Chapter 19

A seller or his or her agent is required to deliver the prospective purchaser a disclosure notice that includes both of the following:

1. A notice in at least 12 point type or contrasting color as follows: "California property tax law requires the assessor to revalue real property at the time the ownership of the property changes. Because of this law you may receive one or two supplemental tax bills depending on when your loan closes." "The supplemental tax bills are not mailed to your lender. If you have arranged for your property tax payments to be paid through an impound account the supplemental tax bills will not be paid by your lender. It is your responsibility to pay the supplemental bills directly to the tax collector. 2. A title in at least 14 point type or contrasting color that reads as follows " Notice of your supplemental property tax bill " Keep in mind that including the required information in the mellow - ruse disclosure may satisfy the disclosure notice requirements of this section. Supplemental taxes may be assessed whether a new loan is obtained or an existing loan is assumed to accomplish the purchase of the property or whether the property is purchased without financing.

Income tax withholding

1. Employers must provide all employees with w4 forms 2. Employers mhst file with the IRS A FORM 941 3. The wage and tax statement for all employees showing the total wages paid in the amount withheld during the year is called a form W2 4. The form given two independent contractors is called a form 1099 5. While we are discussing forms the IRS has form number 8300 which is used if a consumer pays $10,000 or more in cash towards a transaction. The sum must be reported to them

There are four principal prerequisites for transforming a mobile home into real property

1. Obtaining a building permit 2. Attaching the mobile home to an approved foundation 3. Recording a document reflecting that the mobile home has been officiated to an approved foundation system 4. Obtaining a certificate of occupancy

The following regulations apply to income taxes in California:

1. The tax brackets for individuals and corporations are different for state income tax purposes than they are for the purposes of federal income taxes 2. There are special rules regarding new residence and their need to father California income tax statement. 3. The impact of federal income taxes is more important than that of state taxes. 4. Income tax laws in California are constantly changing so be sure to turn to a professional if you have questions.

Equalization Factor

A factor (number) by which the assessed value of a property is multiplied to arrive at a value for the property that is in line with statewide tax assessments. The ad valorem tax would be based on this adjusted value.

Street Improvement Act of 1911

A law used by cities and counties for street improvements; a typical example of this is that the local government hires a contractor to improve streets, and then each owner along that street is liable for paying a pro rata share of that cost. The owner might either pay the contractor in full within 30 days, OR the local government might sell bonds to raise revenue to pay the contractor.

Mello-Roos Community Facilities Act of 1982

A law used to finance public services, such as waste treatment plants, parks, and schools, in newly developed areas; this can result in extra-high taxes, in addition to the normal property taxes, and MUST be made known to any buyer before a purchase taxes place.

Proposition 13

Also known as the "tax revolt", it was a Californian ballot measure in 1978 that slashed property taxes and forced deep cuts in government services. Limits the maximum annual tax inflation factor. Meaning that rather than using a pure ad valorem system the property taxes in California are now levied a system that is based on the date of acquisition.

General Tax

Any tax imposed for general governmental purposes. These taxes are called AD VALOREM

Gift taxes

Apply to the voluntary transfer of property from the owner to the receiver. As with estate taxes even though California does not tax gifts the federal government

Documentary Transfer Tax

CA tax for the transfer of real estate at the rate of $.55 per $500 of consideration or fraction there of

Proposition 90

Follows the same general idea but allows the privilege to be applied to A Home purchased in another county if that counties board of supervisors chooses to apply proposition 90

When do real property taxes run

From a fiscal year beginning July 1 until June 30 of the following year

fiscal policy

Government policy that attempts to manage the economy by controlling taxing and spending.

Under proposition 13 if there hasn't been a change in ownership since March 1, 1975 then the 1975 value is considered the initial cash value needed to figure out the annual taxes as explained above.

If there has been a new owner since March 1, 1975 then the new owners full cash value for the purposes of taxes is the sales price or the value of the property on the date of the transfer. In this case a supplemental tax bill would be sent to the new owner. In other words whenever there is a change in ownership the full cash value for tax purposes is adjusted to the current market value of the property. Note that the new owner often ends up as a result of this regulation paying dramatically more real property taxes and the previous owner was paying

Miscellaneous taxes

Including sales and use tax is used in the sale of a business opportunity or mobile home

5 taxes every licencee should be aware of

Property taxes, special assessments, documentary transfer tax, gift and estate taxes, and federal and state income taxes.

Section 205

Section 205 provides for a California resident was served in the military during wartime an exemption of up to $4000 of full value of the property. This applies to property owned by qualifying veterans or the unmarried spouses of deceased veterans. This exemption result in a tax savings up to $40. This exemption may not be applied to a property on which the homeowners exemption has been successfully applied. Under section 205.5 upon the death of an illegible veteran the exemption rights are extended to either the unmarried Spouse or the pension father or mother of the veteran. Note that there are also special rules for disabled veterans. In some cases depending on the veterans income and extent of disability that has resulted from injury or disease incurred during military service disabled veteran may receive an exemption of $40,000, $60,000, $100,000, or $150,000 of the full cash value of his her residence. A veteran may contact either the California Department of veteran affairs or the County assessor for more information regarding the disabled veterans exemption. In some cases a disabled veteran may not be required to pay any property tax

Special Assessment Tax

Tax levied against only the owner's who will benefit from the improvements

Real property tax becomes a lien on

The January 1 that precedes the fiscal tax year

If an owner fails to pay his property taxes when they are due on June 30 then

The tax collector will publish a notice of intent to sell the property to the estate of California because of these unpaid taxes this is not a real sale however it is known as a book sale. In a book sale the property owner still owns the real estate but the owners name is entered into a delinquent account book and this begins a five-year period of redemption. During this five-yearperiod the owner can redeem the property by paying all back taxes, interest, penalties, and any other applicable fees. If the current taxes are paid on time than the delinquent taxes may be paid in five annual installments if after five years the taxes remain unpaid the delinquent property reverts to the state and the former owner loses the title.

In California about half of the states 100,000,000 acres are owned by governments

This means they are exempt from property taxation

NOTE that the following conveyances are considered transfer exclusions:

Transfers between spouses; a transfer of a principal residence of $1 million or less, between parents and children; replacing a property due to government eminent domain; or replacing a property due to disaster. The County assessor will not route reappraise such a property and will not increase the property taxes on it in the situations

Section 218

Under section 218 an owner occupied residential dwelling is entitled to a $7000 deduction from the full appraisal value. (this also applies to an owner occupied unit in a multiple unit residential structure in owner occupied condominium, cooperative apartment, or unit in a duplex) . To claim this California homeowners exemption a person must have been the owner and lived in the home on or before January 1 and must file for the exemption with the assessors office by February 15. Once claimed the homeowners exemption remains in full affect until the title is transferred or the exemption is terminated by the owner. The bottom line savings from the homeowners exemption is $70 ( take The $7000 x 1% tax equals $70)

This tax can be paid in two equal installments

With the first installment due November 1 (delinquent by December 10 or the following business day by 5 PM if December 10 falls on a holiday or weekend) and the second installment due February 1 (delinquent by April 10 or the following business day by 5 PM if April 10th falls on a holiday or weekend) Or if the taxpayer prefers to make a single payment then both installment will be paid when the first installment is due November 1st.

ad valorem

according to value

rate of taxation

fiscal policy

Proposition 60

homeowners 55 years of age and over are allowed to transfer their base-year property tax value to another home of equal or lesser value in the same county and keep their low assessment from their former home.

Estate and inheritance tax

tax on a deceased person's property