PRESERVING YOUR PROPOSITION 13 BASE YEAR VALUE (2):
HOW TO TAKE IT WITH YOU

    One of the main reasons that California voters passed Proposition 13 in June 1978 was to protect themselves against escalating property taxes as the value of their property increased. By establishing base year values that could not go up by more than 2% per year, Proposition 13 kept the owner's property tax increase at a manageable level. Unless there was a change of ownership or new construction, their base year value would not change. One unintended effect of Proposition 13, however, was to discourage people from changing their residence as their family circumstances evolved as shown in the index,following example:

    Fred, 56, and Nelda, 53, wish to sell their large, four bedroom home on a large lot now that their children are grown and have homes of their own. They have lived in their current home for many years and the 1975 Proposition 13 base year value of $40,000 has only grown to $59,000 by 1996. Their property tax bill is approximately $600 per year. Their home today is worth $195,000.

    Fred and Nelda have found a townhouse with two bedrooms and no yard for $159,000 but they are unwilling to make the move because under Proposition 13 this change of ownership will establish a new base year value for the townhouse based primarily on their purchase price and their tax bill will jump from $600 to approximately $1600 per year. They are on a fixed income and cannot afford the additional $1000 per year in taxes.

    To solve this problem California voters passed Proposition 60 in November 1986 which permits people over 55 years of age to sell one home and buy another of equal or lesser value in the same county within two years and take their original Proposition 13 base year value with them. In the example above, Fred and Nelda could move to the townhouse and still pay $600 per year in property taxes (their total bill may be larger or smaller, however, depending on the tax rate and fees charged at the new residence) plus future increases not to exceed 2%. Only one of the owners has to be over 55 on the date the original house is sold. Depending on the timing of the transactions, equal or lesser value can mean up to 112% per cent of the sale price of the original residence.

    To qualify for this program Fred and Nelda must file a Claim for Base Year Value Transfer with our office when they have made their move. This office will then issue a supplemental assessment notice that will transfer their base year value to the new residence. If the new residence had a higher base year value than the home they sold, they will receive a refund check to help them pay the higher taxes until the next full tax year when their former base year value will appear on the regular bill. The lower base year value cannot be transferred until the original home is sold; so if the replacement home is purchased first, there may be a period when they will have to pay the higher tax. Adjustments can be made to the transfer if the original home had additional uses such as a vineyard or multiple dwelling units so that the comparison between the original and replacement home values is fair. The over-55 base year transfer can be used only once in a person's lifetime.

Should you have any questions please contact Napa County Assessor-Recorder John Tuteur
at 707.253.4459 or by e-mail jtuteur@co.napa.ca.us

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