Understanding California’s Property Tax Postponement Program

Keith B. DunnaganToday, we take a look at California’s property tax postponement program. This program is designed to assist seniors with certain limited financial capacity keep their property taxes current. It is an important program to understand and may provide critical relief to struggling seniors.

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Understanding California’s Property Tax Postponement Program

By: D. Keith B. Dunnagan, Esq.

Elderly coupleAs more and more “boomers” retire and move to fixed incomes, and while California home prices and property tax costs increase, more individuals are finding it difficult to pay their property tax. To help combat the issue of affording property taxes, California operates a program called the Property Tax Postponement (PTP) Program that allows a homeowner, if eligible, to postpone paying their property taxes in the year they are due. There are five requirements to meet eligibility and an applicant must meet all five. The requirements to be eligible for the PTP program are as follows:

  1. The applicant must be either 62 years old or older, blind, or disabled;
  2. Own & occupy the real property as the principle place of residence;
  3. Total household income of $35,500 or less;
  4. Have at least 40% equity in the property; and
  5. No reverse mortgage on property

Breaking down these requirements, to meet criteria one, the applicant must turn 62 on or before December 31 of the year preceding application for entry into the program. For example, if an applicant wants to participate for 2019 taxes, they must turn 62 by December 31, 2018. If filing under disability, the disability must be expected to last continuously for at least 12 months. To qualify, all other recorded owners of the property, except for spouses, registered domestic partners, parents, children, or grandchildren must meet the criteria in section one. If one other recorded owner does not fall into one of the exempted categories and does not meet the above criteria, then an application will fail.

For criteria two, the person needs to have continuously lived on the property for the previous calendar year. Mobile, manufactured, or modular homes as well as floating homes and house boats do not meet the requirements.

Criteria three includes total household income for the previous year, which means including income of everyone who has lived in that household for the previous year. This excludes minors, full-time students, and renters.

For criteria four, the homeowner cannot have more than 60% of the homes’ fair market value in liens, mortgages, or other encumbrances. The homeowner must have at least 40% equity in the property; if there are multiple owners, the equities of the owners may be combined.

Criteria five means that a reverse mortgage on the property is an automatic disqualifier. This is because reverse mortgages may result in reduced or zero equity.

Generally, applications are accepted beginning October 1 and may be filed until the middle of February. However, these applications are on a first come, first serve basis. Then the applicant completes the application process and submits the application to the California State Controller’s Office. Along with the application, supplemental documents, such as tax returns, proof of age, deeds, and mortgage statements may also be required. It may be beneficial to engage competent legal council to assist in completing this application.

If the application is approved, then the property taxes that are postponed must be repaid and an interest rate of seven percent per year is charged. This interest rate is on a simple interest basis, which is computed each month. As an example, if a homeowner is on the PTP Program and postpones $1,000 in taxes, the interest owed would be $70 per year, or $5.83 a month. Repayment is secured by a lien against the property. Interest will continue to accrue until payments of both interest and the property taxes are fulfilled.

The attorneys at BPE Law have significant experience in assisting individuals with their real estate needs. Should you be considering whether this program is beneficial for you — you should consider retaining competent legal council to assist.

The attorneys of BPE Law Group, PC. have been advising our clients on real estate, business and estate planning issues for over 20 years and have assisted numerous clients in business and real estate matters and have represented clients in thousands of matters involving real estate. If you have questions concerning legal matters, give us a call at (916) 966-2260 or e-mail Keith at kbdunnagan@bpelaw.com. Our flat fee consult for new clients may get you the answers you need for the questions you have.

The information presented in this Article is not to be taken as legal advice. Every person’s situation is different. If you are facing a legal issue of any kind, get competent legal advice in your State immediately so that you can determine your best options.