Prop 60 – Good News for California Homebuyers 55+
Are you over 55 and thinking about selling your home and downsizing, but are you worried about the tax implications when you move? If so, you are not alone. As baby boomers approach retirement age and are left empty nesters, their housing needs are changing along with their lifestyles, but inflation and taxes seem to keep going up and up and up. Fortunately, some relief is available, in the form of Proposition 60.
What is Proposition 60?
Proposition 60 is a constitutional amendment, approved by California voters, that provides property tax relief in certain circumstances. Essentially, what Proposition 60 does is allow qualified property owners to replace their primary residence with a new home of equal or lesser value while maintaining their same tax base. Why, you ask, would anyone want to do that? Wouldn’t my property taxes be lower on a lower value home? Not necessarily. With Proposition 60, what is transferred is the Proposition 13 or “base year value” of the previous home, which can be substantially less than the current market value of either home.
How can I qualify for Proposition 60?
– Both the original home and the new home must be located in the same county.
– Both the original and replacement property must be your primary residence.
– Both properties must be eligible for the Homeowners Exemption or the Disabled Veterans Exemption.
– The seller or spouse residing in the home must be at least 55 years old when the original property is sold.
– The replacement home must be of equal or less value than the current market value of the original home. There is a little leeway within this rule, depending on when the new property is purchased. For a home purchase (or completion of new construction) that occurs 1-2 years after the sale of the original home, the “equal or less” rule may change slightly. Talk to your county assessor for details on this.
– The purchase or completion of construction of the replacement property must be completed within two years of the sale of the original property.
– The application for tax relief must be submitted within 3 years after the purchase (or completion of construction) of the new home.
– This is a once in a lifetime benefit. Neither spouse can reapply.
How do I apply for Proposition 60 tax relief?
Contact your county assessor’s office. The adjuster will determine if the transaction qualifies and will provide you with claim forms.
I heard something about Proposition 90. What is that?
Proposition 90 is an amendment that allows a homeowner to bring the benefits of Proposition 60 throughout California. Each county in California has the option of accepting tax basis transfers from other counties, allowing qualified homeowners greater flexibility when planning a move. Counties are not required to participate and there are currently only 7 counties in California that accept Proposition 90. These counties include Los Angeles, Orange, Ventura, San Diego, Alameda, San Mateo, and Santa Clara. This number is subject to change as counties have the option to revoke their participation.
Proposition 60 and Proposition 90 are large extensions of Proposition 13, which was the initial relief offered to the taxpaying public. If you think either might work for you, check with your tax assessor or county assessor for more details.