Ask Phyllis: a blog series of frequently asked real estate questions.
Questions about Property Tax Reassessment
Dear Phyllis,
I have been a fan since your column first appeared in the Glendale News-Press. My question is about property tax reassessment. My wife and I have owned our two-bedroom, one-bath home since 1982, and due to Prop 13, our property taxes are very low. We never had children, so the house size was never an issue. My wife has been after me to add a master suite with a second bath and walk-in closet. Besides the inconvenience, I don’t want our property taxes to skyrocket. I am seeking your sage advice. I appreciate any insight you can provide.
Robert
Dear Robert,
Thank you for being such a loyal reader. You bring up a common concern among long-term homeowners in California. Thanks to Proposition 13, your property taxes are based on your 1982 purchase price, with only modest annual increases allowed.
Only the value of the new construction will be added to your assessed value. In your case, that’s the primary suite with a second bath and walk-in closet. The rest of your home stays assessed at its original Prop 13-protected amount. That amount can only increase by a maximum of 2% each year.
For example, your home is currently assessed at $150,000. If you add a primary suite valued at $100,000, your new assessed value would be about $250,000. Yes, your property taxes will increase. But it’s far less than if your entire home were reassessed at today’s market value.
Remodeling can be messy, time-consuming, and disruptive, especially if you remain during construction. It’s wise to ask yourself whether enduring months of construction is worth it. Or perhaps moving into a home with the desired features might make more sense. If you or your wife are over 55, you can transfer your existing property tax base to a new home (that’s for another column).
If you’re curious about what your current home might sell for and what your purchasing power could look like elsewhere, I recommend talking with a trusted local Realtor. Even if you don’t want to jump into anything, attending a few open houses can help you visualize your options and better inform your decision.
I wish you the best of luck with whatever decision you make.
Warm regards,
Phyllis
