What are the advantages and disadvantages to owning property in California vs. Nevada? People looking to own property at Lake Tahoe often ask this question in trying to decide which side of the lake to purchase property. The following information shows some of the comparisons between owning/living in each state. Click on these links for more information about California Tax Benefits & Nevada Tax Benefits.

• Property taxes in NV are county specific.
• Washoe County assesses property taxes every 5 years, but currently they are several years behind in that process
• Washoe County taxes are higher than Douglas County. Douglas County real estate is a lot less expensive thank Washoe County; Washoe County is closer to CA.
• There is no personal income tax in the state of Nevada. This can be a good thing, especially for retirees from CA who can bring their retirement incomes with them if they become residents. It’s the main difference. It’s like getting a 10% raise for living across the state line. Residency is 183 days a year. Some Californian/Nevadans fudge on this and maintain homes in both states but claim NV as primary residency and vote/register vehicles/bank etc. in NV.
• Generally, I tell people that if they buy a $1,000,000 house in CA, their tax bill will be about $1000/month, while in Douglas County the property tax on a $1,000,000 house is +/- $3500 per year.  Assuming an 8% annual increase, it will take 9 years for the DC tax to equal the CA tax, and property taxes are usually just one of several considerations in the equation.  The most important thing, of course, is for the client to decide what the most important factors in his personal equation are.
• In California, property tax is reassessed upon transfer at approximately 1.25% of sales price.  In Nevada, property taxes are not uniform throughout the state but vary county by county, and are not reassessed upon transfer but on a 5 year schedule.  In Douglas County, including the Carson Valley and Tahoe’s East Shore, taxes tend to be significantly lower than in Washoe County, which includes Incline Village and Reno.   In recent years the Washoe County rates have become very controversial as they’ve approached those of California.
• Douglas County property tax bills cannot be calculated from the “Total Assessed Value” posted on the Assessor’s website.   Among the subjective considerations are view, age of the property and Special Taxes.  Sewer is the biggest component of Special Taxes – that’s generally where a property is hooked up directly to county sewer rather than being part of a Gen’l Improvement Dist.   Those Special Taxes are billed as part of the prop tax bill.  GID members pay for water, sewer and snow removal separately at roughly $135/month.  The newer the improvements the higher the property tax bill.  View is also a subjective element –  in the case of two seemingly identical homes, the one with the better view usually has higher taxes.
• Several years ago the NV legislature capped annual increases at 3% for primary residence.  I called the Douglas County Treasurer and confirmed that the increase for second homes and rentals (non owner occupied properties) can be up to 8% in the county.
• Assume you have a sale for $1,000,000 in Nevada and California.  Nevada taxes will stay the same through the end of the fiscal year.  Typically taxes on Incline Village properties run .6 of 1% of the value of the home.  Taxes on a $1,000,000 is approximately $6,000.  The yearly cap on taxes is 3%.  Taxes on the sale of a $1,000,000 in CA is $12,500.  It will take over 30 years for property taxes to reach $12,500 plus all the savings you have over the 30 years.  I believe your taxes go up a minimal amount each year.
• As a resident, we have no state income tax if you earn your money in Nevada or if you have passive income even if it comes from California.  If you are a resident of Nevada and are employed in California you will be taxed by California.
• My experience has shown me that if it is Primary than the tax advantages can be more substantial.  If it is a second home and they already live in California than not as big a deal UNLESS they plan to retire in that home to protect their assets than Nevada is a better option.

California Versus Nevada LLC
from San Diego Business Law Firm

A limited liability company, better known as “LLC”, is a flexible business entity. It gives you the asset protection characteristics of a corporation, but with less formality. From a tax perspective, the LLC is taxes most often as a partnership. This avoids the double taxation issues that arise with a traditional corporation.

After deciding to form an LLC, the next issue is picking the state in which to do the formation. For people living in California, there is a temptation to form the entity in Nevada. Why? Well, it usually comes down to tax issues. California taxes everything including a LLC. Nevada, on the other hand, provides a much better tax situation.

So, when we ask about the merits of a California versus Nevada LLC, the answer is Nevada is the best jurisdiction to pick, right? It might appear so at first glance, but there are problems with this approach. You will often read that you can form a business entity in any state you desire. This is true, but you probably should not.

