DeLeon Realty prides itself foremost on ensuring clients purchase the right property at the lowest possible price. However, watching out for the best interests of clients in all the numerous peripheral issues that are associated with property acquisition is one of the many ways that DeLeon Realty stands above the rest of the industry. Clients of DeLeon Realty benefit from agents and staff with a wide variety of backgrounds, meaning that if an issue arises, most likely someone in the firm has experienced the issue before and knows how to best advise the client.
Property taxes are no exception. With a legal background and having worked at the county of San Mateo as an appraiser for property tax assessment purposes, the author is uniquely positioned to advise clients of the buyer specialist team in property taxrelated issues. Several common questions pertain to the use of various propositions passed by the electorate to prevent the reassessment of properties upon transfers and the increase of taxes levied on the property.
Proposition 60 and Proposition 90 are most often of interest to both buyers and sellers. Proposition 60 allows a person age 55 or older to transfer the assessed value of a principal residence at the date of sale to another property within the same county to be used as the replacement principal residence. The intent is to allow older citizens to downsize without a drastic increase in property taxes, assuming they have owned their principal residence for some time and are benefitting from a low assessed value pursuant to Proposition 13. However, multiple conditions must be met, and unadvised downsizers may end up ineligible if they do not have proper advice on the avoidance of potential pitfalls.
For example, downsizing clients may have significant cash reserves that they wish to use to buy in a superior location relative to their principal residence and, as a result, would need to spend more than the sales price of their principal residence to acquire their new, smaller, yet better located home. Clients may take this route, knowing only of the age requirement. However, DeLeon Realty is well aware of an additional requirement that the replacement home be of equal or lesser value than the principal residence being replaced.
This means downsizing clients must consider that, regardless of how much equity they have accumulated over the years, they will not be eligible to avoid reassessment if they decide to spend more than the sales price of their principal residence to make an upgrade in location. There are minor exceptions that can be discussed with clients at private consultations.
Proposition 90 is designed to accomplish the same thing as Proposition 60. However, while Proposition 60 permits this home transfer within a county, Proposition 90 addresses the issue of what happens if clients wish to transfer their assessed value to a property in a different county than their principal residence.
Proposition 90 is optional for counties, and those that elect to participate will allow sellers from a different county to transfer the assessed value of the property outside of the county into their county. Presently, ten counties participate, including San Mateo and Santa Clara counties. This means that they are quite attractive to those over 55 interested in relocating.
Proposition 60 and Proposition 90 are only two of the many property tax issues that DeLeon Realty is prepared to provide advice upon. There are many other aspects of property taxation that are important to consider. Please reach out to the DeLeon Team with any questions about property taxes and your ability to reduce them.