How to save on property taxes

Over 55 Exemption may save you money on your property tax bill

If you own a home you have been in for a long time and are paying low property taxes under California’s Proposition 13, you may be able to keep that tax base when you sell your home and buy another.  This great financial tool was made possible by the passage of two ballot propositions in the 1980’s; 60 and 90.  60 makes it possible to keep your tax base within your home county, and 90 makes it possible to take your tax base to reciprocating counties, of which there are eight.  Of course, it isn’t quite as easy as all that-there are some rules and forms to be completed for making that happen:

  • You must be 55 years old or older at the time of sale or purchase, whichever comes first.
  • This is a one-time exemption (married couples can only do this once).
  • Both the sale (old) and replacement (new) properties must be owner occupied.
  • You must purchase the new house within two years of the sale of the old house.
  • The purchase price of the new house must be the same or less than the sale price of the old house if purchased before the sale of the old house.
  • If the purchase of the new house takes place within one year after the sale of the old house, the purchase price may be 105% of the sale price; if it happens between 1 and 2 years, it can be 110% of the sale price.
  • Practically speaking, this means scaling down in order to make the purchase prices work out-for instance you may move from your single family home into a condominium.
  • Prop. 90 allowed reciprocity between eight California counties.  They are Alameda, Los Angeles, Modoc, Orange, San Diego, San Mateo, Santa Clara and Ventura.
  • A representative at the San Francisco Assessor’s office said they still reciprocate with the eight counties; but please check before you make any sale or purchase.   With the budget crisis many counties may no longer participate in reciprocity, so please contact them before making any moves.
  • Check out the Board of Equalization’s website to get more information at http://www.boe.ca.gov/proptaxes/faqs/propositions60_90.htm or call (800)400-7115
  • Also see the San Francisco Assessor’s website at http://www.sfassessor.org/index.aspx?page=73  see form BOE 60-AH or call (415)554-7915

This is a pretty nice financial tool.  It is worth exploration if you have any desire to scale down and the expense of more expensive property taxes has stopped you.  This could be the beginning of your New Year’s Resolution list.

What do loan limits mean?

You’ll hear the term ‘loan limits’ as you talk more and more about financing. There are three types of loan limits: conforming, super-conforming and jumbo.  This is important, because the government buys loans in the secondary market, which puts more money back into lenders’ pockets to lend out even more money.  The government has limits on the size loans they will buy, so they will only buy conforming and super-conforming loans.  The loans that fall outside these categories are jumbo loans. 

The conforming loan limit is a permanent limit (subject to change by the government) and the super-conforming limit is temporary, based on median income in a region.  Interest rate pricing for the conforming loan limit is generally the lowest of the three.

Jumbo loans are financed through private investors, and not eligible to be purchased in the secondary market.  When financing tightens, it’s generally in this category, as there may be fewer investors willing to risk their money to people borrowing money at this level.  Pricing for this financing is generally higher than it is with conforming.

Here are the current limits:

http://www.fanniemae.com/aboutfm/loanlimits.jhtml