Let’s assume I live in Tahoe City, CA and have a business idea. I decide to go ahead and form a Nevada LLC. Once created, I launch my business in Tahoe City, CA. I open an office in my home. I meet with clients in the office. I take calls in Tahoe City, CA. I receive orders in Tahoe City, CA. Basically, all the business activities are taking place in Tahoe City, CA.

This is a common scenario, but problematic. Since the day-to-day activities of my business are taking place in Tahoe City, CA, California state agencies are going to view me as a California business. This means I will have to register with the Secretary of State as a foreign LLC since my entity is based in Nevada. I will also have to pay California state taxes and other fees.

The end result of all of this is that I end up paying all the fees I would have by originally forming the LLC in California. On top of that, I will also be paying all the Nevada fees. Given this scenario, the benefits of using a Nevada LLC are lost and I actually end up in a worse situation.

Most books and websites discussing the creation of business entities are painfully inadequate. Make sure you understand the complete picture before choosing where to originate your LLC or any other business entity.

Check out this video by CBS News.

For more detailed info on operating your business in the greater Reno-Tahoe area, click here.

Property Taxes

Douglas County Click on the link for more info on Nevada Taxes.

For the owner-occupied single family residence, the property tax bill is capped at an increase of 3%. Excluded from the cap is any increase in the assessed valuation of the property from the prior year which is due to any improvement or change in the actual or authorized use of the property.

For residential rental property the 3% cap also applies if the rent charged does not exceed the fair market rent as most recently published by the United States Department of Housing and Urban Development.

For all other property (second homes?) in a county including centrally assessed property, the cap over the prior year is equal to: The average percentage change in the assessed value of a county over the current year plus the previous nine years, or 8%, whichever is less, and then compare that value to twice the increase in the CPI for the previous calendar year. After comparison, the higher percentage between the two is the percentage limit on the increase in property taxes over the previous year.

HOW THE TAX RATE IS DETERMINED

The tax rate is proposed in April of each year based on the budgets prepared by the various local governments: counties, cities, school districts and special districts such as fire protection districts, etc.

Local government budgets, effective with FY 2005-2006, are constrained by the amount of revenue that will be generated under the partial tax abatements which limits the increase in property tax to 3% for single family residences and no more than 8% for other property.

As a result of the partial property tax abatements, a local government may determine that an additional tax rate is necessary to satisfy outstanding obligations secured by the property tax. The local government may increase the tax rate to cover payment of the obligation as long as that portion of the rate is stated separately on the tax bill. The local government may also go to the voters for approval to impose a rate which is exempt from the partial abatement caps.

HOW THE TAXABLE VALUE OF  REAL PROPERTY IS DETERMINED

The Assessor estimates the land’s taxable (full cash) value by considering its location, zoning, actual use, etc. Land values are estimated from market sales or other recognized appraisal methods. The taxable value of buildings is the estimated replacement cost new less depreciation. The land value is added to the improvement’s taxable value to arrive at the property’s overall taxable value.

Property in Nevada is required to be reappraised (revalued) at least once every five years. Between reappraisal years the values are adjusted each year by factors approved by the Nevada Tax Commission. Additional appraisals may occur when improvements are added, new structures are built or because of use or zoning changes.

HOW PROPERTY TAXES ARE CALCULATED

To compute the property taxes for a particular parcel of property, simply multiply the assessed valuation by the tax rate as shown in the following example.

Taxable value x 35% = assessed value x tax rate = property taxes due.

NOTE: Effective starting with FY 2005-2006, the total property tax due must not exceed the total property tax billed the previous year by more than 3% for an owner-occupied single family residence or certain residential rental property, and must not exceed 8% for all other real property. If the property tax due exceeds the applicable cap, it will be artificially lowered by the County Treasurer before property tax bills are sent to the taxpayers.

REAL PROPERTY Example
Taxable Value $ 1,000,000 x 35%
Assessed Value 350,000 x $ .0298 (1)
Property Tax due $10,043.00 (2)

NOTES:
(1) $2.98 per $100.00 assessed valuation
(2) At this point, compare the property tax bill you paid the previous year to determine if the taxes as calculated above exceed the cap described in the previous paragraph.

