Archive for the ‘Taxes’ Category

Seniors Tax Break

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For all Home owners in California above 62 years old, or those with parents in that age group, the State Controllers Office has a program which allows long term postponement of Property Taxes. Go to www.sco.ca.gov and select “Public and Gov, Services” tab, then select “Property Tax Postponement”.

Consider a 68 year old Grandmother living alone in the old family home in North San Jose. All her children and grand children are living in Pleasanton, about 30 minutes freeway driving away. She would love to sell up and move closer to the family, and could afford a suitable house using her sale proceeds. However, the price of the house in Pleasanton would be higher than the sales price of the San Jose house, so thanks to California’s Proposition 13 www.hjta.org/node/320 and the incomplete Propositions 60 and 90, www.boe.ca.gov/proptaxes/faqs/propositions60_90.htm she would not be able to carry her existing Property Tax payment over to the new house. This would increase her Property Taxes by $600 per month. This makes the whole thing impracticable as she cannot afford this extra expense. and her children are unable to subsidize her, even if she would accept it.

Here’s how the numbers work:

Grandma’s house, bought in 1980 for $50,000, is now worth $600,000 and has no mortgage.

Thanks to Prop 13 her property taxes are only $90/month.

The replacement house in Pleasanton will cost $750,000 and she can easilly handle the small mortgage needed.

However, thanks again to Prop 13, her new property taxes will be $781/month. This she cannot manage.

Using the Property Tax Postponement program she is able to make the move and simply allow the accrued Property Taxes to reduce her final estate. A result with which the whole family can be happy.

More Property Tax Relief For The Unlucky

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Many Californians who bought their home since late 2006 now find themselves facing mortgage payment shock, and are unable to refinance due to a drop in the value of their home.

This double whammy is the major cause of the increased number of foreclosures and short sales.

While there is no easy answer for many in this situation there is one thing they can do to at least reduce the cost of owning their home.

California Proposition 8 allows for a reduction in Property Taxes when the current value of the house is now lower than the assessed value (usually the purchase price in this scenario.)

For example. You paid $450,000 in December 2006 for a beautiful 4 bed 3 bath home in Elk Grove.

The Builder is now selling the same house in phase 3 of the development for $380,000.

Your property taxes are $5,628 per year.

The buyer at $380,000 is paying $4,752 per year. That’s $868 per year less than you.

Prop 8 allows you to file for a “reduction in assessed value” in the County where you live. Example: www.acgov.org/forms/assessor/decline_market.pdf for Alameda County. There is some paperwork required but nothing you cannot handle yourself.

There is no need to fall for the flyer in the mail offering to take care of this for you at at a  price.

Simply call the County Assessors office and explain you want to apply for a “Reduction in Assessed Value” for your home. They will send you the required forms which you complete and send back. It may take a couple of months before they respond but respond they must.

Major Help From The IRS

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This is a great example of intelligent action by a government agency not know for it’s compassionate nature.

Also evidence of the benefits of being a Realtor and having the support of the California Association of Realtors.

IRS TO EXPEDITE TAX LIEN RELIEF FOR HOMEOWNERS
The Internal Revenue Service (IRS) recently announced it will expedite its process of providing relief from federal tax liens for distressed homeowners. With over one million current federal tax liens against real and personal property, the IRS announcement should help REALTORS® and their clients resolve federal tax lien issues in their sale and loan transactions.

As background, a homeowner seeking to sell or refinance a property must generally pay off an existing federal tax lien. However, during the current economic downturn, many homeowners don’t have the cash or equity to do so. Hence, for a refinance, the homeowner may request that the IRS makes its tax lien subordinate or secondary to the lien of the refinancing lender. For a sale, the homeowner may, under certain circumstances, request that the IRS discharge its claim. The IRS’s processing time for subordination or discharge requests has been about 30 days. The IRS is currently working to expedite that time frame to help distressed homeowners. For IRS instructions on requesting relief from federal tax liens, go to the IRS Publication 783 for discharges and Publication 784 for subordinations at www.irs.gov.

C.A.R. provides REALTORS® with many legal articles covering a wide range of topics of interest. Some of the new or newly revised legal articles available at http://qa.car.org are as follows