Applications to transfer taxes from one house to another continue to tie up North Bay assessors’ offices, which have been facing thousands of documents to review to complete the processes.
The offices were hit by two waves of activity, which began when Proposition 19 passed in November 2020. The first wave involved parents trying to pass down their property to their children who were not going to occupy the home before a February deadline. California legislation just changed that with Senate Bill 539 going into effect in January.
The second wave came about from seniors who wanted to transfer their more favorable tax base rate from one county to another. Proposition 19 allows homeowners over age 55 to keep a better tax rate when they sell one house and buy another.
That measure took effect in April 2021, and since then, county staffers have been processing applications and reviewing reams of supporting documents.
In Sonoma County, assessor reviews grew by 18%. An official told the Business Journal that her department has processed almost half (47%) of the documents, which amounts to about 16,000 assessor reviews left to process.
The county received 342 base-year transfer requests. As of Feb. 9, 10 have been completed. Of those, 167 involved properties within the county, while 175 were from counties outside Sonoma County boundaries.
“We’re way behind on transfers. We’re usually done by March,” Sonoma County Change of Ownership Barbara Green said, adding she’s received approval on one out of two positions she plans to fill to help with the effort.
One of the more notable changes between the passages of Proposition 19 then SB 539 involved extra tax protections for parents and grandparents passing down their land to their children. The new tax law used to require the children live in the home, a requirement that sent a surge of filings to county offices to beat a deadline from a year ago as a result of Proposition 19. Parents were forced to make transfers to their heirs prematurely to save on their tax bills.
The new provisions gained from the passage of SB 539 also extend tax protections for properties valued at more than $1 million.
The bill co-authored by California Sen. Mike McGuire, D-Healdsburg, received widespread support from the California Association of Realtors.
This law is of particular interest to the North Bay because the region is filled with estates, farms and ranches. The region has also absorbed an uptick in the number of people moving into the rural areas from often times the larger cities for more space since they can work remotely.
“These clarifications will help ensure Proposition 19 is implemented consistently throughout California and provide certainty to qualifying homeowners and those with family farms,” association President Dave Walsh said in a statement.
“The Realtors got behind it because of the lack of inventory everywhere. Hopefully, this will make it easier for people to move, even if they buy up (at a higher price) or down,” Compass Realty Healdsburg agent Carol Lexa said, adding 2021 was a banner year for real estate transactions.
As an example, appraisals on real estate transactions are so backlogged they’re taking six months to a year to complete.
Many seniors who are seeking to buy into an area in a higher tax bracket gain the benefit of taking their lower tax paid at the time the house being sold was purchased, plus 2% each year for inflation. The law requires the home serve as their primary residence.
And that’s much of the motivation behind getting Marin County’s 265 applications on base-year tax transfers processed, Assessor-Recorder-Clerk Shelly Scott pointed out.
“We’re in a holding pattern, but I want to get through these before the next (tax) installment is due (in April),” she said.
Her department, which underwent a rewrite of its computer system program to do the work, plans to complete all applications by the end of February.
In Napa County, Assessor John Tuteur had prepared to process his department’s 80 base-year transfers before finding out about the new formula issued through SB 539.
“Thank God, we did (hold them). We would have had to do them again,” he said.
Now, the county is ready to complete the applications.
Susan Wood covers law, cannabis, production, tech, energy, transportation, agriculture as well as banking and finance. For 27 years, Susan has worked for a variety of publications including the North County Times, Tahoe Daily Tribune and Lake Tahoe News. Reach her at 530-545-8662 or [email protected]