details here.

I get excited when I save my clients money so, these can be a LOT of fun! Just do your homework, talk to your CPA and let the retirement begin!


Rebekah Owen has been helping clients with their real estate dealings since 1988. She is a licensed real estate broker, a trained mediator and serves in a leadership capacity with the Santa Clara County Association of Realtors as well as with the California Association of Realtors. She lives with her family in San Jose, California and can be reached at 650-492-5958.