If you are 55 years or older and are considering taking the big step of moving into a new home in California, whether to downsize or maybe to explore a new community, Propositions 60 and 90 can make that move easier on your pocket book. Proposition 60 is a constitutional amendment that allows the transfer of the base year value of your current primary residence to your newly acquired property of primary residence. Why is this significant and how can you benefit?
Proposition 60 is an intra-county amendment (in other words, moving within the same county), and it builds on Proposition 13. It allows for people the age of 55 and older to transfer their base year value to the newly acquired home as long as the newly acquired home will be the primary residence and is eligible for homeowner’s exemption or disabled veteran’s exemption. This is meant to prevent a shocking increase in property taxes and work as an incentive for people 55 and older to feel comfortable in their experience of reentering a perhaps, vastly changed real estate market.
If you are thinking about moving to a different county in California, Proposition 90 is an inter-county amendment and it’s got you covered, if the county you are moving from and to are listed below:
• El Dorado
• Los Angeles
• San Diego
• San Mateo
• Santa Clara
For Propositions 60 and 90, the transfer of the base year value must happen within a two-year period. This means that the homeowner must sell and buy a new residence within a two-year period. The replacement property that is acquired must adhere to the “equal or less than” current value rule. This limits the current value of the replacement home to be equal to or less than the current value of the former residence, even if the you are buying only a partial interest in your new primary residence.
Propositions 60/90 can only be filed once, even if you and your spouse who resides with you experience divorce or even upon the death of you or your spouse. One exception to this one time only rule is if you filed once with the eligibility of age and then if you became disabled, you may file again due to disability.
How does this work?
Thanks to Proposition 13, your home’s appraised value is determined at the time you purchase it and increases on that value are limited to a maximum of 2% through that same proposition. Through Propositions 60 and 90, you can transfer that same level of tax obligation so long as your new property is of equal or lesser value than the original property sold.
So what would this look like?
Say you bought a home 10 years ago for $300,000, meaning its current assessed value is about $365,698 today. Assuming your tax rate is around 1.25%, you’re paying $4,571 in taxes each year. If you sell that home for $700,000 and move into a new place valued at $650,000, you would still only pay the tax obligation for a $365,698 house (and 2% more each year).
Without Propositions 60 and 90, you would be paying $8,125 each year in taxes instead of $4,571. This makes moving for seniors much cheaper and feasible, especially for those who rely on fixed income such as Social Security and nest egg returns.
How do I file?
After you’ve finalized the sale of your old home and the purchase of your new one, fill out the claim form BOE-60-AH, Claim of Person(s) at Least 55 Years of Age for Transfer of Base Year Value to Replacement Dwelling, which you can obtain from your local County Assessor’s office. http://www.boe.ca.gov/proptaxes/faqs/propositions60_90.htm
If you would like to obtain more information feel free to call us 619.794.0218 or contact us via email.