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'.