For further information, visit the Nevada Department of Taxation site.

Other Tax Benefits

• NO corporate income tax
• NO personal income tax
• NO franchise tax
• NO unitary tax
• NO inventory tax
• NO inheritance tax
• NO estate tax

OTHER NEVADA TAX BENEFIT INFORMATION

Your Nevada Connection
Many individuals and businesses are motivated to relocate to the “Silver State” by the fact that Nevada does not impose a state income tax. Is relocation an option you should consider?

A Question of Residency
The single, most important prerequisite for taxpayer to take advantage of Nevada’s “tax hospitality is domiciling one’s self in the state. In simple terms, this means the individual must make Nevada his principle place of residence-his primary home.

The Close Connection Test
Various factors are considered in determining whether a taxpayer has close ties with a particular state, including:
Where are you physically present
Where you have sources of income
where you register to vote
Where you own a house
Where you claim homeowner’s exemption
where you driver’s license is issued
Where you closet business contacts are, i.e., attorneys, accountants, banks, etc.
Where you closet social contacts are, including clubs
Where your vehicles are registered
Where you minor children attend school, and whether you paid resident or non-resident tuition
Which state has jurisdiction in the administration of your wills and trusts
where you obtained a homestead exemption
Where you maintain a safety deposit box
Where you filed an affidavit of domicile
where you own a cemetery plot

While no factor by itself can positively determine residency, registering to vote or claiming the homeowner’s exemption in California, for example, has been found to make the taxpayer a California resident, regardless of the other factors.

Benefits to Individuals
Individuals who are “domiciled” in Nevada and become Nevada residents will generally escape state taxation of their income, except for income arising from sources within another state. Even taxpayers who may continue to be required to “source” one or more items of their income to a taxable state may still enjoy a significant reduction in their overall state tax burden.

Benefits to Corporations
A corporation organized and domiciled in Nevada could significantly reduce its state tax burden. States generally tax corporate business income based on the corporation’s level of activity within and outside that state. Therefore, shifting at least part of the corporation’s business activities to Nevada will generally result in a reduction of state tax. In addition, being organized and domiciled in Nevada will eliminate state taxation of the corporation’s non-business income.

Benefits to Trusts
Likewise, trusts with Nevada fiduciaries can gain a significant tax advantage. In California, for example, trust with California fiduciary are taxed on income retained in the trust, even if all beneficiaries are California non-residents. With a Nevada fiduciary, non-California source income, distributed to non-California beneficiaries or retained and taxable in the trust, will escape California taxation.

Finding Out More
For more information, click here.

THE ASSESSMENT PROCESS

Annual Assessments
Annually, whoever owns taxable property on January 1 (the lien date) becomes liable for a tax calculated at 1 percent of the “taxable” value of the property. Article XIII A of the California Constitution (Proposition 13) also permits adding to the 1 percent tax rate a rate needed to pay interest and redemption charges for voter-approved indebtedness. Such additional rates will vary from area to area within a county.

Change in Ownership and New Construction
The assessed value for most property taxed under Article XIII A is the prior year’s assessed value adjusted for inflation up to 2 percent. However, if there has been a change in ownership or completed new construction, the new assessed value will be the market value of the property as of the date that if changed ownership or was newly constructed. That property will also be assessed on the supplemental roll.

Supplemental Assessments
The supplemental roll provides a mechanism for placing reappraisals under article XIII A into immediate effect, rather than waiting for the next January 1 lien date. A prorated assessment (the supplemental assessment) reflects the increase or decrease in assessed value that results from the reappraisal. It covers the portion of the fiscal year that remains after the date of change in ownership or completed new construction. The supplemental assessment statutes apply to any property subject to article XIII A that has undergone a change in ownership or completed new construction since July 1, 1983.

For changes in ownership or completed new construction occurring between January 1 and May 31, two supplemental assessments are issued. The first covers the portion of the current fiscal year remaining after the date of the event; the second covers the entire next fiscal year. An increase in assessment will result in a supplemental tax bill. A decrease in assessment will result in a refund.

Supplemental assessments do not affect exemptions for which the assessee is otherwise eligible. If granted, the exemption is applied to the amount of the supplemental assessment.

