Proposition 60 & Proposition 90
In 1986, California voters approved Proposition 60 which serves to protect
Californians over the age of 55, as well as disabled homeowners of any age, from
increases in property taxes when they sell their home and buy another. Proposition 60 allows these homeowners to
transfer the current assessed value of the home they sell, to the home they
purchase, if both homes are in the same county and the new home does not cost
more than the sales price of the old home.
So, if the homeowner has a home with an assessed vale of $100,000,
sells it for $400,000, and purchases another home for $400,000 or less, the tax
basis of $100,000 can be applied to the new home. Property tax savings in this
situation could be about $3,300.
According to a senior staff attorney
with the state Board of Equalization, the tax authorities for all 58 California
counties legally are required to honor Proposition 60.
In 1998, a second
measure, Proposition 90, was
approved to expand Proposition
60. Unlike Proposition 60, Proposition 90 does not necessarily
limit the homeowner from having to sell and buy property within the same county
to receive the tax break.
With Proposition 90, the county in which
the new home is located must participate in a special property assessment
program. Not many counties participate in the program. As of October 1, 2003
only 9 counties authorize use of the program. Those counties are:
Alameda,
Kern, Los Angeles, Modoc, Orange, San Diego, San Mateo, Santa Clara, and
Ventura
HOW DO THESE PROPOSITIONS WORK?
When the senior citizen purchases or constructs a new residence, It Is
not reassessed, if he/she qualifies. The Assessor transfers the factored base
value of the original residence to the replacement residence
Claims must
be filed within three years following the purchase of the replacement residence.
The replacement property must be the owner´s principal residence and
eligible for the Homeowner´s Exemption. The original property, at the time of
its sale, must have been eligible for the Homeowner´s Exemption, or entitled to
the Disabled Veteran´s Exemption.
The seller of the original residence,
or a spouse residing with the seller, must be at least 55 years of age, as of
the date that the original property is transferred.
The replacement
property must be of equal or lesser "current market value" than the original.
The replacement property must be purchased or newly constructed within
two years (before or after) the sale of the original property.
The owner
must file an application within three years following the purchase date or new
construction completion date of the replacement property.
This is a
one-time only filing. Proposition 60/90 relief cannot be granted if
the claimant, or spouse, was granted relief in the past.
In most
Instances, if more than one owner of an original property is eligible for Props
60/90, they must choose among
themselves which one will use the benefits.
Only claimants who have not
previously been granted this property benefit are eligible. This is a one time
benefit.
If the market value of the replacement dwelling slightly exceeds
the 'equal or lesser value' test compared to the full market value of the
original property, the owner cannot receive partial benefit. It is 'all or
nothing'.