California’s disabled Veteran’s property tax exemption is a little known and highly beneficial tax savings program for families that have already sacrificed so much for our Country.
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Who Qualifies for Disabled Veteran Property Tax Exemption?
The California Constitution and Revenue and Taxation Code section 205.5 provides for a property tax exemption for the home of a disabled veteran or an unmarried spouse of a deceased disabled veteran.
There is a basic exemption or a low-income exemption available to a disabled veteran who, because of an injury incurred in military service:
- is blind in both eyes, or
- has lost the use of two or more limbs, or
- is totally disabled as determined by the United States Department of Veterans Affairs (USDVA) or by the military service from which the veteran was discharged.
An unmarried surviving spouse may also be eligible if the service person died as the result of a service-connected injury or a disease incurred while on active duty in the military.
The disabled veterans’ exemption has no personal wealth cap requirements, although annual income verification is required if Veteran is using the low-income exemption.
This property tax exemption is only available on a veteran’s principal place of residence.
The issues regarding these exemptions are complex, and the eligibility requirements are specific. Your local assessor’s office should be consulted for detailed requirements regarding these exemptions.
How California property taxes are assessed
Property taxes in California are based on the purchase price of the home. California’s Proposition 13allows property taxes to marginally increase for inflation each year, but will not be re-assessed until the title transfers on the home.
For instance, if you purchased a home 15 years ago for $100,000 – even if the home is worth $200,000 today, the property taxes are assessed off the original $100,000 value increased slightly over the years.
This is different than many States that will reassess property values yearly and adjust taxes according to current market value.
The disabled veteran’s property tax exemption is subtracted from the assessed value of the property – then taxes are assessed on the lower value.
How much is the tax exemption for disabled Veterans?
As of January 2011, the tax exemption for California veterans is as follows:
No income restrictions: $116,845.00
Low income* restriction: $175,269.00
*Low income limit for 2011 is $54,470.00
Calculating property tax exemption
Let’s say you own a home with an assessed value of $150,000.
If you do not meet low income guidelines, your property tax exemption would be $116,845.
Subtract your tax exemption from the current assessed value:
$150,000 Assessed value – subtract
$116,845 – this leaves an assessed value of $33,155.
As an example if your County property taxes are 1% of the assessed value, in the scenario above, your property tax liability would $1,500 a year, or $125.00 a month added to your mortgage payment without the exemption.
As a disabled Veteran in California, using the post exemption assessed value, your property tax liability would be reduced to $331.55, or $27.63 a month added to your mortgage payment with the exemption.
That would reduce your mortgage payments by almost $100 a month!
Using the same scenario above except you qualify for the low income exemption would leave you with zero property tax liability because the exemption would exceed the assessed value of your home.
Additional Resources and Links:
If you have questions about claiming this property tax exemption or how you can use this exemption to assist with the purchase of a new home, leave me a comment or question below, use Live Chat or shoot me an email and I’ll get right back to you!