Death and Taxes
Death and Taxes. Everyone’s heard those words before. It’s part of a quote that actually originated with Benjamin Franklin: “Our new Constitution is now established, and has an appearance that promises permanency; but in this world nothing can be said to be certain, except death and taxes.”
Here we are, living more than 240 years after Ben made his pithy observation. A lot has changed since then but as of today’s blog post, death is still at the top the short list of inevitable facts we all have to face. (Until Ray Kurzweil and the Engineering Team at Google successfully achieve The Singularity and start transforming brain waves into digital algorithms uploaded into the cloud so we can all live forever.)
Meantime, we lesser mortals here at Real Estate of Mind are working on that other most inevitable thing in our lives – taxes. More specifically real estate taxes. Something so many people in and around the age of 55 are thinking hard about as they head into the last third of your lives struggling with questions about downsizing, cash flow and leaving a legacy for their kids.
Here’s a quick cheat sheet (reference guide, not an actual suggestion for cheating on your taxes,) for those trying to figure out how to avoid substantial increases in their property taxes when they sell their house and buy another one somewhere else in California.
The good news is: California has been dedicated to the proposition that both death and taxes should be avoided at all costs for quite some time. By being a resident of this State, you’ve already got a leg up! Here are some of those propositions:
Prop 13 (1978): The original granddaddy proposition reducing existing property taxes and significantly limiting increases in the future.
Prop 58 (1986): Allows parents to pass homes on to their children without a reassessment of property taxes. See the fine print folks.
Prop 60 (1986): Offers homeowners the opportunity to sell their home and buy a new one (of lesser value) in the same County they live in while transferring a lower property tax base. (Not to be confused with the other, more recent Prop 60 having to do with condom use in the porn industry!!!)
Prop 90 (1989): Allows homeowners to transfer their existing property tax base to other participating counties in California. Only 11 counties currently qualify. Call or email for the list.
Prop 110 (1990): Extended Prop 60 to disabled homeowners of any age.
Prop 193 (1996): Extension of Prop 58 allowing Grandparents to transfer property to Grandchildren (provided their children are deceased) without reassessment of property taxes.
And last but not least, stay tuned for progress reports on Assembly Bill 1322 recently introduced by Rep. Raul Bocanegra, D-San Fernando. If passed, this legislation would modify Prop 90 and allow every qualified homeowner over the age of 55 to transfer their property tax base to any other county in the state. Something quite a few of you would welcome. This one could be coming to a Statewide Ballot Measure near you soon.
In the meantime, while continuing our quest to cheat both death (via google) and taxes (via proposition) I invite any and all of you who are wrestling with the numbers to give me a call to discuss how each of the different Propositions can assist in your planning.