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Is there relief from increasing California property taxes?

Why are property taxes continuing to increase? Forty years ago, Californians passed Proposition 13 to keep property taxes predicable and affordable. Yet even though limits exist on increases in assessed values, there was nothing to protect against voter-approved debt or special taxes.

For those on fixed income any unexpected increase in property taxes can add up. Property tax shortfalls over several years can even force some to sell. The reinstatement of the Property Tax Postponement program may help.

 

How does it work?

Anyone who is over 62, blind or disabled may defer property taxes on a principal residence. They also must meet some other criteria, including:

  • Household income of $35,500 or less
  • At least 40 percent equity in the residence (for example, a reverse mortgage would make a homeowner ineligible)

Interest of seven percent per year adds to the deferred property tax bill. A lien for the unpaid taxes also applies against the property.

History of the program

The program had helped about 6,000 homeowners, some had benefited from it for 20 years and the majority were over 70. In 2009, with a state budget in the red, the legislature cut the program.

In 2014, it was restored and began operating again in 2016. On October 1, the state controller will start accepting applications for the 2018-2019 program. Limits on funding mean that not everyone accepted will receive relief, but applications are processed as received. And it is necessary to reapply each year.

Events that trigger repayment obligation

Repayment of the deferred taxes is due when certain future events occur:

  • Sale of the property
  • Refinancing a mortgage or defaulting on a mortgage
  • Death of the owner
  • Transfer of title

California property taxes may combine with other tax issues, learn about comprehensive options to resolve back taxes and halt collection efforts.

Retirement and a fixed income on its own will not stop the IRS, which can even garnish a portion of Social Security benefits. But the IRS also has available programs like currently not collectible status that pauses enforcement efforts.

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