Selling a Home with Proposition 13 Tax Relief – Propositions 60 & 90 #tax #relief
Prepared By: Melissa C. Marsh. Los Angeles Business Attorney
Written: December 2004 – Last Updated: February 2010
Proposition 60 allows seniors age 55 or older to sell their existing residence and to buy a replacement residence of equal or lesser value within two years in the same county without being subject to a property tax increase. In fact, the old proposition 13 assessed valuation from the initial home will transfer to the new replacement property. In most situations, this transfer is allowed only once in your lifetime and only one spouse must be age 55 or older. If the two spouses desire to split and each buy a replacement residence, only one spouse will have the advantage of using the Proposition 60 transfer. In other words, if one spouse uses the transfer the other will be thereafter prohibited.
Proposition 90 extends Proposition 60 by allowing California counties to elect to accept transfers of Proposition 13 valuations from other counties. Thus, if a senior wants to move from Los Angeles County to say Orange County, now the senior can take his or her old lower Proposition 13 assessed value to a new replacement residence of equal or lesser value to any of the following eight (8) California counties presently (as of February 15, 2010) accepting proposition 90:
2. El Dorado;
3. Los Angeles;
5. San Clara;
6. Santa Diego;
7. San Mateo; and
**Contra Costa, Inyo, Kern, Riverside, Modoc, Monterey, and Marin have dropped out of the Proposition 90 program.
Proposition 110 again extended Proposition 60 by creating an exception to the one-time-only transfer limitation applicable to seniors age 55 or older. Pursuant to proposition 110, if a person over the age of 55 years previously received a base year value transfer from an original property to a replacement dwelling and subsequently becomes severely and permanently disabled, then that senior may now transfer his or her original Proposition 13 base year value a second time. The base year value transfer, however, is not available in the reverse situation; if one receives the benefit due to disability, then they cannot subsequently claim the relief for age.
To qualify for the Proposition 60/90/110 tax benefits, the following criteria must be met:
1. At the time of sale, the original property must have been eligible for the Homeowners� Exemption, or entitled to the Disabled Veterans� Exemption;
2. Both properties must be located in the same county, unless the replacement residence is located in one of the 7 counties that accept Proposition 90;
3. On or before the date of transfer (closing of escrow) for the original Proposition 13 property, either the seller or the seller’s spouse must be at least 55 years of age, or be severely or permanently disabled;
4. The replacement dwelling bought must be of equal or lesser value than the selling price of the original Proposition 13 property;
5. The replacement dwelling bought must have been acquired or newly constructed within two years of the sale of the original Proposition 13 property;
6. The senior or disabled owner must file an application (claim form with the county assessor’s office) within three (3) years following the purchase date, or new construction completion date, of the replacement property; and
7. The original property must be subject to reappraisal at its current fair market value (e.g. most transfers between parents and children will not qualify.)
If you have any questions, or would like further assistance, please call 818.849.5206 to schedule a low cost $85 telephone consult, or your can do so online at Schedule a Telephone Consult .