Propositions offer big savings on property taxes

Propositions offer big savings on property taxes
Written by Cres McFall
Wednesday, 26 August 2009

With the first installment for fiscal year 2009-2010 property taxes officially due Sept. 10, assessing your assessment is a good idea – particularly, if a review can save you money. Following are some tax exemptions you might have overlooked.

• Homeowner’s exemption. It is likely that you filed a request for a homeowner’s exemption when you purchased your principal residence. If you didn’t, you may be eligible for an exemption of up to $7,000 off your assessed value. This exemption would reduce your annual property tax bill by approximately $70.

• Proposition 8, decrease in market value. If you purchased your home during a heated market, its current value may be less than the purchase price. Assessments under Proposition 13 are based on the purchase price plus an annual 2 percent increase, unless the county assessor grants a reduced valuation under Proposition 8.

You must apply for the reduced valuation. If granted, be aware the reduction is temporary and prompts an annual reappraisal. If the market value later exceeds the Proposition 13-factored base-year value, the previous assessed value may be restored.

• Proposition 58, transfer of title between parents and children. Real estate transferred from parent to child or child to parent may be excluded from reassessment if a claim is filed within three years after the date of the transfer. Normally, a transfer triggers a reassessment to the current market value of the property.

There is no dollar limit on the original owner’s principal residence. On nonprincipal residential property, there is a $1 million limit (taxable value). Proposition 193 allows exemptions on grandparent-to-grandchild transfers if parents are deceased.

• Proposition 60, moving to another home within Santa Clara County. This proposition allows homeowners 55 years of age and older to transfer the Proposition 13 base-year value of their principal residence to a newly purchased residence in the same county, provided certain conditions are met:

1. The new purchase or new construction must be completed within two years, before or after, the sale of the original residence.

2. The replacement property must be equal to or lesser in value than the original residence, equal or lesser in value defined as 100 percent of the market value of the original property as of the sale date if the replacement dwelling is purchased before the original property is sold; 105 percent of the market value of the original property as of its sale date if the replacement dwelling is purchased within one year after the original property is sold; or, 110 percent if the replacement dwelling is purchased between one and two years after the original property is sold.

3. Special rules apply to multi-unit dwellings and mobile homes.

4. An application must be filed within three years of the date the replacement property is purchased or newly constructed.

• Proposition 90, moving to another county. This allows a homeowner to transfer the base-year value of the principal residence in one county to a newly purchased residence in another county. Provisions are the same as those under Proposition 60, except that a nonrefundable processing fee of $60 is required.

Five other counties have Proposition 90 transfers: San Mateo, Los Angeles, Orange, San Diego and Ventura.

For more information, visit www.sccassessor.org.