Today I have the honor and privilege of having our county assessor, Mr. Tom J. Bordonaro, Jr. In California, we have Proposition 13 and Tom is going to break that down for us. “Proposition 13 is very simple; it actually forbids a re-assessment unless there is a change in ownership or new construction,” Tom explains. Tom also stated that Proposition 13 was passed in 1976 in response to a “tax revolt” when homeowners saw escalating property values and were being assessed every four years. Since they were being assessed very four years, many people were seeing their taxes double or even more.

With Proposition 13, as Tom adds, it creates stability, adds surety and helps local governments because they know what to expect from taxes every year. Proposition 13 has a limit of no more than 2% tax increase per year. “That is tied to inflation and they measure using the California Price Index,” he continued. “Whatever that is from October to October, everyone every county in the state applies that inflation factor.”

Another factor that comes up in our area is that once you turn 55 years of age and you have a very low tax base, there is a way for a one-time transfer of that tax base to another property. This is otherwise known as the “Base Year Tax Transfer” or Proposition 60. Tom tells us that Proposition 60 originated in the early 1980’s and that the idea behind it was for parents whose children have moved out of the house and had no use for a four bedroom home. These people are also preparing to live fixed income and retire. They are typically looking to move down from their four bedroom home to a two bedroom home but can’t afford the two bedroom home because it is valued higher here in California.

Proposition 60 allows you to purchase that two bedroom home in the same county and as long the market values of the home are the same, you can move your tax base over one time. Tom notes that some counties do allow for these tax bases to be transferred, however, San Luis Obispo does not accept them. “There is a second transfer allowance for people who become permanently disabled,” Tom said. With a doctor’s certification, you are allowed another transfer of that tax base if you are unable to use your home. The criteria are the same in regards to home values; however you do not have to be 55 years of age to transfer your tax base if you become disabled.

Another tax exception, the “Parent/Child Exclusion” or Proposition 58, came on before the “Base Year Value Transfer.” Tom states,” You can pass onto your children the base year of your principle residence plus up to $1 million in assessed value per transfer.” This prevents property taxes from rising in the event a parent passes. Children can also transfer the base value to their parents. Tom tells us that the law can apply to grandchildren as long as the parents are deceased. This is great for estate planning and also helping your children get a start in the world.

If you have any specific tax questions, you can reach Tom’s office at (805) 781-5643 or visit their website that has a vast amount of information and brochures. Thank you Tom for joining us and thank you for watching. Have a great day!