Kelly, Other/Just Looking in San Francisco Bay Area

Should I expand or buy a larger home? Prop 13 keeps me stuck in my home.

Asked by Kelly, San Francisco Bay Area Thu Aug 30, 2007

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Many of my clients (I'm an architect) come to me with your same scenario. They are not old enough to take advantage of prop 60 or 90, and need more space. If you remodel your home, the portion of the construction price that adds square footage to the home is added to your base value of your property tax. The County uses it's own calculation for the cost per square footage which is usually less than what you actually paid for the addition.
There is a website that is designed to help people make the decision on whether to move or remodel. It's: http://www.remodelormove.com/index.cfm .
You can also call me or email me directly if you want to talk in more detail outside this forum. Just click on my name to get my information. I wrote an article in the San Jose Mercury answering a similar question. Should I post it here?
2 votes Thank Flag Link Thu Aug 30, 2007
Jennifer Kre…, Home Seller in 95124
MVP'08
Hi Kelly. Yours is a very unfortunate situation. Not only have I had clients with a similar problem, but my parents have also decided to stay in their home because of property taxes. I imagine you have a very low tax base and thus cannot afford to pay taxes on a new purchase? Before you make your decision whether to expand or move, make sure you look into props 60 and 90. These two propositions were designed for seniors who would like to move but are otherwise trapped by their low tax base. Proposition 60 allows you to move within your county to a property of equal or lessor value and transfer your low tax base to that new property. Proposition 90 allows you to purchase in a cooperating county within California (the cooperating counties change periodically so you need to check with the local tax assesor's office for a current list) and transfer you tax base to that new home. Of course there are a few restrictions, guidelines, and requirements that need to be met, but this is definitely something that you need to look into before making your final decision. Don't start construction yet! Like I said, I have personal and professional experience with this issue so don't hesitate to contact me if you would like further guidance.
Web Reference: http://www.vanfenton.com
2 votes Thank Flag Link Thu Aug 30, 2007
Hi Kelly:

To add onto what Mary said, Prop 60 and Prop 90 are designed for seniors - as long as one of the owners is over age 55 when the home is sold. Another fine point is that it allows you to purchase upto 105% of the sale price of your current home if you close on your new home between day 1 and day 365(6) or up to 110% between 1 year and 1 day to up to 2 years after you close on the sale of your home.

Unfortunately, that's not much room to play with; and it also limits you to the few counties that accept prop 90.

http://www.sylviasellsmarin.com/Prop9060

To combat that, there are certain initiatives being considered now, one is to expand prop 90 counties (perhaps to the whole state), another is to allow moving up where the increased tax base will be the difference between the value of your sold home and the new home you are going to purchase; so those are the good news.

If you decide to buy a larger home, keep in mind that you might be able to write of part of the increase.
In the mean time, whether you expand or buy a larger home will probably depend on your goal.

Do you like the current location you are in? Can you see yourself stay there for a long period of time? Can you put up with the inconvenience of a major remodel, especially if you have to change the footprint or add another lever? Will the zoning allow it? Does this make your house the most expensive house on the block and how will the resale value be? Will the design plan fit your needs or do you really prefer to have something totally different? Will the extra living space take up your outdoor space? All these can be part of your consideration.

The decision might not be as easy as just money that’s involved.

Good luck and please let me know if I can help you in anyway. Depending on where you are, we can also come out and help you decide the kind of remodel you might want to do.

Thanks,
Sylvia
1 vote Thank Flag Link Thu Aug 30, 2007
Sylvia Barry,…, Real Estate Pro in Novato, CA
MVP'08
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I guess the question in my mind is why do you need more space? If you can be clear on that, it may be that renovation (without expansion) of your home will solve your problem.
0 votes Thank Flag Link Fri Sep 28, 2007
Expansion of a home in San Francisco has serious difficulties and issues associated with it. Depending on your neighborhood, you can actually spend YEARS in neighborhood battles, struggling with the Planning Department, etc. I am an architect and have done many such projects in the City. This is not an easy go, but many people are in your exact same situation. I strongly suggest you find a qualified residential architect who can advise you about how to proceed and what the process will look like here in SF. GOOD LUCK!!
Web Reference: http://ww.group41inc.com
0 votes Thank Flag Link Fri Sep 28, 2007
Kelly.....Are you looking to remain in San Francisco? Perhaps you could find a larger home for the same or less money out of the city and transfer your tax base. Under prop 13 you can purchase at the same value or up to 5% more.
Web Reference: http://pamwinterbauer.com
0 votes Thank Flag Link Thu Aug 30, 2007
Pam Winterba…, Real Estate Pro in San Ramon, CA
MVP'08
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Kelly
Before I give any more answers I am curious about why you need a larger home? The circumstances might help us guide you with better alternatives.

One thing to remember is that the Prop 60/90 option is only doable ONE TIME. Depending upon your age and situation there might be some other options.
0 votes Thank Flag Link Thu Aug 30, 2007
Keith Sorem, Real Estate Pro in Glendale, CA
MVP'08
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Mary's answer is correct as far as your options if you age qualify. I think that if your thinking of expanding you probably are not of the age that either of those propositions would help.
My wife and I went through a remodel 2 years ago - kitchen and additiona downstairs. I don't recommend it. We had a good architect and a good contractor but it still got ugly at the end. When I was in construction we used to joke that we should have a marrige counselor on staff.
When I work with clients facing this issue, and I have many times, I adivise that you explore what you want to do. In other words where do you want that you don't have know. Then find out how much that would cost and think REALISTICALLY what will it be like to go through the process. Then see if you can find a house that will give you what you are looking for. So far in my experience the clients I've worked with have opted to move up rather than remodel and they are very happy with the decision they made, taxes and everyting. In fact one expressed it this way "Money is important but your emotional well being is much more important"
Web Reference: http://www.JedLane.com
0 votes Thank Flag Link Thu Aug 30, 2007
Jed Lane, Real Estate Pro in San Francisco, CA
MVP'08
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