September 13, 2007
Understanding Property Taxes
Understanding Property Taxes
Property tax increases are a popular method used by municipal and county governments to raise revenue, but they can also have a big impact on the local real estate market.
In most cases property taxes are levied as a percentage of a home's value, or an acceptable representation of the home's value. Governments generally assess homes at 100 per cent or less of their estimated market value in an attempt to keep taxes affordable. By this method, local real estate trends are kept at arm's length, and property owners don't have to worry as much if a neighboring home sells for $10 million. Property taxes often generate the majority of a city or county's annual operating budget for hospitals, school systems, waterworks, parks, libraries, police, and other expenses.
Some property taxes are limited to a certain cross section of homes, or homes above a certain market value, in order to protect affordable real estate. One such example of this was seen this summer 2007 in Ulster County, New York, where a proposed real estate transfer tax was only meant to apply to homes above the median sale value for the area. Values there were destined to shift as buyers searched out properties below the median price range.
Every property tax change is a new opportunity for real estate buyers. The trick is knowing what to expect from different tax strategies, and how long those effects will last.
If you havea any specific tax questions about the Santa Clara County market, please don't hesistate to contact us. We'll be happy to answer any questions you may have.
Comments
December 6, 2007
Dave Johanson said:
I want to sell my house and buy another house in the county. Can you give me the exact rules in regards to keeping my property taxes the same? My wife is over 56. I understand we can sell our house, buy another house for the same price or less and keep our property taxes the same. Is this true? What if we adding onto the new home after buying. What happens to the property tax then?
December 10, 2007
Buyer's Broker said:
Don’t Let The Thought of Higher Property Taxes Stop You From Purchasing A New Home!
Propositions 60, 90, and 110 can save thousands of dollars each year when a new residence is purchased!
California voters passed Propositions 60, 90 and 110 to protect qualified persons from increased property taxes when they sell their principal residence and purchase or construct a replacement residence of equal or lesser value.
If you qualify under any of these propositions, you must file an application within the time period prescribed. The Assessor will determine if the transaction qualifies. These are generally a one-time only benefit. You must verify that you and your properties (current residence and replacement residence) qualify before considering a move. Also, if there is more than one owner of the original property, only one may claim the benefit as long as that person is eligible.
Proposition 60
If the person and principal residence qualify, the Assessor transfers the factored base value of the original residence to the replacement residence. Proposition 60 requires that the replacement residence can be located in the same county as the original residence.
The following conditions must be met for tax relief to be granted under Prop 60:
Both the original property (former residence) and its replacement must be located in the same county. If the replacement property is located in a different county from the original, see Proposition 90.
As of the date of transfer of the original property, the seller or a spouse living with the seller must be at least 55 years old.
The original property must have been eligible for the Homeowners’ Exemption or entitled to the Disabled Veterans’ Exemption.
The replacement dwelling must be of equal or lesser value than the original property.
The replacement dwelling must have been purchased or newly constructed on or after 11/06/86
Without exception, the replacement dwelling must be purchased or newly constructed within two years (before or after) of the sale of the original property.
The original property must be subject to reappraisal at its current fair market value as the result of its transfer, in accordance with Sections 110.1 or 5803 of the Revenue and Taxation Code.
Without exception, a claim for relief must be filed within three years of the date a replacement dwelling is purchased or new construction of a replacement dwelling is completed.
Proposition 90
Enacted after Proposition 60, it allows transfer of the tax base from one county to another county if the California county (where the replacement residence is located) allows the transfer. These counties do allow the transfer: Alameda, Modoc, Santa Clara, Kern, Monterey, San Diego, Los Angeles, Orange, San Mateo, and Ventura.
Proposition 110
Allows a severely and permanently disabled person to transfer the base year value of his/her property to a replacement property. Also exempts from reassessment new construction completed for the purpose of making a structure more accessible for a severely and permanently disabled person.
For further information, visit:
www.oc.ca.gov/assessorFAQprop60.asp.
*Information is deemed to be reliable, but is not guaranteed to be accurate. Please verify this information before you enter a transaction.