Q. My wife and I are considering selling our home and purchasing a replacement home in California to be closer to our children? I hear there may be some way to transfer our very low property tax to our replacement home. Do you know anything about this?
A. Yes. If at least one of you is at least age 55, or disabled, you may be able to transfer your low “base year value” from your current residence to your new residence. But, there are conditions and restrictions, including geographic limitaions, some of which are as follows:
1) The new residence must be located either within the same county as your original home, OR, within one of the following 10 counties which now permit transfers in from other counties: Alameda,Los Angeles, Orange, Riverside, San Bernardino, San Diego, San Mateo, Santa Clara, Tuolumne and Ventura. Note: El Dorado County just ended its program, except as to transactions that were in escrow as of November 7, 2018.
2) The replacement residence must be of “equal or lesser value” to your original residence. This is determined by comparing the sale price of your old residence with the purchase price (or the construction cost) of your new residence. If the replacement home is purchased prior to the sale of your existing home, the purchase price may not exceed 100% of the sale price of your existing home. But, it can be up to 105% if you purchase your replacement home within the 1st year following sale, and up to 110% if purchased within the 2nd year following sale. Caution: If these equivalency tests are not met, there is no partial benefit. Thus, it is all or nothing regarding the base-year transfer rule, and so you need to be very mindful of the numbers when planning.
3) The replacement home must be purchased or newly constructed within two years either before or after the sale of your original home.
4) You must formally apply for this base-year transfer by submitting the appropriate form to the County Assessor of your new county within three (3) years of the date the replacement dwelling is purchased or newly constructed, although the Assessor can grant relief for late filed claims.
5) You can only use this benefit once, with the following exception: if you have opted for this benefit once based upon age, and you later become “severly and permanently disabled”, you may then use it a second time based upon your disability.
The law regarding base-year transfers has some quirks and you should read up on them as part of your planning. A good resource is the website of the Alameda County Assessor, which offers information Notices, Questions & Answers, and the relevant Claim Form. The Assessor’s phone number for questions pertaining to Base-Value Transfers is (510) 272-3787. I hope this information helps and extend good wishes on your planned relocation.
References: Cal. Rev & Tax Code § 69.5; CAL Constitution Article XIIIA, §2(a) [valuation of real property]; BOE Letter to Assessors 2016/034 (9/15/2016) [List of California counties which have adopted Ordinances permitting transfers in of Base Year Values from other counties]. Alameda County Assessor Information notices: Notice #1 Re: Base Year Transfers, with Claim Form; Notice #2 [with Questions & Answers].