Tax Saving Month on Your Primary Home with New Wrinkle

By Jeff Prang

Los Angeles County Assessor

 

This month I want to take a moment of your time to visit about a specific property tax savings program my office offers that is just waiting to reduce your budget.

We do manage several programs for seniors, veterans, people with disabilities, and non-profits, resulting in $724 million in tax savings last year alone.

Since 1974, the state’s Constitution has tried to give homeowners financial relief against the high cost of housing through the Homeowners’ Exemption (HOX) that can automatically reduce your assessed tax burden by $7,000, if the home is your primary residence as of Jan. 1. That translates to an actual reduction of $70 to a homeowner’s tax bill. And all the homeowner has to do is fill out the application at assessor.lacounty.gov and they are good to go. The deadline is Feb. 15 to get the entire savings but if you miss the deadline, please file anyway and you will get it prorated this year and the full amount the following years.

Homeowners need only apply once in order to receive these savings each year. The savings continue until a change (such as a sale) is recorded.

It’s important to remember that when the Homeowners’ Exemption was created in 1972 and then formally enacted in 1974, the median sales price for a single family home was about $34,000 statewide. The median sales price of a home now is about $800,000. 

The $70 exemption taken off the property tax bill is entirely inadequate in providing any relief for the California homeowner. We cannot forget that the property tax bill also includes local bond debts and fee assessments, including water and school districts that have nothing to do with assessed value of the home under Proposition 13.

Yes, obviously it is long overdue for an increase to the Homeowners’ Exemption. As a hypothetical example, if the state Legislature increased the current homeowners’ exemption from $7,000 to $25,000 for everybody and perhaps even up to $500,000 for qualified low-income homeowners, that translates into a savings of $250 for all and $5,000 for those qualifying low-income homeowners.

I encourage our state Legislature to study this issue and increase the Homeowners’ Exemption, even modestly.  At a minimum, they should attach an escalator clause that will keep the Homeowners’ Exemption in line with inflation.

Having said that and at the current savings of $70, nearly one in three homeowners in Los Angeles County still do not take advantage of this program, leaving $30 million unclaimed each year. Across the County, an additional 435,000 families can be saving on their tax bills.

The Homeowners’ Exemption is even more important than ever before because of Proposition 19. Prop. 19 has changed the rules that apply to transfers between parents and children or in some cases, even grandparents to grandchildren. Prop. 19 abolishes transfers of any property not being used as a primary residence. It also eliminates the current parent-to-child and grandparent-to-grandchild exemption in cases where the child or grandchild does not use the inherited property as their principal residence, such as using a property as a rental house or a second home.

However and this is most important: The child receiving the home has one year from the date of transfer to acquire the Homeowners’ Exemption, if the parent did not have it at the time of the transfer. If the home does not have the Homeowners’ Exemption, the children will not receive the tax benefit, and they could be stuck with a huge property tax increase.

I am providing regular briefings on the latest updates and our website will be continuously posting new information on Proposition 19 that may assist taxpayers.

For more information on Prop. 19 or other tax savings programs, visit assessor.lacounty.gov or call 213/974-3211.

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Los Angeles County Assessor Jeff Prang has been in office since 2014. Upon taking office, Prang implemented sweeping reforms to ensure that the strictest ethical guidelines rooted in fairness, accuracy and integrity would be adhered to in his office, which is the largest office of its kind in the nation with 1,300 employees and provides the foundation for a property tax system that generates $24 billion annually.