Property Tax Transfers Hit Gridlock

Erickson is a Westlake Village homeowner.

For older Californians in the last few years, the lucky numbers 13, 60 and 90 have replaced the traditional seven and 11.

Thanks to the initiative process, Proposition 13 was approved by the voters in 1978 and rolled back property tax assessments to their 1975 basis. It also limited the yearly inflation adjustment to 2% and gave retired seniors a chance to remain in their homes.

Before Proposition 13, retirees often were forced to sell their homes as property taxes approximated their monthly Social Security checks. But Proposition 13 was a double-edged sword. The family home usually wasn't the compact quarters that retirement dictated, and so the trap had reversed. Instead of being forced out by escalating tax bills, retirees were forced to stay because of the low property taxes that Proposition 13 bestowed.

In November, 1986, voters came up with an answer to this dilemma: Proposition 60.

Seniors 55 or older could sell the outgrown family home, move to a smaller house and keep their old tax base as long as the new home cost the same or less than the previous one. One important qualification: both old and new homes had to be located in the same county.

Then, in the last election, Proposition 90 was approved and eliminated the same-county restriction and allowed intercounty moves, if the receiving county approved.

So far 10 counties (Los Angeles, Orange, Riverside, San Diego, Kern, San Mateo, Marin, Santa Clara, Alameda and Contra Costa) have put out the welcome mat to transferees.

The three propositions look great on paper. But are 13, 60 and 90 really lucky numbers for California's oldsters? Well, maybe two of the three are, but not Proposition 60, at least not for us.

Proposition 13 blessed us, as we remained happily in our family home in West Los Angeles watching the property taxes increase arithmetically from 1975 while the actual value zoomed exponentially.

But eventually the old homestead of 31 years burdened us in size and upkeep. We decided to sell and take the two-year grace period allowed by the IRS to postpone taxes on our profit in seeking the perfect retirement home. Two years was also the limit of Proposition 60.

On Dec. 1, 1986, we listed; they saw, and we conquered--signed the purchase agreement--four days later. Immediately the new home hunt began. The new house could cost up to $329,500 (the sales price of our old home) but the tax basis would be that of our old home, $84,590.

Modest Requirements

Our housing requirements were fairly modest: single story, sidewalks, street lights, underground utilities, quiet patio, nearness to a Kaiser Permanente medical facility, low crime, nearby shopping and transportation and located in Los Angeles County.

As we eliminated scores of prospective homes, the housing prices relentlessly spiraled upward. By waiting those two years we jeopardized our chance of living in tranquil retirement anywhere, let alone in Los Angeles County.

But in the nick of time there suddenly appeared our dream home in Westlake Village, and the Los Angeles County line cut across just 1 1/2 blocks to the west, satisfying the Proposition 60 requirements. We closed escrow on Dec. 1, 1988.

A knowledgeable real estate broker had warned me to file for the Proposition 60 exemption promptly because a previous client had lost her benefits by taking her time to file.

Forewarned, I filed for the Proposition 60 exemption a full six weeks before our escrow closed. Approval of my Proposition 60 application reached me Jan. 18, 1989. All in order? Unfortunately not.

When a bill from the assessor arrived in March, 1989, I wasn't worried. The bill would only be a couple of hundred dollars, as part of our taxes had been paid through escrow.

Complaint Dismissed

But instead, this so-called supplemental tax bill demanded $1,400, payable in two installments. Surely there was a mistake. Our total tax bill for the whole year should only have been $1,000 based on our Proposition 60 valuation.

A call to the Chatsworth branch of the Los Angeles County assessor's office dismayed me. The clerk dismissed my complaint saying, "Pay the whole amount. It takes time for Prop. 60 to get on the tax rolls. Only one lady working on it downtown." Grudgingly I paid the supplemental bill.

When a delinquent notice on taxes for our property arrived at my son's home in Encino on June 1, 1989, I was mystified. Previously, the supplemental bill had reached us at our new address. Another call to the Chatsworth assessor's office cleared up my confusion about regular tax bills, supplemental tax bills and the elusive benefits of Proposition 60.

Property is assessed once a year on March 1, the clerk explained. Unlike income taxes, the property tax year begins July 1 and ends the following June 30. The first installment is due Nov. 1 (delinquent Dec. 10), the second installment is due Feb. 1 (delinquent April 10).

The first clerk had not mentioned that the second half of the regular tax bill for 1988-89 was owed on the property, along with the supplemental tax.

Overburdened Office

The recent increase in the number of property transactions has overburdened the assessor's office, so a new tax bill is not sent out with every property transfer. Instead the assessor relies on escrow plus the previous owner forwarding the second installment to the new owner. Ours never reached us.

One by one I listed for the second clerk the reasons why the delinquent bill and the penalty were unfair. He listened patiently, and then said, "Maybe you can get it excused. But this is the wrong place to complain. This is a problem for the tax collector's office. You're talking to the assessor's office."

As if to console me, the clerk added that he personally knew that downtown was still working on some Proposition 60 transfers from 1986.

Again I heard that only one woman worked on the transfers. I facetiously joked that I might not live to experience the benefits of Proposition 60. Dead serious, he agreed.

A call to the tax collector's office produced no answer, only a recorded message. To get a human response I turned to our supervisor, Mike Antonovich.

Same Story Told

Obviously, "B.J." in his Woodland Hills office had heard my story of frustration and bewilderment dozens of times from other property owners who not only thought they had overpaid their tax obligations but had been sent delinquent notices and assessed penalties.

"Yes, the story of one lady assigned to Proposition 60 is unfortunately true," he added.

A call to the liaison officer between the supervisors and the assessor's office brought a return call from Barbara Simpson, a most articulate, efficient assessor of 20 years' experience.

True, the initial approval of each Proposition 60 transfer is verified by the solitary worker downtown. As of this date 5,230 approvals have been given out of 5,849 applications.

The accepted Proposition 60 transfer then wends its way to the appropriate regional office for processing and preparation for data entry downtown. But deadlines must be met for regular property transfers, and since there are many more regular transfers, Proposition 60 transfers, although approved, may sit in a regional office until a sufficient number accumulate.

The downtown data entry computer shuts down every year from June to October, but this year a new system will postpone the start up until December. Apologetically, Simpson acknowledged that my refund probably wouldn't arrive until early next year.

And the refund will not include interest, I learned. The Assembly did not address whether interest should be paid on delayed refunds when they enacted the Proposition 60 law, and only another bill will correct that oversight.

So for more than a year, John J. Lynch will have a $2,500 interest free loan from us (taxes of $3,500 based on present market value, minus taxes of $1,000 based on previous home basis value).

What can we do as taxpayers and voters?

Join me in writing to Los Angeles County Assessor John J. Lynch, 500 W. Temple St., Los Angeles, CA 90012-2770 to change priorities at the regional offices to effect our tax break promptly. Also, advise your assemblyman in Sacramento that a bill mandating interest on refunds needs to be legislated to induce the assessor's office to act on Proposition 60 transfers as quickly as regular transfers.

As seniors, we shouldn't take the rumble seat to any other group.

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