OVER 55? CALIFORNIA PROPERTY TAX RELIEF
Since its passage, Proposition 13 prohibits property tax increases until property ownership is changed.
PROP 60 If either spouse is over age 55 (when the old home is sold), this proposition allows a replacement of a primary residence with a new home of equal or lesser value (but see below for some exceptions on how to buy MORE house and stay within the guidelines!) within the same county and transfer of the Prop 13 assessed valuation from the old home to the new property. This is allowed once in your lifetime, and a spouse who has done it before ‘taints’ both spouses.
PROP 90 allows counties to elect to accept transfers of Prop 13 values for moves from other counties when a primary residence is replaced with a less expensive (but see below) home. If you are over 55 and move into a county which accepts Prop 90, you may take your old, lower Prop 13 value, regardless of from which county you move.
Using Prop 90, you can sell your $400,000 San Francisco home [assessed value $80,000] and move to a new $300,000 home in San Mateo; the new San Mateo assessed value will be $80,000!
7 COUNTIES WHICH ACCEPT PROP 90 (Current as of 6/1/2008)
Alameda, Los Angeles, Orange, San Diego, San Mateo, Santa Clara, and Ventura. [Contra Costa, Inyo, Kern, Riverside, Modoc, Monterey, and Marin have dropped out of the Prop 90 program.]
Props 60 and 90 apply if you “trade down” (i.e. the new home costs less than the sales price of the old home).
If you buy New Home 1st; then sell the Old Home, you must go down in price. –This is a very common practice for most folks as they list their home, sell it and want to close on the replacement property at the same time. However,waiting can have its advantages!
If you sell the Old Home1st; then buy the New Home:
- In 1st 365 days after the sale of Old Home, you may go up 5% in the purchase price of New Home. –For instance—you sell your existing house in the country on some acreage for $500,000. You are seeking less land to maintain but don’t really want to sacrifice square footage but are seeking an in town location. You find a property slightly higher, say $525,000. Can the deal be done? Yes, as you are within the 5% limitation on going up in price.
- If you buy New Home more than 1 year from the sale of Old Home, but less than 2 years, you may go up 10%.—Say you sell the property in the Country and decide to rent for a while but keep looking. The market rebounds a bit and you end up finding that great “aging in place” replacement home for $550,000 just over a year after selling you original house—can the deal be done? YES! You are within the 10% rule! Enjoy your new home with your old Prop 13 tax rate!! Is this a great country or what!!??