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Property Tax Savings for 55+

 

If you are a homeowner over the age of 55, and are considering a move, you may realize a significant tax savings, thanks to California tax initiatives known as Propositions 60 & 90.

Simply stated, Props 60 & 90 allow a homeowner, age 55 years or older the ability to transfer the tax base of their current principal residence to a replacement property of equal or lesser value.  Considering that properties are reassessed when sold, the ability to transfer an existing tax base may result in substantial tax savings while enjoying your new residence.

Who Qualifies for Prop 60 and Prop 90?

You or your spouse who resides with you must be 55 or older when the original property was sold and your original property must have been eligible for the Homeowners’ or Disabled Veterans’ Exemption. The replacement property must be your principal residence and must be eligible for the Homeowners’ Exemption or Disabled Veterans’ Exemption.  The replacement property must be of equal or lesser “current market value” than the original property. The “equal or lesser” test is applied to the entire replacement residence, even if the owner of the original property acquires only a partial interest in the replacement residence. Owners of two qualifying original residences may not combine the values of those properties in order to qualify for a Proposition 60 base-year transfer to a replacement residence of greater value than the more valuable of the two original residences.  The replacement property must be purchased or built within two years (before or after) of the sale of the original property.

What is the difference between Prop 60 and Prop 90?

Proposition 60 relates to transfers within the same county (intra-county). Proposition 90 relates to transfers of base value from one county to another county in California (inter-county).

As of December 12, 2017, eleven counties in California have an ordinance enabling the intercounty base year value transfer, and among them is San Diego County.  The other counties include: Alameda, El Dorado, San Mateo, Los Angeles, Santa Clara, Orange, Tuolumne, Riverside, Ventura and San Bernardino.  Since participating counties can change at any time, we recommend contacting the county to which you wish to move to verify eligibility.

How does one file for Prop 60 or Prop 90 tax relief?

You should file an application with the County Assessor where the replacement property is located after both transactions are completed. You can obtain the proper forms from the assessor’s office. (Some counties offer downloadable forms on their website).

If you are thinking of a move and of exercising this tax benefit, we suggest that you consult with your County’s Assessor’s Office to verify your eligibility, and also consult with your tax advisor.

 

Sources: California State Board of Equalization & Los Angeles County Office of the Assessor

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