As we all grow older and begin to contemplate retirement, something many of us dream of doing someday, we may look at downsizing our home for a more comfortable lifestyle. Perhaps a home that maintains the quality of life we’ve become accustomed but is not so challenging to maintain. Maybe, something smaller, less expensive.
Perhaps, we’re already retired and have our eye on that special home. Or maybe we are still working and simply want to move.
Well, there is a way to do any and all of the above if you’re 55 or older and save a significant amount of money on your property taxes. That’s what I’m here to visit with you about today.
There is a constitutional tax initiative that allows senior citizens to transfer their property tax from their current home to a replacement property, if certain requirements are met. This may result in substantial tax savings. Substantial, especially if you’ve been in the home for some time.
Here’s how it works: If you or your spouse that lives with you are 55 or older, you may buy or construct a new home of equal or lesser value than your existing home and transfer the former value to your new home. To reiterate, the replacement property must be of equal or lesser current market value than the original property. This is a one-time only benefit.
Now, it’s important to also remember that you must buy or complete construction of your replacement home within two years of the sale of the original home. Both the original home and the new home must be your principal place of residence.
A claim must be filed within three years of purchasing or completing new construction of the replacement home. If a claim is filed after the three-year period, relief will be granted beginning with the calendar year in which the claim was filed. Also, the home must be eligible for the Homeowners’ Exemption or Disabled Veterans’ Exemption. Again, the new home has to be your primary residence.
Interestingly enough, even if the original home is located outside Los Angeles County, if the other criteria is met, you will be eligible for this property tax relief. If you want to relocate and purchase the home in another county, that’s OK, too. But check with the county you’re going to go, so you can be sure of any variables that may exist.
Moreover, if you meet all eligibility requirements, this tax savings is granted for any type of home, whether it be a single-family residence, condominium, unit in a planned development, cooperative housing, community apartment, manufactured home, which is subject to property taxes, and even a living area within a larger structure consisting of both residential and non-residential accommodations. All are eligible.
And finally, if you decide to make improvements to the replacement home within two years of purchase, you are eligible for additional tax relief covering the new construction. As with everything in life, there is a caveat to this last detail and that is the total amount of purchase and new construction must not exceed the market value of the original property at the time of the sale.I know it’s a lot of information to digest all at once. But here’s the deal, if you’re 55 or older, you can save significant money on your property taxes. That’s a good thing for all as we move along in life.
Feel free to visit my website at assessor.lacounty.gov for more information on this tax-savings program and retrieve the required applications.
Los Angeles County Assessor Jeff Prang has been in office since 2014. Upon taking office, Prang implemented sweeping reforms to ensure that the strictest ethical guidelines rooted in fairness, accuracy and integrity would be adhered to in his office, which is the largest office of its kind in the nation with 1,400 employees and provides the foundation for a property tax system that generates $17 billion annually.
Los Angeles County Assessor Jeff Prang has been in office since 2014. Upon taking office, Prang implemented sweeping reforms to ensure that the strictest ethical guidelines rooted in fairness, accuracy and integrity would be adhered to in his office, which is the largest office of its kind in the nation with 1,400 employees and provides the foundation for a property tax system that generates $17 billion annually. .