How Props 60 and 90 can Benefit You

Property Tax Fear Holding You Back From Downsizing? 

We have a housing shortage in Los Angeles and we also have very little inventory. Why is inventory so low? Because people who have owned a home for a long time don’t want to sell and lose their low property tax base. You may be surprised to know that anyone over 55 is eligible - using prop 60 / 90 - to sell their home and transfer their current tax base to a new home or condo purchase. This is really helpful for anyone who has lived in their home for a long time, and wants to downsize or move, but is afraid of a huge property tax increase on a new home. Read on for a few things to know about these propositions and how they work. What is prop 60 / 90? It’s a tax initiative that allows people 55 and older to transfer their tax from their current home to a replacement property if certain requirements are met. This could result in a significant property tax savings. Prop 60 relates to transfers within the same county and Prop 90 relates to transfers of base value from one in California to another County in California. Participating counties in California have passed ordinances allowing Proposition 90. Currently, the counties in California participating include: Alameda, Orange, San Diego, Tuolumne, El Dorado (will expire in November 2018), Riverside, San Mateo, Ventura, Los Angeles, San Bernardino and Santa Clara.

What is required to qualify? The property must be your primary residence. The replacement home can be purchased or built but it has to be equal or less in value to your existing home. This benefit can also only be used once. The meaning of “equal or lesser value” depends on when you purchase the replacement property. In general, equal or lesser value means:  105% or less of the market value of the original property. Replacement property is purchased within the first year after the sale of the original property.  110% or less of the market value of the original property. Replacement property is purchased within the second year after the sale of the original property. As long as you are buying a home, condo, anything subject to local real property taxes and living in the unit as a primary residence you should qualify.

When do you file or make the claim? You have up to 3 years to file a claim but usually this is something that you will do during your escrow period. The replacement home must be purchased or built within two years of the sale of the original property. This can be 2 years before or after but remember the value can’t be greater than the home you are replacing. You or your spouse must be at least 55 years old at the time you sell the original home.