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.
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.