PROPERTY TAX EXEMPTIONS

The state Constitution provides for a variety of full and partial exemptions. The Legislature has unlimited authority to provide for exemption of any kind of personal property, but it cannot exempt real property without specific authority provided by the Constitution.

Following is a brief discussion of some of the major property tax exemptions in California. Please note that issues regarding many of these exemptions are complex; the assessor’s office should be consulted for detailed requirements regarding exemptions.

Personal Effects
Household furniture, hobby equipment, and other personal effects are exempt. This exemption does not include vehicles, aircraft, or boats with a value over $400. It also does not include any property used for a trade or business. No filing is required.

Intangible Personal Property
All forms of intangible personal property are exempt. Examples of intangible personal property include cash, bank accounts, mortgages, and stock certificates. No filing is required.

Homeowners’ Exemption
The Constitution requires a $7,000 reduction of taxable value for qualifying owner-occupied homes. The state reimburses local agencies for the loss in property tax revenue. The homeowner must make a simple one-time filing with the county assessor for the exemption.

Business Inventory
Personal property held for sale or lease in the ordinary course of business is exempt. “Business inventory” includes merchandise held for sale or lease, animals used in the production of food or fiber, and incidental supplies passed on to the customer. The exemption does not include property in use on the lien date (except animals) or ordinary supplies. No filing is required, but the assessor may audit the taxpayer to verify whether the property qualifies.

Low-Value Property Tax Exemption
A county board of supervisors is authorized to exempt from property taxes real property with a base year value and personal property with a full value so low that, if not exempt, the total taxes, special assessments, and applicable subventions on the property would amount to less than the cost of assessing and collecting them. The value threshold is $5,000 or less. However, the value threshold is increased to $50,000 for possessory interests that are for a temporary and transitory use in a publicly owned convention center, cultural facility, or fairground.

Church Exemption
Land, buildings, and personal property used exclusively for religious worship are exempt. The exemption does not include excess property or property used for purposes other than religious worship. This exemption requires an annual filing.

Welfare Exemption
The welfare exemption includes property owned, irrevocably dedicated to, and used for religious, hospital, scientific, and/or charitable purposes. The Board makes a one-time determination regarding whether an organization is eligible for the exemption. Each year, the county assessor determines whether the property is being used for exempt purposes.

Disabled Veterans’ Exemption
Current law provides a basic exemption of $100,000 on the principal place of residence for veterans with specified disabilities or for unmarried surviving spouses of deceased disabled veterans. A one-time filing is required. This exemption may be raised to $150,000 if the applicant meets the income limit of $40,000. Annual filing is required for the $150,000 exemption. The income limit and both the exemption amounts are adjusted annually for inflation.

Crops, Trees, and Vines
Growing crops are exempt. No filing is required. Grapevines are exempt for the first three years and orchard trees for the first four years after the season in which they are planted. Date palms under eight years of age are exempt. Standing timber is exempt but is taxed when harvested.

Other Examples of Exempt Properties
Listed below are some other types of properties that are fully or partially exempt. Some of the exemptions require filing, and there are restrictions on the use of the properties in some cases.

Aerospace museum personalty Historical aircraft Livestock (most) Burial plots Nonprofit colleges and schools Large vessels and low-value boats Free libraries and museums Art gallery displays.

OTHER PROPERTY TAX RELIEF MEASURES

The state Constitution provides for a variety of tax relief measures that the Legislature has implemented as California property tax relief programs. The issues and qualifications regarding these programs are complex, and claim forms must be filed to obtain the relief. The assessor’s office should be contacted for claim forms and detailed requirements regarding these programs.

New Construction Exclusion for Disabled Access
New construction may be excluded from reassessment if it consists of modifying an existing structure to make the structure more accessible to a physically disabled person. Claims for this exclusion must be filed with the county assessor.

Disaster Relief
The taxable value of properties that have been substantially damaged or destroyed by a disaster may be reassessed to reflect the damage if the county where the property is located has adopted a disaster relief ordinance. Claims for this relief must be filed with the county assessor within the time period specified in the ordinance or within one year from the date the property was damaged or destroyed by the disaster, whichever is later. The reduced value remains until the property is fully repaired, restored, or reconstructed. Then the factored base year value will be restored as long as it is substantially equivalent to the property prior to the damage or destruction. For property located in a county that has not adopted a disaster relief ordinance, a taxpayer may request from the county assessor a Proposition 8 reduction in value.

