May 2000 – Sincerely Sire Newsletter
Transferring Your Tax Base
Today I called the Orange County tax assessors office on behalf of a homeowner who was 55 years old. He was going to sell his home and purchase another home in Orange County with his new wife. She was not on title to his house, and he wanted know if he could transfer his low tax base, even if he purchased this other home with his new wife, who was not on title on his current home.
Well, the answer to that question was easy, yes, he could, provided he was qualified under all other requirements. While I was on the line, I decided to get some other questions resolved about transferring one’s tax base, like what exactly does it mean, to transfer your tax base? Do you simply take your current taxes with you? How many times can you transfer your tax base? Is there a limit on how much you can pay for your new home? etc. Here is what I found out:
You must be at least 55 years of age and the property you are selling must be your principal residence.
You can purchase two years before or after you sell your current residence.
You must purchase within Orange County or another cooperating county.
You can transfer your tax base only once.
If you purchase within 1 year after the sale of your home, you can buy up to 5% higher than your home’s sale price. If you purchase within the 2nd year after the sale of your home, you can purchase up to 10% higher than your home’s sale price. If you purchase before you sell your home, the purchase price of your new home can be no greater than your home’s sale price.
Transferring your tax base means this:
As an example, if you purchased your current home in 1978 for $80,000, and now your house is worth $400,000, and the net accessed value over the years has been increased to $180,000, that is the base that you would take with you. So, if you bought another house for say $400,000, your tax base for that new home would only be $180,000, not the purchase price of $400,000. You will be taxed at whatever the rate is where you are buying. So, lets say you are leaving Huntington Beach where the tax rate is about 1.18% and moving to a city where the tax rate is 1.5%. Your new annual taxes would be 1.5% (not 1.18%) of the old $180,000 base (not of your new $400,000 purchase price)—a savings of over $3,000 per year.
At the writing of this newsletter cooperating counties are San Diego, Los Angeles, Ventura, Kern, Alemeda, San Mateo, Santa Clara, Moneterey, Modoc and, of course, Orange County. Also, I was told that Orange County will let Riverside residents transfer their tax base here, but Riverside won’t accept ours.
All of the above information should be verified with the Orange County Assessor’s office at 714-834-2746 and your professional tax advisor, as the rules and cooperating counties may change. The above information is deemed reliable but not guaranteed.