If you live in California and over the age of 55 you can effectively reduce your property taxes when buying a new home.
In California when you buy a new property you are subject to reappraisal at a new base tax value. Since real estate historically appreciates over time, your new base tax rate value will increase and therefore your property taxes will also increase.
Proposition 60 and 90 are here to help 🤗
Proposition 60 allows you to transfer your current property's assessed value into a new replacement property. In other words, you would be able to buy a new property, yet still, pay the same property taxes.
Proposition 90 allows you to transfer tax value within the same county. Proposition 90 expands Proposition 60 by allowing you to transfer you base tax value from one county to another.
If you bought a home 20 years ago for $200,000, at a tax rate of 1.25%, your property taxes would be $2,500 annually. Your tax rate can only increase by 2% annually (Proposition 13), therefore your property tax payment would be $3,642 today.
If you decided to sell, let's say you were wanting to downsize.... if you sold your home for $650,000 and purchased a home for $500,000, your new home would be subject to reappraisal and your new property taxes would now increase to $6,250 from $3,642.
For many Seniors, this tax increase makes it impossible to live comfortably when their income does not increase. With Proposition 60, you can transfer your current property taxes at the $3,642 annually to your new property.
This is how Proposition 60 helps you save money!
Proposition 60 Requirements ✅
1. You or your spouse must be at least 55 years of age when the original property is sold.
2. The original property and new property must be within the same county.
3. You can only use the transfer once in your lifetime.
4. The new replacement property must be of equal or lesser value than the original property sold.
5. The replacement property must be built or bought within 2 years of selling the original property.
6. Your original property must be your primary residence and have been eligible for the homeowner's' exemption or disabled veterans' exemption.
7. Your replacement property must be your primary residence and must be eligible for the homeowners' exemption or disabled veterans' exemption.
❓What does "equal or lesser value" of a replacement mean?
The market value of the replacement property as of the date of purchase must be equal or less than the market value of the original property on the date of sale. The meaning of "equal or lesser value" depends on when you purchase the replacement property. In general, equal or lesser value means:
100% or less of the market value of the original property if a replacement property were purchased or newly constructed before the sale of the original property, or
105% or less of the market value of the original property if a replacement property were purchased or newly constructed within the first year after the sale of the original property, or
🔥 Hot Tip 🔥: You do not need to wait 1 year to use the increase if you close on your replacement property the very next day within that year.
Example: You sold your original home for $500,000, you would be able to purchase up to $525,000 (5% higher than your original sale) and keep your original taxes if you meet all requirements.
This is a great tool if the qualified county you are moving to is a little more expensive.
110% or less of the market value of the original property if a replacement property were purchased or newly constructed within the second year after the sale of the original property.
Proposition 90 allows these counties to transfer your base tax value from one county to another.
Below are the participating counties.....
|Alameda||El Dorado||Los Angeles||Orange||Riverside|
|San Bernardino||San Diego||San Mateo||Santa Clarita||Ventura|
🤷♂️ If a county is not on the list, you may call the county you are interested in and ask them.
Proposition 60 can only be used one time except....
As a person over the age of 55, you can only use the benefits of Proposition 60 or 90 once in your lifetime. However, there is ONE exception via Proposition 110 which says that if you received a relief for age and subsequently become severely or permanently disabled and have to move because of the disability, you may exercise this relief a second time for disability.
How to get more information about Proposition 60 & 90 💁♂️
As you see, these two propositions can provide tremendous relief to California homeowners nearing retirement. However, there are a lot of requirements and rules to adhere to. Please click here on MORE INFORMATION to view the requirements and a list of questions. You can also reach Ventura County Tax Assessors office at 805-654-2181. They have their own group that assists with prop 60 & 90 questions.
If you have any questions about your property or how these propositions can help you, feel free to give us a call.
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