In California, real property (any property that is attached directly to land, as well as the land itself) is reassessed at current market value if it is sold or transferred. Thus, when you purchase a home, it is subject to reappraisal and in most cases is assigned a new base tax value. As California real estate historically appreciates over time, the base value generally increases with each reappraisal which results in increased property taxes.
This can be off-putting for home-buyers who have been in their current home for a long amount of time and are used to paying taxes at a lower base tax value. This is especially true for older people who may be living off of a fixed income! In an effort to off-set higher property tax burdens for those looking to move or relocate later in life, Proposition 60 was passed in 1986 and Proposition 90 followed in 1988.
Proposition 60 enables you to transfer your current home’s assessed value to your new home. Basically, you are able to purchase a new property, yet still pay the property taxes at the same rate you pay on your current property.
There are a few requirements to that you must meet in order to use Prop 60:
- You or your spouse must be at least 55 years of age when the original property was sold.
- You may only use the transfer once.
- The current property and new property must be within the same county. **
- The new replacement property must be of equal or lessor value than the property sold.
- The replacement property must be built or bought within 2 years of selling the original property.
- Your original property must be your primary residence and have been eligible for the homeowners’ exemption or disabled veterans’ exemption.
- Your replacement property must be your primary residence and must be eligible for the homeowners’ exemption or disabled veterans’ exemption.
**Prop 90 is essentially an extension of Prop 60 – it allows you to transfer your base tax value from one county to another (inter-county). Currently, the following ten counties in California have an ordinance enabling the intercounty value transfer:
Alameda, Los Angeles, Riverside, San Diego, Santa Clara, El Dorado, Orange, San Bernardino, San Mateo, Ventura. It is important to note that these counties are always subject to change, so be sure to contact your designated county to verify eligibility.
Important factors to note:
- If you qualify for Proposition 60/90 benefits, you still need to file for a Homeowners’ Exemption on the replacement property – the exemptions are NOT granted automatically
- A claim must be filed within 3 years of purchasing or completing new construction of the replacement property
- You cannot give your original home to a child or grandchild and still get Proposition 60/90 benefits – an original property must be sold and subject to reappraisal at full market value
To reiterate: if you are over the age of 55 and are looking to move into a new home, Propositions 60&90 could allow you to maintain your current tax base value and save you money every year!
As always, contact us if you would like more information or are interested in buying or selling. We love not only saving our clients money, but also educating them in HOW we do so 🙂