As you approach your golden years you begin to think about your future needs and dreams. These dreams possibly involve the thought of selling your current home to downsize into a smaller or more updated space for new adventures. While initially, you consider this to be a great idea, you quickly begin to realize that although you can afford the transition into a new home based on the price of the property; you may not be able to afford or expect the exorbitant property taxes that you would be responsible for by moving into a new home in the state of California.
Many senior citizens feel discouraged and disheartened when they first consider the impacts that current California property tax rates will have on their ability to move into a new property. However, if you or your spouse are aged 55 or older there is a way for you to successfully transition into a new home while still maintaining the ability to pay the same affordable property taxes you are currently enjoying under California Proposition 13. John Rydquist gives a useful and clear explanation of how Chapter 13 applies when selling and purchasing a new home, in his article Considering Downsizing, Retirement or Relocation?
Proposition 60 and 90 – What Is It?
These two constitutionally based tax initiatives give California seniors who meet certain requirements, the ability to sell their current primary residence and transfer their trended base year value used to calculate property taxes into their new primary residence to calculate their new property taxes. Depending on when your original home was purchased, and how long you have resided in your current residence, this may translate into substantial savings in property taxes for your new property. If you are selling and buying in the same county, you will take advantage of Proposition 60. It is a relatively simple process. If the home you are buying is outside the county, you would use Proposition 90 for the intercounty transfer of trended base value from one county to another. However, the curveball here is your options are the ten counties listed below that participate in Proposition 90.
All pertinent information for this article has been based on the guide to Proposition 60 & 90 provided by the Los Angeles County Office of the Assessor at:
The 10 counties that allow for intercounty base year value transfers are:
- San Mateo
- Los Angeles
- San Bernadino
- Santa Clara
- San Diego
Proposition 60 and 90 – Who Qualifies?
You now have a more clear understanding of the enormous benefit of claiming tax relief through both Proposition 60 and 90 when considering a move to a new home, but what other requirements are needed to meet the necessary qualifications under the law.
In order to qualify for this tax relief, you or your spouse must reside in the same primary residence and one of you must be age 55 or older. Once you meet the age qualification you are entitled to transfer the trended base value from your original home to your new residence, so long as the new home is of equal or less value than the original home. You may purchase a home that already exists or you may purchase a replacement home that will be newly constructed. It is required that both your original home and your new home are your primary residences in order to apply these tax savings and you must be eligible for a Homeowner’s Exemption or Disabled Veteran’s exemption on both properties.
To take advantage of this one-time benefit to claim this reduction in property taxes for your new property, you must ensure that you will be buying or completing the construction of your new home within 2 years of the sale of your original property, otherwise, you will lose the opportunity to claim this tax relief. In order to apply the trended base value to the property taxes for your new home, you must file a claim within 3 years of the purchase of your new property or from the completion of construction as a newly constructed home.
As we grow older our needs evolve and change as well as our desires. It is not necessary for you to continue to live in a home that does not meet your needs, by claiming relief through Proposition 60 and 90 you can move to a new property without fear of losing the tax benefits for your current property or facing excessive property taxes for your new home.
This is Part 1 of a two-part series that will expand on Proposition 60 and 90 and the factors to consider when claiming this tax benefit.
For a no-hassle consultation, contact John Matukas and put his 30 years of experience to work for you.
About the Author
John Matukas has been in real estate for over 25 years. John took up real estate as a profession back in Boston and moved to Los Angeles. A great work ethic that brought John success in Boston has translated to the same success in Los Angeles. He is a Certified Probate Realtor and you can visit his Probate Website at www.ezLAmove.com Email me at [email protected] or call him directly at 323-377-4961.