California has unique requirements regarding computation of value for property tax. A very simple summary is that a property’s value for tax rates are determined by the value of the property at the time of purchase. While this does have some benefits, it can cause problems for older citizens who might be interested in moving or downsizing because upon purchase of the new residence, the property tax represents a significant hardship.
To assist with this, California passed Propositions 60 & 90. Propositions 60 & 90 amended section 2 of Article XIIIA of the California Constitution to allow a person who is over age 55 to sell his or her principal place of residence and transfer its base year value to a replacement dwelling of equal or lesser value that is purchased or newly constructed within two years of the sale. Proposition 60 allows for the transfers of a base year value within the same county (intracounty). Proposition 90 allows for the transfers of a base year value from one county to another county in California (intercounty) if the county has authorized such a transfer by an ordinance.
There are restrictions on when this can be used based on the claimant (the home seller of the existing property), the original property (property being sold), and the new (replacement property). For the claimant:
- The claimant, or a spouse residing with a claimant, must at least 55 years of age when the original property is sold.
- This is a one-time only benefit. Once a claimant has filed for and received this tax relief, neither the claimant nor the spouse residing with the claimant, can ever file again, even upon the claimant spouse’s death or if they divorce. However, if the claimant becomes disabled after receiving this tax relief, the original claimant may transfer the base year value of the personal residence a second time due to the disability, which involves a different claim form
Regarding the original property:
- The original property must be eligible for the Homeowners’ Exemption 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.
And regarding the new (replacement) property:
- 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 value” than the original property.
There are other considerations when claiming this benefit, so professional advice should be sought. Consult with your Googain Loan Officer for more information. Other information is available on the California Government website: Propositions 60/90 – Transfer of Base Year Value for Persons Age 55 and Over.