Increased Property Taxes Holding You Back from Downsizing?
Buyers in 2015 hear stories from their parents and grandparents of homes purchased in the days where you could buy in San Diego for, oh, say, $18,000, or $50,000, or goodness, even $200,000. Little did they know how much their home would appreciate as they remodeled, raised a family, and stayed in that home. Then those kids they spent so much time raising grew up and started to have families of their own. They bought their first home to house their growing family and settled out of town for a great job offer or property. Now, with the “kids” all grown, the grandparents want to spend their precious time watching their grandchildren grow up. To sell their house, the one bought for $100,000 now valued at $800,000, well that would entail much higher property taxes, and they are living on a fixed income.
Proposition 60 & 90 to the Rescue
Created as relief from Proposition 13, which dictates that property is assessed for tax purposes when it changes ownership, Propositions 60 & 90 are game changers.
If Grandma is 55+ years old: she can take that glorious $100K tax base to a new home in San Diego. In other words, instead of paying property taxes on her new home’s value ($800K), she gets to transfer her 100K basis to her new home and pay only 1/8th of the property taxes she would otherwise owe. The only caveat? You have to make sure the county you live in and are remaining in allows it. Good news for San Diegans; our county is Prop 60 friendly.
Now assume that Grandma’s kids moved from San Diego to Los Angeles, and Grandma wants to move there. Now grandma can sell her San Diego home and move into a $800K property in a different county (in this case Los Angeles) where her kids now live and pay 1/8th of the property taxes she would otherwise owe there. The only caveat? You have to make sure that the county you are moving to allows it. As long as grandma’s new home costs the same or less as her current home, she gets to keep her original basis for property tax purposes.
How it works:
- Make sure that the county you are moving to is Prop 60 or Prop 90 friendly.
- File an application within the time period prescribed. The Assessor will confirm that the transaction qualifies.
- This is a one-time only benefit. Grandma cannot keep moving around with this $100K basis. If Grandma AND Grandpa own the property (there is more than one owner of the original property), only one party may claim the benefit as long as that person is eligible.
- More on reappraisal here: http://www.boe.ca.gov/proptaxes/faqs/propositions60_90.htm.
Where in San Diego can I use this tax break? Contact us for suggestions! Info@KolkerRealEstateGroup.com