To say that the Woolsey Fire was a disaster is a gross understatement. The amount of property damage— both to structures and the beautiful landscape burned in Los Angeles County—was staggering. Presently, the value of the 670 homes destroyed in Malibu alone is estimated at $1.6 billion. The Woolsey Fire destroyed about 100,000 acres and 1500 structures. This, of course, does not take into account the residents whose homes were saved or spared but still have substantial fire damage and find their community in ruins.
In the face of such devastation, what relief is available? First and foremost, a cautionary word: Beware of scam artists. Your insurance settlements may be the only money available to either move, repair, or rebuild.
What follows is general information and not intended as specific legal advice as you should always consult competent professionals before making your final decisions.
Property Tax Relief – The County of Los Angeles has a web page dedicated to answering questions regarding property tax relief: lacounty.gov/lacountyrecovers/property-tax-and-assessments. It provides an excellent source of information, especially regarding filing a “Misfortune and Calamity” claim. There is a 12-month window in which to file the claim on form ADS-820 (California Revenue & Tax Code §170). Note that the damage to the “real property” may include not only the value of the destroyed or damaged structures, but the diminution in value of the land. Homeowners in the same community could consider banding together to coordinate their submissions, supporting documentation, and possible cost reduction.
Refund Claim – You may also consider filing a ‘Claim for Property Tax Refund’ for the taxes you paid for the past fiscal year due to the damage or destruction of your property. The form for the Property Tax Claim for Refund is found on the Los Angeles County Assessor’s website.
Seniors – You may decide to take your insurance proceeds and move to another home in California rather than rebuilding on the destroyed or damaged site. If you are age 55 or over, California Revenue & Tax Code §69.5 provides that you may sell your principal place of residence and transfer its base year value to a replacement dwelling of equal or lesser value if the new principal residence is purchased or newly constructed within two years of the sale. This does not require that you sell your initial residence before you purchase the replacement. It only requires that the sale and replacement occur within the two-year window.
If you decide to move out of the county where your property is located, Proposition 90 provides for the transfer of base year value between counties. You should confirm with the county to which you want to move that they will allow the base year transfer. These rules are very specific, and you should receive guidance from qualified real estate counsel.
2018 Income Tax – As for your federal and California income tax filing for 2018, federal Publication 547 “Casualties, Disasters and Thefts” and Tax Topic 515 should be your first source for understanding how to claim a disaster loss. Undoubtedly, by the time this article appears, there will be specific guidance from the Internal Revenue Service and the California Franchise Tax Board on disaster losses due to the Woolsey and Camp fires.
Karl Knickmeyer, Attorney at Law
2945 Townsgate Rd., #200
Westlake Village, CA 91361
C: 310.717.7245 – F: 866.304.9279