By William Rodarmor

Have you ever heard people described as “prisoners of rent control”? Those are people who are renting a cheap, nice apartment in a place like Berkeley or New York but can’t afford to move, because they’d never find another place at the same rent. It turns out that many of us are “prisoners of property taxes” for similar reasons.

If you have lived in your house for a long time — before Proposition 13 was passed in 1978, say — you probably pay very low property taxes. If you buy and move to a new home, your new residence would be reassessed and your taxes would skyrocket, right?

Not necessarily.

California passed two propositions that can help people 55 and older avoid a major property-tax jolt when they move. Thanks to Proposition 60, which was passed in 1986, those seniors can transfer their old property tax basis to a home bought (or newly constructed) within the same county, and pay taxes at the same low rate. Proposition 90, which was passed in 1988, lets seniors do the same thing when they move between certain counties. (A third proposition, 110, extended those rights to the severely disabled of any age).

These “get out of property-tax jail free” cards can save seniors a lot of money. Proposition 13 severely limits the amount a home assessment can rise each year, so people who bought houses years ago, when they were relatively inexpensive, pay a fraction as much in taxes as their neighbors who bought in the recent, booming market. The difference can run to thousands of dollars per year.

The biggest limitation applies to Proposition 90, the one that allows transfers between counties. This is a “local-option” law, and very few counties adopted the law, and even fewer kept it on their books. In the Bay Area, the counties of Alameda, Santa Clara, and San Mateo accept transfers from any other county in the state (Contra Costa and Marin counties once did, but no longer). You can also transfer your property tax basis to property in Kern, Los Angeles, Modoc, Orange, San Diego, and Ventura counties. By contrast, Proposition 60 operates throughout California.

Some general restrictions apply to both kinds of transfer:
The owner or co-owner must be at least 55;
The original and replacement property must be the owner’s principal residence;
The replacement dwelling must be of equal or lesser value than the old one; and
The dwelling must be bought or built within two years of the sale of the original property.

This isn’t an exhaustive list, and the various laws have many definitions and requirements. Like life itself, property transfers are complicated, and each person’s circumstance can raise another question.

If the house you buy is less expensive than the one you sell, no problem. Ditto if it’s the same price. But you may still be OK if it’s slightly more expensive. If you sold your old home for $700,000 in July 2002 and bought a replacement for $735,000 in May 2003, does it qualify for the base transfer? (Yes, because the transfer happened within one year, and the new home’s price is within 105 percent of the old one’s.)

Can a mobile home qualify as an original property? (Yes, but only if it was enrolled as real property.) Can you give your property to your child and still get a Prop 60 benefit when you buy a replacement property? (No.) Can two people who owned separate residences combine their base year values and buy one replacement dwelling together? (No. Nice try, though.)

As you can see, there are a lot of possible wrinkles. For answers to these and other questions, the Alameda County assessor publishes a very useful booklet on Prop 60 and Prop 90 transfers. Call 510-272-3787, or go to www.acgov.org/assessor. The Contra Costa County assessor has information on Prop 60. Call 925-313-7400, or go to www.co.contra-costa.ca.us/depart/assr/Proposition60.html.

For Contra Costa and Alameda counties, the impacts of the propositions have been both similar and different. In the five years between January 1999 and December 2003, Contra Costa received 1,782 Prop 60 applications, and approved 1,419 of them. Contra Costa initially accepted Proposition 90 transfers from outside the county, but stopped after four years, in 1993. The reason was simple: it cost the county too much money. Between November 1988 and June 1992, the county lost about $4.4 million in property taxes, says customer services coordinator Robin Perez. “Periodically, the board has been asked to reconsider the re-implementation of Proposition 90,” she says, “but considering today’s economic climate, it won’t be reinstated any time soon.”

Alameda County takes a more sanguine view, claiming the impact of the propositions has been minimal. Leslie Rein, a public information specialist in the county assessor’s office, estimates that in the last five years, they have seen only 150 Proposition 60 transfer claims a year and about 80 Proposition 90 transfers. “We have some 450,000 parcels in the county, so it’s pretty insignificant,” she says. But Rein thinks the transfers are a big help to taxpayers. “We feel it’s a real benefit to be able to transfer your basis,” she says.

After the dramatic run-up in housing sales and prices in 2003, experts think the residential market may cool a little this year. According to DataQuick, nearly 12,000 houses and condos were sold in the nine Bay Area counties in December, a 26 percent increase over December 2002. The median single-family home price in Alameda County sold for a record $446,000, up 11.5 percent from $400,000 in 2002. In Contra Costa, the price hit $395,000, up 9.7 percent from $360,000. Sales were spurred by continued low interest rates and a tight market, with more buyers than available houses. In Berkeley, however, the price figures are much higher. According to statistics from the Berkeley Association of Realtors, the average price of a house sold jumped from $557,653 in January 2003 to $620,840 in December, an increase of 11.3 percent.

William Rodarmor is a freelance writer, editor, and French translator in Berkeley, California.