You Don't Know! Property Tax – money out of your pocket!Topic: Home buying
What is your age? Do you know that if you are over 55 and have been owned your home for several years you may be free for property tax or have some significant relief!
There are currently three propositions that affect eligibility for tax relief; Proposition 13, Proposition 60 and Proposition 90. You'll learn how each of these propositions are saving the over 55 home owners a significant amount of money.
Prop 13 - The Golden Egg
Proposition 13 prohibits property tax increases until property ownership is changed. If you currently own your home you know how much money you are saving in light of the fact that housing values have sky rocketed over the last 5 years!
However, what happens when you sell your home? Will you have to give up the advantage of the lower cost property tax you currently enjoy? Not necessarily...
Prop 60 - Transferring Made Easy
Proposition 60 allows you to transfer your current property value to a new home within the same county you live in now. You must be replacing your primary residence and the cost of the new home must be equal or lesser value than your current home.
This allowance can be used once in your lifetime. For those of you who have a spouse that has taken advantage of this tax break previously, you will not be allowed as a couple to use this tax loophole again.
What happens if you move out of your current county?
Prop 90 - Distance No Longer an Issue
Prop. 90 allows a county to choose to accept or deny Prop. 13 and accept a grandfathered property value assessment when buying a new home. As of June 1, 2005, seven California counties honor Proposition 13; Alameda, Los Angeles, Orange, San Diego, San Mateo, Santa Clara and Ventura.
Prop. 60 and 90 apply if you are "trading down." (i.e. The value of your new home is less than the value of your old home.) However, the government being who they are has stipulations.
If you buy your new home first, then sell the old home, you must go down in. If you sell the old home first, then buy the new home: In the first price. 365 days after the sale of your old home, you may go up 5% in the purchase price of your new home. If you buy your new home more than one year from the sale of your old home, but less than two years, you may go up 10%. You must file a claim with your county assessor's office within three years of the acquisition or completion of construction of the replacement property. Claim forms are available at the Assessor's public counter and in regional offices, or you may visit the State of California website, State Board of Equalization at: www.boe.ca.gov/proptaxes/assessors.htm.
Some buyers may choose to pay the commissions outside of escrow to keep the cost of the purchase price down. Your obligee will prove invaluable in helping you to maximize your mortgage package to take full advantage of this striking tax break.
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