Prop 19.’s property tax switch a ‘godsend’ for Southern California seniors – Orange County Register

Bruce and Teresa Steele of Rancho Palos Verdes wrote a heartfelt and considerate e-mail to me final Sunday about how the deserves of Proposition 19 vastly helped them. They advised me one other column that appears at its advantages can be good for readers.

You see, Prop. 19 permits owners 55 and older, the severely disabled or the victims of a wildfire to maneuver their decrease Prop. 13 tax base as much as 3 times anyplace in California.

Earlier than the regulation was enacted in 2021, owners solely received one base tax switch and it solely labored if the brand new house was of equal or lesser worth. Additionally, solely a handful of counties on the time allowed the tax switch. In the present day, house owners should buy up with the worth differential added to their property tax price.

Right here’s an abbreviated model of the Steeles’ story, based mostly on e-mail excerpts and a cellphone interview with Bruce Steele.

“For my spouse and I, Prop. 19’s aid for retirees who need or want to alter residences was a godsend,” Bruce mentioned. “After we retired, we moved right into a west Torrance neighborhood (in 2014) from a Redondo Seaside townhouse. We thought it might be the final one we’d ever transfer to. We have been incorrect.”

Bruce defined that shortly after they moved into the townhouse, native mother and father discovered an elementary faculty entry level by the Steele’s house, which turned flooded with site visitors twice a day throughout the week. His neighborhood, Bruce mentioned, turned a cut-through road “subjecting us to impolite and harmful drivers.”

When Prop 19. was enacted, the Steeles have been capable of promote their Torrance townhome and purchase a house in Rancho Palos Verdes, for which they paid $1.9 million. They purchased the townhouse in Torrance for $950,000 and offered it in April 2021 for $1,660,000.

“With the assistance of Prop. 19 and the sale of some Oregon property, it didn’t create a property tax impediment to our transfer,” Bruce mentioned. “In any other case, we would have needed to transfer to a much less fascinating location or depart California.” He famous their townhouse was purchased by a younger household with kids.

Thus far, 1000’s of householders age 55 and older in Southern California have taken benefit of Prop. 19’s tax-transfer profit because the regulation was enacted.

Greater than 2,400 owners in Los Angeles County have been assessed and granted a tax switch, in response to Stephen Whitmore, public data officer on the county’s Workplace of the Assessor. There are 400 pending with the appraisal crew now, he mentioned.

The assessor’s workplace receives about 100 new switch requests monthly, Whitmore advised me.

Orange County’s complete transfers to this point are roughly 4,520 with about 200 new switch requests every month, mentioned Neal Shah on the Orange County Assessor’s Workplace. The workplace has a backlog of 91 transfers.

In Riverside County, transfers complete 2,009 with a median of 80 new month-to-month switch requests, in response to Sean Downs, chief appraiser at Riverside County Assessor-Clerk-Recorder. San Bernardino County officers couldn’t present any information by press time.

The above switch information, by the way in which, excludes grandparent or mother or father/little one transfers eligible underneath Prop. 19.

There are a couple of distinctions concerning the tax switch. Homebuyers should file for the tax exemption within the first 12 months of a brand new buy — it’s not computerized. You have got as much as three years to file the bottom 12 months switch papers along with your county assessor. The excellent news? There isn’t any worth cap with respect to the brand new house in contrast with the previous house’s worth.

If you’re shopping for down in worth “or equal or lesser worth,” then the unique house’s factored base 12 months worth could also be transferred to the substitute house with none worth adjustment.

You can also purchase your up-leg residence first after which promote your former major residence. Or, you possibly can promote your departing residence first after which purchase your up-leg house, as long as both of those is achieved inside a two-year window.

Right here’s one other instance: A home-owner sells their Laguna Niguel house for $1 million with a factored base worth of $500,000. Inside the first 12 months of the sale, the previous Laguna Niguel resident buys a Newport Seaside house for $2 million.

Right here is the mathematics: $1,000,000 x 105% = $1,050,000 (if the substitute residence is purchased in 12 months two, then you definitely issue 110%). Take the total money worth of the substitute house of $2 million minus the adjusted money worth of the unique property or $1,050,000. The distinction is $950,000. Now add the $950,000 distinction to the bottom worth of $500,000. Your new property tax base is $1,450,000. That’s not unhealthy when you think about the home-owner might have been paying property taxes on a $2 million house. So, thanks Prop. 19.

Whitemore additionally famous that if a senior over the age of 55 receives a property tax profit on account of Prop. 19 after which later strikes out however continues to personal the property, then that house will proceed to get pleasure from Prop. 13 protections.

The California State Board of Equalization has a wealth of data at boe.ca.gov/prop19. You can also contact your county assessor’s workplace to make clear any questions.

Mortgage charges

The typical long-term U.S. mortgage price climbed this week to its highest stage since November.

The typical price on the benchmark 30-year house mortgage rose to six.79% from 6.57% final week, in response to Freddie Mac. A 12 months in the past, the speed averaged 5.09%.

It’s the third consecutive price hike, lifting the common price on a 30-year house mortgage to its highest stage because it surged to 7.08% in early November.

The typical price on 15-year fixed-rate mortgages, standard with refinance loans, rose to six.18% this week from 5.97% final week. A 12 months in the past, it averaged 4.32%, Freddie Mac mentioned.

The Related Press contributed to this report.

Jeff Lazerson is a mortgage dealer. He could be reached at 949-334-2424 or jlazerson@mortgagegrader.com.