Q: A couple of months ago I was informed that my home of 50 years is being purchased by the county in which I live.
My property is going to be used for freeway work.
The price I’ve been offered is fine. My question is, when I relocate to another home will I have to pay property taxes based on the new purchase price of the property?
I am currently protected under Proposition13 (in California) and my taxes are only about $600 a year. There is no way can I afford $3,000 to $4,000 a year in property taxes that I’ll owe based on the new price of the house.
This is not fair. What can I do?
A: It may not be fair, but that’;s how it works in California. Thanks to the sale of your home of 50 years, you will have several hundred thousand dollars (or perhaps millions) in your pocket once your property is sold. When you purchase another home, you will have to pay whatever property taxes are owed when you purchase a replacement property.
However, depending on your income and the fact you’re a senior citizen, you may qualify for a property tax deferment program that is administered by the California Department of Real Estate.
To qualify for the program, you must have a very low income, have at least 20 percent equity in the home, be at least 62 years of age, and the home must be your primary residence. You have to file papers each year with the DRE, and any property taxes that are owed will accrue interest. A lien will be filed against your home, and when you sell the home, or die, the taxes will have to be paid out of the proceeds of the sale of the property or your estate.
You should also seek out information from the government agency handling the purchase of your home to determine if there is any law that would allow you to lower your taxes on the new property or assist you in connection with that move.
According to Katheryn J. Peschell, a California-based Enrolled Agent, if your property was a beneficiary of proposition 13, then when you sell your property and purchase new property you can take your property taxes with you providing that the new property you purchase costs less than the selling price of the old property and that you are buying in the same county or a reciprocating county. The new home has to cost less that the selling price of the old home though if it costs one dollar more then you will pay the full 1% tax less any homeowners’ credits that may be available to you
For more information, go to the home page of the California Department of Real Estate (http://www.dre.cahwnet.gov/).
Please seek the services of a real estate attorney who can go over the county’s offer for purchase to make sure you are getting everything you are entitled to in this transaction.
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