How Do Base Year Value Transfers Affect California Property Taxes?

 Posted on March 15, 2022 in Property Taxes

Homeowners in California will often be subject to high property taxes. However, the state’s laws do provide some benefits for property owners by limiting the amount that property taxes can be increased each year. When a home is bought or sold, a reassessment will be performed to determine the property taxes that will apply based on the home’s current market value. In certain cases, homeowners may be able to avoid a reassessment by transferring the value of their current home to a new property. A recent change in the law has affected when these “base year value transfers” may be performed.

Proposition 19 and Base Year Value Transfers

California’s Revenue and Taxation Code was amended in 2021 after the passage of Proposition 19. New provisions regarding base year value transfers went into effect on April 1, 2021. These included changes to who may perform these types of transfers and the time limits for doing so. 

A property’s factored base year value is determined based on the value of the property in 1975 or the last time a reassessment was performed due to a change in ownership or new construction. This amount may be increased by a maximum of 2% per year, and property taxes will be assessed based on this value. A person who performs a base year value transfer will be able to transfer the factored base year value of their current primary residence to a new primary residence. If the full cash value of the replacement residence is higher than the full cash value of the original property, the difference in these values will be added to the transferred base year value.

A base year value transfer can be performed by a property owner who is at least 55 years old, has a severe and permanent disability, or was the victim of a wildfire or other natural disaster. When a person requests a base year value transfer, they must be using the replacement property as their principal residence, and they must have previously used the original property as their principal residence. The original property must be sold within 2 years of the date the person purchased the new property or completed new construction on a home located on the new property.

Claim for base year value transfers must be made within 3 years after the purchase of the replacement property or the completion of new construction on the replacement property. A person is limited to 3 base year value transfers during their lifetime. However, claims filed by victims of wildfires or natural disasters will not count toward this limit.

Contact Our San Jose, CA Property Tax Attorney

Issues related to California property taxes can be complicated, but homeowners may be able to take advantage of the laws and minimize the amount they will be required to pay. At John D. Teter Law Offices, we can help you understand whether you may qualify for a base year value transfer when moving to a new home or transferring ownership of property, and we will work with you to minimize your potential losses. Contact our San Jose property tax lawyer at 408-866-1810 to get the legal help you need.

Sources:

https://www.boe.ca.gov/proptaxes/pdf/lta22009.pdf

https://www.boe.ca.gov/proptaxes/pdf/rules/Rule462-540.pdf

https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=202120220SB539