The State of California offers three property tax relief programs for senior citizens. These programs can provide tax relief for low-income senior citizens who may be able to delay paying property taxes until a later date, and/or transfer assessed value from a prior home to a new one. We’ll examine each of these California state tax programs below.
The state of California is said to have some of the highest taxes in the nation. Rocket Mortgage estimates California to be #16 on a list of property tax rates by state. The number one spot is New Jersey at the most expensive, and the state with the lowest property tax rate is Hawaii.
How do the numbers themselves compare? At the most expensive, New Jersey’s property tax rate is 2.49%. The most affordable, Hawaii, has property taxes at .28%. By comparison, California’s property tax rate is .76%
The State of California offers three senior citizen property tax relief programs:
- Property Tax Assistance offers tax relief to qualifying low-income seniors. This program includes a cash reimbursement for a certain portion of property taxes
- Property Tax Postponement allows qualifying senior citizens to choose between letting the State of California pay some or all of the applicant’s property taxes “until the individual moves, sells the property, or dies” according to state literature
- A Replacement Housing Program allows seniors to sell a home and purchase a new one (equal or lesser value) with the benefit of transferring the assessed value of the former residence to the new home. The advantage here is a workaround for Proposition 13. This program allows qualifying seniors to keep their property tax maximum that would normally be lost when buying a new property
This option is also known as the Gonsalves-Deukmejian-Petris Property Tax Assistance Law. If you are a California resident 62 or over, are a low-income resident, and/or have qualifying disabilities, you may be able to apply for cash assistance from the state for property taxes.
This program does NOT reduce the amount of tax owed. Instead, the program pays you back a portion of the tax collected. The Property Tax Assistance program features an annual requirement to claim the assistance; this is not a single-application option, you must reclaim the benefit each year.
The assistance itself features a refund of a percentage of the tax applied to the first $34,000 of property assessment. Household income limits are a feature of this program and your income will help determine the amount of the refund you are due. The lower your income, the higher the tax assistance may be. A modification to this program allows a one-time-only doubling of the relief payments, and you may be able to apply (once only) for an expansion of the income limits.
This option allows seniors and those with qualifying disabilities the ability to have the state pay some or all property taxes on a primary residence until the owner dies, sells the property, or passes the title of the home to “an ineligible person” according to the State of California.
There are income limits for this program; your household income (not individual income) must not exceed $24,000. Furthermore, the owner must have 20% equity in the home. If the owner dies, sells, or transfers the home, all taxes become due.
Claiming this tax benefit requires you to apply with the State Comptroller’s Office, and a lien is placed on your property. Delayed tax payments accrue interest and are added to the lien. If you are accepted into this program you are free to pay some or all of your property taxes at any time.
This is not offered in conjunction with the Tax Assistance program, but it is possible to apply for both at once. You are required to apply to each program separately.
If you are at least 55 years old, this program allows you to sell your home, purchase a new one (equal or lesser value) and transfer the former home’s assessed value to your new primary residence.
Conditions apply; they include a requirement to purchase the new house within two years of selling the old one and both houses must be located in the same county. This program has no income restrictions and is not designed to be need-based.
The new home, under this relief program, is not reassessed when it is purchased. The benefit comes when the new home has a greater market value than the assessed value of the old home. You pay the lower property taxes as though you lived in the old property even if the new home would be valued higher if it were subject to a new assessment.
This program helps senior citizens sidestep Proposition 13–under normal conditions moving to a new home would require an assessment of the new home with the results likely being higher property taxes. No such assessment is required under the California Housing Replacement Program.
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