If the disaster occurs in an area proclaimed by the Governor to be in a state of emergency and the taxpayer chooses not to repair, restore, or reconstruct the damaged property:

•               The taxable value of property substantially damaged or destroyed may be transferred to comparable replacement property that is located within the same county and acquired or newly constructed within five years after the disaster. Claims for this exclusion are filed with the county assessor.

•               The taxable value of a principal residence substantially damaged or destroyed may be transferred to a qualified replacement residence located within another county, provided that the replacement residence is located in a county that has adopted an ordinance that allows such taxable value transfers. This is effective for disasters occurring on or after October 20, 1991. Contra Costa, Los Angeles, Modoc, Orange, San Francisco, Santa Clara, Solano, Sutter, and Ventura Counties have adopted ordinances accepting transfers of base year value under this program. Claims for this exclusion must be timely filed with the county assessor.

Eminent Domain
The taxable value of property may be transferred to a comparable replacement property if the person acquiring the real property has been displaced from property by eminent domain proceedings, by acquisition by a public entity, or by governmental action that resulted in a judgment of inverse condemnation. The replacement property does not have to be located in the same county as the taken property. Claims for this exclusion must be filed with the county assessor within four years of displacement.

Over 55 and Disabled Citizens Relief
People over the age of 55 or who are severely and permanently disabled may transfer the taxable value of their principal residence to a replacement property if it is of equal or lesser value, located within the same county, and purchased or newly constructed within two years of the sale of the original property. This tax relief is available only once in a lifetime. There is one exception to this one-time-only limit. If a claimant becomes physically and permanently disabled after transferring the taxable value under the age requirements (over 55), the claimant may transfer the taxable value a second time under the disability requirements if the move is related to the disability.

The taxable value may be transferred to a qualified replacement property located in the same county or to a qualified replacement property located within another county provided that the replacement property is located in a county that has adopted an ordinance to allow such transfers. Alameda, Los Angeles, Orange, San Diego, San Mateo, Santa Clara, and Ventura Counties have adopted ordinances allowing transfers under this program. Claims must be filed with the county assessor within three years of the purchase or completion of construction of the replacement property.

Parent-Child and Grandparent-Grandchild Exclusions
The purchase or transfer of a principal residence and the first $1 million of other real property between parents and children is not subject to reassessment. Claims for this exclusion must be filed with the county assessor within certain time limits. This exclusion also applies to transfers from grandparents to grandchildren when both qualifying parents are deceased, subject to certain limitations.

Click on the link for more information about California Property Tax.

Property Taxes

To estimate property taxes on a property in California, you can use 1.25% of purchase price as a rule of thumb for the 1st year’s tax bill. When you purchase a home, the county tax assessor reassesses the property and sets a new property tax amount based on your purchase price. Your property taxes will be approximately 1% of your purchase price, plus any voter approved bonded indebtedness of the community (hence the 1.25% rule of thumb). Additionally a community may have a “Mello-Roos” assessment. Another common item you may find on the tax bill is for “pest abatement”, or a bond for a sewer district.

Proposition 13 limits property tax increase to 2% annually
In future years, the tax assessor is allowed to increase the assessed value by 2% appreciation per year.

Homeowner’s Exemption
This is a deduction of $7,000 from the “accessed value” and applies only to owner-occupied properties. Once you’ve purchased a home you will receive a card to fill out to apply for the exemption. The card must be completed and returned between March 1st and April 15th. Applications submitted after April 15th, but before the end of the year will qualify for only 80% of the exemption.

Supplemental Property Tax Bill
The Supplemental Property Tax Bill is for the difference between the tax based on the seller’s assessed value and the tax based on your new assessed value.

There are only 3 occasions in which CA property may be reassessed:
o Upon sale of the property
o When a permit is pulled for any work done on the property
o Upon an ownership change other than between a married person or from a parent to a child.

