Over Age 55? Live in California? Reduce your Property Taxes when you sell
by Teena A. Takata

Special provisions in the property tax law allow anyone who is age 55 or older to "trade down" their home value once, but to retain your old property tax basis. If you have held your old home for a long time, the assessed value may be very low. Taxpayers who are at least age 55 can transfer their property tax base in the old home to the new home. Briefly, the rule requires a trade down from the old home’s value to new, one spouse must be at least age 55 on the date of the sale, and the investment in the new home must be made within two years of the sale of the old home. A form is filed with the County Assessor to claim the property tax benefit. However, it will take time to process the form, so you likely will get a property tax bill at the new rate. Pay the bill at the new rate when it is due, but once the form is processed and the assessed value of the new home adjusted, then the County will refund any overpayment.

The property tax base can be transferred in the above manner at any time the related sale and purchase occur in the same county. Transfers of homes between counties may still qualify, but you generally will need to confirm the rules with the county the new home is located in.

As an example, consider a home that has been held for many, many years, by an older couple. The assessed value (the property tax base value) might be $80,000. The current value could be $400,000. If the couple (or a surviving spouse who was over age 55) wanted to trade down to a home worth $200,000, then by filing the proper forms, the present owner who is over age 55 can sell their old home and buy the new home, thereby "trading down" to the new home, but they can preserve their old $80,000 property tax base by filing these forms. At California rates, that could mean a savings of about 1.2% of $120,000 (the difference between the old property tax base and the new home’s cost), or $1,440 per year.

Inherit a home from a parent? Keep the property taxes low!

If you are too young to benefit from the above rule, then let your parents know about it. However, another little-known property tax rule can allow a child who inherits real property from a parent to keep the old property tax base upon filing proper application. So, the reduced property tax base on the home above can be retained by their child, if the home is used as a residence by the child. This rule is subject to some limitations on value, and you again need to file special forms, so consult a competent tax advisor if this situation might apply to you.


BizNet Magazine Supports:
Because It's The Right Thing To Do.

If You Entered This Page Through a Search Engine Or Any Other Framed Website Click Here To ReturnTo BizNet Online Magazine


Send mail to editor@biznetonline.com with questions or comments about this web site.
Copyright © 1997 ~BizNet OnLine Magazine
Last modified: November 08, 2002