Two California initiatives provide senior residents with property tax savings. If you are over 55, find out how to transfer your property tax rate to a new home!
California has a program where senior residents can roll-over low property tax rates to a new home, a practice that saves homeowners thousands per year. For example, my grandparents purchased their home in the 1960s for about $80,000, paying about $1,000 per year in property taxes. After 40 years, the same home was worth about $400,000. If my grandparents, who were by then senior citizens, wanted to sell that house and purchase a new house for $400,000 or less, Propositions 60 and 90 would allow them to transfer the $1,000 property tax rate (known as the trended base value) from their original home to their new $400,000 home. Standard property tax on a $400,000 home is about $5,000. The transfer of the trended base value in this case would have saved my grandparents $4,000 per year in property taxes.
Propositions 60 and 90
Propositions 60 and 90 are constitutional initiatives passed by California voters. They provide property tax relief for persons age 55 and older by preventing reassessment when a senior citizen sells his/her existing residence. In most cases, these constitutional tax initiatives allow senior citizens to transfer the trended base value from their current home to a replacement property if certain requirements are met. This may result in substantial tax savings.
If you or your spouse that resides with you are age 55 or older, you may buy or construct a new home of equal or lesser value than your existing home and transfer the trended base value to your new property. This allows the senior citizen to continue to pay approximately the same amount of annual property taxes as before. The Assessor transfers the factored base value of the original residence to the replacement residence. For legal reference, see Section 69.5 of the Revenue & Taxation Code.
The replacement property and the original property, at the time of its sale, must have been eligible for the Homeowners' Exemption or entitled to the Disabled Veterans' Exemption
This is a one-time only benefit. You must buy or complete construction of your replacement home within two years of the sale of the original property. Both the original home and the new home must be your principal place of residence.
How To Claim Your Benefits
A claim must be filed within three years of purchasing or completing new construction of the replacement property. If a claim is filed after the three-year period, relief will be granted beginning with the calendar year in which the claim was filed. Once you have filed and received this tax relief, neither you nor your spouse who resides with you can ever file again.
What is the difference between Proposition 60 and Proposition 90?
Proposition 60 is available when both the original and replacement properties are located within the same county such as Los Angeles County.
Proposition 90 is available when the original and replacement properties are located in different counties. However, not all counties have passed an ordinance allowing Proposition 90. Currently, those counties accepting Proposition 90 are Alameda, San Diego, Santa Clara, Los Angeles, Orange, San Mateo and Ventura. This list is subject to change. Please check with the local county assessor before purchasing a replacement property.
For additional information, call the Assessor’s Proposition Unit at (213) 893-1239.
Claim forms are available at all of the Assessor’s Offices and may be downloaded at the Assessor’s website.
Eligibility Requirement Checklist
- 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.
- Your original property must have been eligible for the Homeowners’ or Disabled Veterans’ Exemption.
- You, or a spouse residing with you, must have been at least 55 years of age when the original property was sold.