There are two propositions in California that may be of financial benefit to seniors when they sell their homes and downsize to a smaller residences.
Proposition 60 is a constitutional amendment approved by the voters of California in 1986. It is codified in the Revenue & Taxation Code, and allows the transfer of an existing Proposition 13 base year value from a former residence to a replacement residence within the same county, if certain conditions are met. This benefit is open to homeowners who are at least 55-years old and are able to meet all qualifying conditions.
Proposition 90, approved in 1988, extends the transfer of assessed valuation to those moving into other counties within the state.
Participation by each county is voluntary and as of November 2014, only 10 counties have passed an ordinance authorizing inter-county transfers: Alameda, El Dorado, Los Angeles, Orange, Riverside, San Bernardino, San Diego, San Mateo, Santa Clara and Ventura.
It is important to check with the County Assessor’s office in the county to which you plan to relocate before selling your present home and buying a new one.
What are the eligibility requirements for propositions 60/90?
- You, or a spouse residing with you, must have been at least 55 years of age when the original property was sold.
- 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 “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.
- The replacement property must be purchased or built within two years (before or after) of the sale of the original property.
- 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.
- 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 replacement dwelling must have been purchased or newly constructed on or after 11/06/86.
- 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.
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.