from the U-T:

prop 60Greg and Sandra Seyler thought they were doing everything right when they bought a home for retirement in Alpine last year and then sold their Santee home earlier this year.

Greg, 54, who earns a living washing windows, and Sandra, 56, a dog trainer, wanted to take advantage of Proposition 60, a 1986 state law that permits seniors, and later the disabled, to keep their low tax bills if they sell one property and buy another for a lower amount.

But the county assessor’s office denied their request because its appraisers believe the Seylers sold their house for more than it was really worth. The county believes the couple owe more than $5,500 in property taxes rather than the $2,000 they had planned on.

If the county prevails, Seyler predicts, all seniors with the idea of taking advantage of Proposition 60 should think three times before doing so.

“I’d never recommend this to anybody,” he said.

Assessment services chief Jeffrey Olson, who is running for county assessor next year, disagrees, saying the Seyler case is so rare that homeowners should have no worries when it comes to taking advantage of this tax perk.

“I don’t think there should be a fear factor,” Olson said. “This is a very rare occurrence, and if they have any questions, contact the assessor’s office.”

Asking questions is what Seyler did, and he says the more he asked, the more confusing his prospects have become.

The Seylers listed their 1,400-square-foot house in fall 2008 with a real estate agent and eventually sold it through Craigslist for $480,000 in February to Glenn and Lori Turgeon. The Seylers provided financing to the Turgeons on a 20-year, market-rate basis.

Because Sandra Seyler was 55, she and her husband were eligible to transfer their Proposition 13 assessment of $165,523 into the house they had bought in April 2008 for $475,000. That would have meant their taxes this year would be $2,008.

But in October, the Seylers learned that the county would not recognize the Turgeon price as legitimate, claiming the Turgeons overpaid by $100,000 for the property, based on comparable sales in the area. Such a ruling automatically meant that the Seylers’ new house would be valued at its purchase price for tax purposes, and their tax bill would be $5,505.

“I never would have moved to begin with if you had said I can’t sell my home for more than $375,000,” Seyler recalled telling Olson in one of many calls and meetings they have had in the past few weeks.

Olson said that in his more than 20 years in the assessor’s office, he has come across only one or two instances like the Seylers’, and in those cases, the assessment appeals board eventually ruled in the taxpayers’ favor. But he said the law requires him to correctly assess the homes in question, regardless of the impact on the county or the owners.

“If they paid too much, we cannot assess it for an extra amount because we want to prop up the tax rolls,” Olson said of the Turgeons’ purchase. “Our responsibility is to determine the market value. Whether it’s higher or lower doesn’t matter.”

When the Seylers learned of the county decision, they immediately filed an appeal with the county Assessment Appeals Board. There are four three-member boards that meet weekly on a rotating basis to resolve disputes between the assessor and property owners. Olson said he intends to speed up the process to have the Seyler case resolved by February if he and the couple cannot reach a settlement. The Seylers plan to pay the higher bill and hope for a refund later.

Speed is of the essence, because under Proposition 60, the Seylers must buy a replacement property within two years before or after the sale of their residence to retain their low tax basis. Olson said they will have plenty of time to buy another house for $375,000 or less. But Seyler said he can’t afford to buy a second home without selling his present residence and doubts he can find something suitable at that price. He is counting on keeping the low tax basis as he looks toward retirement.

“They’re throwing up a bunch of smoke screens,” he complained, saying county appraisers are raising all sorts of charges, from coercion to kickbacks. “They’re being bullies. … They won’t answer me.”

Olson described Seyler as “a real nice guy” but maintained that his hands are tied. “This is how we resolve disagreements,” he said. “There are always going to be disagreements — we’re not going to make everyone happy.”

The tricky thing in this case is the definition of “market value” — not just the cash amount that exchanged hands, but the terms and conditions involved that may have inflated the price.

For example, Olson said, if the seller financing is less costly than commercial financing, then the difference would be reflected in a reduced market value. If the seller covers closing costs, that amount would come off the top.

Likewise, if the owner sells to a relative or someone else in a non-arm’s-length transaction, then the stated price would not stand. And if the price is substantially more than comparable sales elsewhere, then the value would need to be adjusted.

But Seyler said he used a tax attorney and advice from the assessor’s office to make sure the price was less than the home he had bought in Alpine. He did not know Turgeon; he arranged the mortgage terms to comply with Internal Revenue Service guidelines; he advertised the home on the open market; and he set the price at what he thought was a premium level compared with what he called “blue collar” homes around him.

“They may not like it, but that’s just too bad,” he said.

The house includes a pool, lush landscaping, photovoltaic cells to generate electricity and an 800-square-foot workshop. It has been upgraded inside to the point that Glenn Turgeon said it was move-in ready, needing just a bit of paint.

“Everything’s been done,” Turgeon said. “The other properties I’ve seen — there was a lot to be done on those houses. There was no lawn; no landscaping was done. There was a lot of money still to be put into them.”

Ironically, the county stands to lose money if it wins. Beyond the cost in staff time in dealing with the Seylers and preparing a case before the Assessment Appeals Board, there will also be lower collections from the Turgeons, whose tax bill is currently set at the $375,000 basis. The county would also lose out if the Seylers have to sell their Alpine home and buy another for $375,000 or less to keep the low tax basis carried over from the Santee house.

But that’s not at issue, Olson said: “The key is getting it right.”

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