Property tax relief for persons aged 55 and over

What are Propositions 60 and 90?

Propositions 60 and 90 are constitutional amendments passed by California voters that provides property tax relief for persons aged 55 and over. Implemented by section 69.5 of the Revenue and Taxation Code*, it allows these persons, under certain conditions, to transfer a property's factored base year value from an existing residence to a replacement residence.

Typically the property tax of a newly purchased or constructed residence is based on its current market value upon change of ownership. However, the provisions of Propositions 60 and 90 may result in substantial tax savings since it allows the adjusted base year value of the original (sold) property to be transferred to the newly purchased or constructed home if eligibility requirements are met.

What is the difference between Proposition 60 and Proposition 90?

Proposition 60 allows transfers of base year values within the same county (intracounty). Proposition 90 allows transfers from one county to another county in California (intercounty) and it is the discretion of each county to authorize such transfers. As of January 2007, only seven counties have passed an ordinance authorizing intercounty transfers; however, it is recommended that you call your assessor for verification as it could change at any time.

What are the eligibility requirements for Propositions 60/90?

1. You, or a spouse residing with you, must have been at least 55 years of age when the original property was sold.
2. The replacement property must be your principal residence and must be eligible for the homeowners' exemption or disabled veterans' exemption.
3. 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 property, even if the owner of the original property purchases only a partial interest in the replacement property. Owners of two qualifying original properties may not combine the values of those properties in order to qualify for a Proposition 60 base-year value transfer to a replacement property of greater value than the more valuable of the two original properties.
4. The replacement property must be purchased or built within two years (before or after) of the sale of the original property.
5. To receive retroactive relief from the date of transfer, you must file your claim within three years following the purchase date or new construction completion date of the replacement property.
6. Your original property must have been eligible for the homeowners' or disabled veterans' exemption either at the time it was sold or within two years of the purchase or construction of the replacement property.

The original property must be subject to reappraisal at its current fair market value at the time of sale, unless the buyer(s) of your original property also qualify the property as a replacement property for a base year value transfer due to disaster relief or a base year value transfer for a severely and permanently disabled person. Therefore, most transfers between parents and children will not qualify.

This is a one-time only benefit. Once you have filed and received this tax relief, neither you nor your spouse who resides with you can ever file again, even upon your spouse's death or if the two of you divorce. The only exception is that if you become disabled after receiving this tax relief for age, you may transfer the base year value a second time because of the disability, which involves a different claim form.

What does "equal or lesser value" of a replacement property mean?

The market value of the replacement property as of the date of purchase must be equal or less than the market value of the original property on the date of sale. The meaning of "equal or lesser value" depends on when you purchase the replacement property. In general, equal or lesser value means:

• 100% or less of the market value of the original property if a replacement property were purchased or newly constructed before the sale of the original property, or
• 105% or less of the market value of the original property if a replacement property were purchased or newly constructed within the first year after the sale of the original property, or
• 110% or less of the market value of the original property if a replacement property were purchased or newly constructed within the second year after the sale of the original property.

In determining whether the "equal or lesser value" test is met, it is important to understand that the market value of a property is not necessarily the same as the sale or purchase price. The assessor will determine the market value of each property. If the market value of your replacement dwelling exceeds the "equal or lesser value" test, no relief is available.

I plan to relocate from Los Angeles County to San Francisco County, but San Francisco County says they don't allow base year value transfers from another county. I thought there was a law that allows that.

The law that allows for transfers of base year value between counties merely authorizes each county board of supervisors to adopt an ordinance accepting transfers from other counties. It is the discretion of each county to allow such transfers. The county in which your replacement property is located must have an ordinance that accepts intercounty transfers.

As of February 15, 2010, the following eight counties in California have an ordinance enabling the intercounty base year value transfer:

Alameda	Los Angeles	San Diego	Santa Clara
El Dorado	Orange	San Mateo	Ventura

Since the counties indicated above are subject to change, we recommend contacting the county to which you wish to move to verify eligibility.

What is meant by "area of reasonable size" as it applies to either the original property or the replacement dwelling?

An "area of reasonable size" that is used as a site for a residence includes all land within the parcel provided that any nonresidential uses of the property are merely incidental to the use of the property as a residential site. For example, if a claimant sold a home located on a 9,000 square foot lot and replaced it with a home located on a 20-acre parcel, the base year value transfer would qualify as long as the 20-acre parcel was used only for a residential site and incidental uses as a residential site. For example, any commercial use (i.e. crops, raising cattle, etc.) would disqualify that portion of the land.

If a replacement home is newly constructed, what is the date of completion?

The date of completion of a newly constructed replacement home shall be the date that the property has been inspected and approved for occupancy by the local building department, or, if there is no such inspection and approval procedure, when the prime contactor has fulfilled all of the contractual obligations. If inspection and approval procedures are non-existent and there is no prime contractor, the date of completion is when outward appearances clearly indicate it is immediately usable for the purpose intended.

The construction on replacement property must be completed within two years of the sale of the original property to qualify for Proposition 60/90/110 tax relief.

How do I file for Proposition 60/90 tax relief?

After both transactions are complete, an application must be filed with the county assessor where the replacement property is located. The claim form, BOE-60-AH, Claim of Person(s) at Least 55 Years of Age for Transfer of Base Year Value to Replacement Dwelling, may be obtained from the assessor's office. Some counties offer a downloadable form from their internet website, which can be accessed via the Board's website: /proptaxes/assessors.htm.

After receiving the notice that my application has been approved for a base year value transfer, will I receive a refund of the taxes I already paid?

Yes, any overpayments you made will be refunded for the period following the effective date of the base year value transfer (i.e., the latest qualifying transaction).

I still have questions about Propositions 60/90. Where can I find more information?

If you still have questions about Propositions 60/90, you may find the answers in Letter To Assessors No. 2006/010 or, you may call the Technical Services Section at 916-445-4982.

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These questions (and more) were found at the California State Board of Equalization (see HERE) and posted here for information, as a courtesy only.

Please consult your Tax Accountant for updated and/or personalized information.

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For all of your Real Estate needs in the Santa Clarity Valley call:

LeeAnn Bell, REALTOR(R) ... 661-309-2364
DRE License #01260650
Broker: R.Thacker

 

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Here is what one senior client had to say about working with me: 

"I think I appreciate your ability to explain all the important matters very simply to me.  It was my very first experience in selling my first home (since husband's death) ... and you were very helpful to see that everything went smoothly."

- E.Powell

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