According to San Diego County Tax records, Just 8 percent of San Diego County homeowners have owned their residences since 1978, the year Prop. 13 changed how property tax bills in the State of California are calculated.
 
These lucky home owners are saving a TON of money on their anual Property tax bills, because they are based on appraised values far below today’s San Diego County Values.  Current San Diego County home values in May of 2006 were averaging $510,000.

There is a huge gap between today’s high prices and the tax-limiting Prop. 13 appraisal valuations.  The possibility of a huge tax increase has discouraged many longtime owners who might consider selling. Imagine you bought a home 15 years ago for $120,000, your taxes on that home would be less then $1,500 per year. Just imagine having one of your monthly bills increase 500 to 600%!  That median home price of $510,000 would increase your property tax bill to over $6,300 per year! 

The good news is, there is a little known exception, to Prop. 13- Prop 60/90… 

This special exception protects homeowners over 55 years of age.  If, these older homeowners need or want to sell.  This Special Execption, known as the reappraisal exclusion for seniors is a ONE TIME exclusion.  It allows owners to carry over their property assessment AND property taxes to the next home they buy if they follow certain provisions:
The requirements for this relief are listed below:

  1. Age: At the time the original dwelling is sold, the claimant or the claimant’s spouse must be at least 55 years of age. A copy of the qualifying claimant’s birth certificate, drivers license or passport must be submitted with the application to verify date of birth.
  2. Time: The original dwelling must be sold within two years before or two years after the purchase of the replacement. Construction of the replacement dwelling must be completed within two years of the date the original property sold. In addition the application must be filed within three years of the date the replacement property was purchased or new construction was completed.
  3. Value: “Equal or lesser value” of a replacement dwelling is defined as, 100% of market value of original property as of its date of sale if a replacement dwelling is purchased or newly constructed before an original property is sold; 105% of market value of original property as of its date of sale if a replacement dwelling is purchased or newly constructed within one year after the sale of the original property; 110% of market value of the original property as of its date of sale if a replacement dwelling is purchased or newly constructed within the second year after the sale of the original property.
  4. Owner-occupied: Both dwellings must be eligible for the Homeowner’s  

Seniors can only take advantage of this measure ONCE. If a couple owns a home and a spouse dies, that means the surviving spouse cannot sell again and take advantage of the exclusion.

According to Gregory J. Smith, San Diego County Assessor, about 100 homeowners take advantage of the senior exclusion per month.  This measure makes it easier to downsize to smaller residences or exchange a larger older home for newer home which would require less upkeep.

A review of property records done in Apr of 2004 by the San Diego County assessor found four cities – La Mesa, Lemon Grove, National City and El Cajon – had the highest percentages of longtime owners in the county, ranging from 13.6 percent to 18 percent.  The city of San Diego had 10.8 percent.  Overall, the review, found that 73,741 residential properties in the county remain in the hands of people who bought in or before 1978.

So, what else did Prop. 13 do?  It mandated that real property be reappraised only when a change in ownership occurs, or when new construction, such as room additions, are completed on an existing property. Prop 13 also rolled back property values for tax purposes to 1975 values.

Construction related to repairs, replacement or maintenance does not trigger a new assessment, said county assessor-recorder-county clerk Gregory J. Smith.

Except for a change in ownership or because of new construction, property assessments can not be increased by more than 2 percent annually. Based on the California Consumer Price Index.

As an example, under Prop. 13 a house that in 1978 was valued at $60,000, and occupied by the same owners, has a tax bill of less than $900 a year, even though it could sell for more than $700,000 now.  If that home were purchased today, property taxes for the new owner would jump to about $8,500 annually.
 
So if you are over 55 live in a county that partisipates in the one time exclusion, such as San Diego County, and would like some more information about this great program contact one of our San Diego County Realtors for more information.