"1. Will there be a reassessment as soon as the buyer gets the keys ? "
Not really. The sale/sales price will be recorded, and then it may be up to around 6 months before you are sent a one-time Supplemental tax bill covering the increased value established by the sales price.
"2. What will be the new property taxes ? "
1.25% is a common "quesstimate"; however, your effective property tax bill actually consists of three separate levy categories: General Tax Levy, Voter Approved Indebtedness and Direct/Special Assessments.
"3. Is there any way to reduce property taxes in this scenario ?"
Not initially and not until you can prove the market value of the home has dropped via a Prop 8 appeal.
Please review additional information covering your questions at:
"Estimating Property Taxes in CA"
1. Will there be a reassessment as soon as the buyer gets the keys?
A: Yes. The property will be reassessed at closing.
2. What will be the new property taxes?
A: As stated below, $1.25 per thousand dollars of purchase price. Taxes for a $3,000,000 purchase price will be approximately $37,500 per year. Your transaction will more than likely be taxed on the previous rate, and then you will receive a Supplemental Tax Bill a few months down the road which will not only recognize the new tax rate, it will also collect back taxes due for the balance owing from close of escrow until the time of the notice.
3. Is there any way to reduce property taxes in this scenario?
A: Taxes are directly tied to purchase price. Your only solution is to lower the price. If that is not an option, then the answer is â€œNO.â€
There are ways to keep the previous sellers property tax assessed value. If you are related to the seller in specified ways (parent to child, grandparent to child, etc.) then the existing assessed property tax value can be transferred to the new buyer. There are limited other ways to keep the assessed value low - but few properties in Los Altos Hills fall under those special property tax rules.
The reason the seller is paying much lower property taxes is that they fall under proposition 13. Google "California Proposition 13" for more details.
The amount of your of new taxes should be discussed with your tax advisory. Brokers and Realtors are prohibited to give legal or tax advice because they don't have such a licensing.
Yes, there is the way how to reduce or eliminate your immediate tax exposure, and it can be discussed closely with the realtor of your choice.
The property tax will be based on the purchase price. Have your Realtor look in the tax records for the tax rate and any Special Assessments. This will allow you to calculate the yearly taxes.