Real Estate 101


TAXES

Alameda County Property Taxes
Alameda County property tax year begins in the summer on July 1st and ends June 30th. Property taxes are due twice a year—no later than December 10th for the six months of July, through December; and no later than April 10th for the six months of January through June. The tax bill, along with two payment stubs, is mailed in late September or early October.

The buyers’ property taxes are based upon the sales price and are calculated at approximately 1.33% a year, and prorated according to the escorw closing date. Sellers pay for the days they own the home and buyers pay from that day forward.  If the sellers have owned the property for many years, their property taxes are likely to be significantly less. As a result, the portion the buyers pay at close may be lower than the total amount due. You may want to consider setting aside the difference so the money is available when the bill is due.

Supplemental Tax Bill
A supplemental tax bill will be sent to the buyer to make up the difference between the sellers’ original tax amount and the buyers’ new amount. Depending upon how much the previous owner paid and when the bill arrives, the new owner may owe a relatively large amount of money.

Example:

  • Sales Price: $700,000
  • Taxes $700,000 x 1.33    $9300. per year
  • Previous Owners Taxes   $5300. per year
  • Supplemental Tax Bill      $4000. per year (difference between what you paid in escrow and the remaining amount due)

 

55 years of age or older and qualify for Proposition 60 or Proposition 90
When you sell and buy another home you may not incur a tax increase if you buy a home of equal or lesser value. Taxes are assessed yearly, and can only increase by 2% per year, so if you have owned a home for several years, and its value has increased, the taxes may be much lower than the current 1.33% of the purchase price. there may be a significant tax savings if you qualify under Prop 60 or 90 (See below).

Proposition 60
Transfers within the same county in California

Under Prop 60, California law allows any person who is at least 55 years of age (at the time of sale), resides within the same county and lives on the property, to transfer the base year value of the original property to the replacement dwelling of equal or lesser value. Prop 60: www.acgov.org/assessor

Proposition 90
Transfers to other counties in California

Under Prop 90, individuals who move from one county in California to another countiy in California may participate in a similar way to Prop 60. Check online for participating counties, as the number of counties is subject to change. At last check there were seven counties participating. Prop 90: Google or call the counties assessor’s office.

Federal withholding (Foreign Investment In Real Property Tax Act) & California withholding for Income Taxes
The buyer must withhold 10% of the gross sales price if the seller is a ‘foreign person’ or 3 1/3 % of the net sales price if the seller is not a California resident, unless an exemption applies. The title company will send the withheld funds to the IRS and the State.