California
Propositions 60 and 90
When a California homeowner sells his principal residence
and purchases a new principal residence, he generally pays
property taxes on his new home based on its purchase price.
Homeowners age 55 and over may be able to qualify for an exemption
to this rule.
This exemption allows
certain homeowners, age 55 and over, to transfer the assessed
value of their old
principal residence to a new principal residence as long as
(1) their
new residence is located in the same county as the old residence
and (2) certain other criteria are met. This exemption is
commonly called the "Proposition 60" exemption.
There is also another
similar exemption that allows homeowners age 55 and over,
to buy a new residence in another county and
avoid a property tax reassessment. That exemption is commonly
called the "Proposition 90" exemption.
Proposition
60 - Both the seller and the residence must meet
certain requirements:
Requirements of the Seller -
On the date of the
sale of the
old principal residence, the seller, or at least one
spouse if the house is being sold by a married couple, has
to be 55
years of age or older. The seller who is 55 or over
generally has to be residing in the house.
If a principal residence
is co-owned by non-married individuals and one of the co-owners
is over 55 and residing in the residence, then the
exception
may apply to the individual who is over 55.
This exemption
can
generally be claimed only once. If an individual
has claimed this exemption and then gets married or divorced,
the rules
are more complex and you should consult your tax
advisor.
Requirements
of the Property -
In determining whether an owner
is eligible for this exemption, assessors will usually
look to
see
that the original property was eligible for the homeowner's
exemption
at the time the old residence is sold and that
the new residence is eligible for the homeowner's exemption
at
the
time the benefit
is claimed. This helps prove that the residence
was in fact the taxpayer's principal residence. An example
of
some types
of property that can qualify as principal residences
are single-family houses, stock co-ops, condominiums,
and certain
owner occupied
units that are part of a multi-unit building.
The
new residence is required to be purchased or constructed
within two years
before or after the sale of the old residence.
The purchase price of the new principal residence generally
has
to
be equal to or less than the sales price of the old
principal residence.
In most situations, the sales prices of both
the old
and new residence are the only two values that need
to be compared. However, the law technically requires the
assessor to
compare
the full market value as determined by the
assessor, of both the old and new residences to determine if
the
exemption
is
met.
Inflation Adjustment -
When the new residence
is purchased within the first year after the sale of
the
old residence,
the purchase price of the new residence may
exceed the
old residence's selling price by no more than 5
percent. Additionally, when the new residence is purchased
between
one and two
years
after the sale of the old residence, the
sales price of the new residence can exceed the old residence's
selling price
by no more than 10 percent. These percentages
may change, so please check with your local assessor's
office
before
taking any action. Homeowners who purchase new residences
before
they
sell their old ones can receive the exemption
only
on
their new residence once they sell their old residence,
and they
are not allowed to use this inflation adjustment
rule.
Proposition
90 -
Transfers to Different Counties:
To
further the
ability of California homeowners age 55 and over
to transfer their assessed values to their new residences,
voters
passed Proposition
90. This proposition allows a homeowner
age 55
and over
to transfer the assessed value of his old principal
residence to his new residence located in a different
county ifthat county
has elected to participate in the Proposition
90
program.
Under this law, a county's board of supervisors
can elect
to have their county be a qualified participating
county. Homeowners can then purchase their replacement
residence in any
participating
county.All of the requirements discussed
above
for Proposition
60 still must be met to qualify for
this exemption.
The following counties have elected to participate
in
this program:
Alameda (415) 272-3755
Los Angeles (213)
974-3101
Monterey (831)
755-5035
Santa
Clara (408) 299-4347
San Mateo (415)
363-4500
Kern (805) 861-2311
Modoc (916) 233-3939
Orange (714) 834-2746
San
Diego (619)
531-5507
Ventura (805)
654-2176
Counties can opt out of the
plan so you should check
with the county assessor for the
county
in which you are planning to purchase your property
to see if
they
participate.
Note: This
information is intended to be accurate but not guaranteed
to be so, please contact your personal tax professional for
further details. |