REAL PROPERTY Example
Taxable Value $ 1,000,000 x 1.25%
Property Tax due $12,500

THE ASSESSMENT PROCESS

Annual Assessments
Annually, whoever owns taxable property on January 1 (the lien date) becomes liable for a tax calculated at 1 percent of the “taxable” value of the property. Article XIII A of the California Constitution (Proposition 13) also permits adding to the 1 percent tax rate a rate needed to pay interest and redemption charges for voter-approved indebtedness. Such additional rates will vary from area to area within a county.

Change in Ownership and New Construction
The assessed value for most property taxed under Article XIII A is the prior year’s assessed value adjusted for inflation up to 2 percent. However, if there has been a change in ownership or completed new construction, the new assessed value will be the market value of the property as of the date that if changed ownership or was newly constructed. That property will also be assessed on the supplemental roll.

Supplemental Assessments
The supplemental roll provides a mechanism for placing reappraisals under article XIII A into immediate effect, rather than waiting for the next January 1 lien date. A prorated assessment (the supplemental assessment) reflects the increase or decrease in assessed value that results from the reappraisal. It covers the portion of the fiscal year that remains after the date of change in ownership or completed new construction. The supplemental assessment statutes apply to any property subject to article XIII A that has undergone a change in ownership or completed new construction since July 1, 1983.

For changes in ownership or completed new construction occurring between January 1 and May 31, two supplemental assessments are issued. The first covers the portion of the current fiscal year remaining after the date of the event; the second covers the entire next fiscal year. An increase in assessment will result in a supplemental tax bill. A decrease in assessment will result in a refund.

Supplemental assessments do not affect exemptions for which the assessee is otherwise eligible. If granted, the exemption is applied to the amount of the supplemental assessment.

PROPERTY TAX EXEMPTIONS

The state Constitution provides for a variety of full and partial exemptions. The Legislature has unlimited authority to provide for exemption of any kind of personal property, but it cannot exempt real property without specific authority provided by the Constitution.

Following is a brief discussion of some of the major property tax exemptions in California. Please note that issues regarding many of these exemptions are complex; the assessor’s office should be consulted for detailed requirements regarding exemptions.

Personal Effects
Household furniture, hobby equipment, and other personal effects are exempt. This exemption does not include vehicles, aircraft, or boats with a value over $400. It also does not include any property used for a trade or business. No filing is required.

Intangible Personal Property
All forms of intangible personal property are exempt. Examples of intangible personal property include cash, bank accounts, mortgages, and stock certificates. No filing is required.

Homeowners’ Exemption
The Constitution requires a $7,000 reduction of taxable value for qualifying owner-occupied homes. The state reimburses local agencies for the loss in property tax revenue. The homeowner must make a simple one-time filing with the county assessor for the exemption.

Business Inventory
Personal property held for sale or lease in the ordinary course of business is exempt. “Business inventory” includes merchandise held for sale or lease, animals used in the production of food or fiber, and incidental supplies passed on to the customer. The exemption does not include property in use on the lien date (except animals) or ordinary supplies. No filing is required, but the assessor may audit the taxpayer to verify whether the property qualifies.

Low-Value Property Tax Exemption
A county board of supervisors is authorized to exempt from property taxes real property with a base year value and personal property with a full value so low that, if not exempt, the total taxes, special assessments, and applicable subventions on the property would amount to less than the cost of assessing and collecting them. The value threshold is $5,000 or less. However, the value threshold is increased to $50,000 for possessory interests that are for a temporary and transitory use in a publicly owned convention center, cultural facility, or fairground.

Church Exemption
Land, buildings, and personal property used exclusively for religious worship are exempt. The exemption does not include excess property or property used for purposes other than religious worship. This exemption requires an annual filing.

Welfare Exemption
The welfare exemption includes property owned, irrevocably dedicated to, and used for religious, hospital, scientific, and/or charitable purposes. The Board makes a one-time determination regarding whether an organization is eligible for the exemption. Each year, the county assessor determines whether the property is being used for exempt purposes.

Disabled Veterans’ Exemption
Current law provides a basic exemption of $100,000 on the principal place of residence for veterans with specified disabilities or for unmarried surviving spouses of deceased disabled veterans. A one-time filing is required. This exemption may be raised to $150,000 if the applicant meets the income limit of $40,000. Annual filing is required for the $150,000 exemption. The income limit and both the exemption amounts are adjusted annually for inflation.

