The Los Altos real estate market has become soft after three years of escalating prices, especially from the beginning of 2017 to May in 2018. After a significant slowdown during the second half of 2018 and the beginning of 2019, with only three to four weeks in April of 2019 showing a sudden spur in sales, the market has once again slowed. On the whole, the average sale price for the first half of 2019 pulled back slightly, but it’s still the seller’s market; 52% of the houses in first half of 2019 sold above the asking price.
Regardless what the market looks like, in Los Altos and Palo Alto, good houses on a nice street will always sell. In 2000 when the “.com” bubble burst following 9/11, from 2009 to 2011 when the entire country’s real estate market crashed, the good houses in good locations still sold with multiple offers. However, the bidding price was much more reasonable when compared with the crazy market.
When my clients bought houses a long time ago, they often told me, “Any place I moved, the property tax is way too high than what I have to pay now.” If property tax is the only thing that is keeping you from moving, there may be a solution: Property 90/60.
Proposition 60 and Proposition 90, two California laws designed to help senior citizens downsize and retain lower property taxes. The laws allow homeowners who are at least 55 years old to transfer their trended base value to a new property as long as the transaction meets certain criteria. This may result in substantial tax savings for those who qualify.
In 1986, California voters approved Prop 60, which allows tax base transfers within the same county. Prop 90 opened this same benefit to homeowners who want to move to a different county, provided that new jurisdiction is a participating county. The participating counties include Alameda, El Dorado, Los Angeles, Orange, Riverside, San Bernardino, San Diego, San Mateo, Santa Clara and Ventura.
There are a number of criteria that must be met for homeowners to benefit from tax relief under Prop 60 and Prop 90:
- You may buy or build a new home if it’s of equal or lesser “current market value” than your existing home.
- The original property ust have been eligible for the Homeowners’ or Disabled Veterans Exemption
- You must buy or complete construction of your new home within two years of selling your original home.
- This is a one-time benefit. No other tax base transfers are allowed
- Both the original home and the new home must be your primary residence.
- Someone who owns two qualifying original residences cannot combine their value to qualify for the transfer.
- A claim for tax relief must be filed with your county assessor’s office within three years of the sale of your original home. If you file a claim after the three-year period, the property tax relief will start the calendar year the claim was filed.
- Many types of residential properties qualify including a single-family residence, condominium, unit in a planned development, cooperative housing, community apartment, and manufactured home subject to local property taxes.
- You cannot gift your property to a child and apply for Prop 60 or 90 tax relief. The original property must be sold and subject to reappraisal at full market value.