California’s Property Tax Postponement program aids low-income seniors
For Californians who are struggling to pay property tax bills that are rising ever higher due to the increasing number of local bonds and parcel taxes, help may be available.
Property taxes are held in check by Proposition 13, passed by voters in 1978. It limited the annual increase in the assessed value of a property and cut the tax rate to 1 percent statewide. Prop. 13 has helped millions of Californians keep their homes by keeping property taxes predictable and affordable.
But keeping property taxes in check doesn’t always keep property tax bills in check. That’s because extra charges for voter-approved debt or special taxes can be added to property tax bills, and those can really add up. This can become a terrible burden for homeowners who live on fixed incomes, and may even force some to sell their homes because they can’t afford to pay the taxes.
Fortunately, the state of California has restarted the Property Tax Postponement program, allowing homeowners who are at least 62 years old, are blind or have a disability to defer the current-year property taxes on their principal residence if they meet certain criteria.
Before the Legislature ended the Property Tax Postponement program in 2009 amid budget cuts, nearly 6,000 homeowners throughout the state were able to benefit from it. Many had been in the program for 20 years or more and the majority were over 70 years old. In the last year of the program before it was cut, 208 people who claimed its assistance were over 90 years old.
In 2014, legislation was passed to restore the program, and it started up again in the fall of 2016.
To qualify, applicants must have 40 percent equity in their home and an annual household income of $35,500 or less. Other requirements also apply. For example, homeowners who have taken out a reverse mortgage are not eligible.
Homeowners who are accepted into the program may defer their current-year property taxes. It’s actually a loan from the state, with an interest rate of 7 percent per year. The state places a lien on the property until the loan is repaid, but repayment is not due until the homeowner moves or sells the property, transfers the title, refinances, defaults on a senior lien, obtains a reverse mortgage or passes away.
The Property Tax Postponement program is run through the office of the state controller. Applications for 2018-2019 will be accepted beginning Oct. 1 and ending Feb. 10. The funding for the program is limited, so not everyone who qualifies may be accepted. Those who apply early are most likely to get in, as applications are processed in the order in which they are received.
The property tax postponement applies only to the current year’s taxes. Prior-year taxes that are owed are not eligible for deferral.
Homeowners must reapply every year in order to defer their current-year taxes. Even for homeowners accepted into the program, renewal is not automatic. Everyone must apply and requalify annually in order to postpone each year’s taxes.
The good news is that all taxes are deferred under the PTP program, including parcel taxes and charges for voted indebtedness.
One note of caution: Homeowners who have taken out loans under a Property Assessed Clean Energy (PACE) program are eligible for the Property Tax Postponement program, but the PTP defers only taxes, not loan payments. Those homeowners are still responsible for making the payments on their PACE, HERO, Ygrene or similar loans, which continue to be billed on property tax bills even if the property taxes have been deferred through the PTP program.
For more information and to apply for the Property Tax Postponement program, visit the state controller’s website at www.sco.ca.gov, email firstname.lastname@example.org, or call 800-952-5661.
Jon Coupal is president of the Howard Jarvis Taxpayers Association.