Crops, Trees, and Vines
Growing crops are exempt. No filing is required. Grapevines are exempt for the first three years and orchard trees for the first four years after the season in which they are planted. Date palms under eight years of age are exempt. Standing timber is exempt but is taxed when harvested.

Other Examples of Exempt Properties
Listed below are some other types of properties that are fully or partially exempt. Some of the exemptions require filing, and there are restrictions on the use of the properties in some cases.

Aerospace museum personalty Historical aircraft Livestock (most) Burial plots Nonprofit colleges and schools Large vessels and low-value boats Free libraries and museums Art gallery displays.

OTHER PROPERTY TAX RELIEF MEASURES

The state Constitution provides for a variety of tax relief measures that the Legislature has implemented as California property tax relief programs. The issues and qualifications regarding these programs are complex, and claim forms must be filed to obtain the relief. The assessor’s office should be contacted for claim forms and detailed requirements regarding these programs.

New Construction Exclusion for Disabled Access
New construction may be excluded from reassessment if it consists of modifying an existing structure to make the structure more accessible to a physically disabled person. Claims for this exclusion must be filed with the county assessor.

Disaster Relief
The taxable value of properties that have been substantially damaged or destroyed by a disaster may be reassessed to reflect the damage if the county where the property is located has adopted a disaster relief ordinance. Claims for this relief must be filed with the county assessor within the time period specified in the ordinance or within one year from the date the property was damaged or destroyed by the disaster, whichever is later. The reduced value remains until the property is fully repaired, restored, or reconstructed. Then the factored base year value will be restored as long as it is substantially equivalent to the property prior to the damage or destruction. For property located in a county that has not adopted a disaster relief ordinance, a taxpayer may request from the county assessor a Proposition 8 reduction in value.

If the disaster occurs in an area proclaimed by the Governor to be in a state of emergency and the taxpayer chooses not to repair, restore, or reconstruct the damaged property:

•               The taxable value of property substantially damaged or destroyed may be transferred to comparable replacement property that is located within the same county and acquired or newly constructed within five years after the disaster. Claims for this exclusion are filed with the county assessor.

•               The taxable value of a principal residence substantially damaged or destroyed may be transferred to a qualified replacement residence located within another county, provided that the replacement residence is located in a county that has adopted an ordinance that allows such taxable value transfers. This is effective for disasters occurring on or after October 20, 1991. Contra Costa, Los Angeles, Modoc, Orange, San Francisco, Santa Clara, Solano, Sutter, and Ventura Counties have adopted ordinances accepting transfers of base year value under this program. Claims for this exclusion must be timely filed with the county assessor.

Eminent Domain
The taxable value of property may be transferred to a comparable replacement property if the person acquiring the real property has been displaced from property by eminent domain proceedings, by acquisition by a public entity, or by governmental action that resulted in a judgment of inverse condemnation. The replacement property does not have to be located in the same county as the taken property. Claims for this exclusion must be filed with the county assessor within four years of displacement.

Over 55 and Disabled Citizens Relief
People over the age of 55 or who are severely and permanently disabled may transfer the taxable value of their principal residence to a replacement property if it is of equal or lesser value, located within the same county, and purchased or newly constructed within two years of the sale of the original property. This tax relief is available only once in a lifetime. There is one exception to this one-time-only limit. If a claimant becomes physically and permanently disabled after transferring the taxable value under the age requirements (over 55), the claimant may transfer the taxable value a second time under the disability requirements if the move is related to the disability.

The taxable value may be transferred to a qualified replacement property located in the same county or to a qualified replacement property located within another county provided that the replacement property is located in a county that has adopted an ordinance to allow such transfers. Alameda, Los Angeles, Orange, San Diego, San Mateo, Santa Clara, and Ventura Counties have adopted ordinances allowing transfers under this program. Claims must be filed with the county assessor within three years of the purchase or completion of construction of the replacement property.

Parent-Child and Grandparent-Grandchild Exclusions
The purchase or transfer of a principal residence and the first $1 million of other real property between parents and children is not subject to reassessment. Claims for this exclusion must be filed with the county assessor within certain time limits. This exclusion also applies to transfers from grandparents to grandchildren when both qualifying parents are deceased, subject to certain limitations.

Click on the link for more information about California Property Tax.