Property Tax Base Values: Prop 60 & 90 Crash Course

One of the biggest obstacles homeowners face when considering a move is not only the cost of the purchase, but the associated cost of the property taxes with the new home. For senior citizens who may have lived in their homes for a long time and depend on a fixed income, downsizing can feel traumatic when you enter a smaller home and your property taxes triple or quadruple! Enter the benefits of Propositions 60 & 90, known as exclusions from re-appraisal by the California State Board of Equalization.

WHAT IS THE DIFFERENCE BETWEEN PROP 60 & 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.

WHERE CAN I GO?

The home you are looking to buy is considered a ‘replacement property’. According to the California State Board of Equalization, the replacement property must:

-          Be your principal residence

-          Be of equal or lesser "current market value" than the original property

-          Be purchased or built within two years (before or after) of the sale of the original property

As of July 2016, the following counties will currently accept base year value transfers from other counties (***Counties indicated above are subject to change, we recommend contacting the county to which you wish to move to verify eligibility.) On August 30, 2016, the El Dorado County Board of Supervisors approved an extension of their ordinance, which will now sunset on October 1, 2021.

WHO IS ELIGIBLE?

Eligibility is dependent on how old (or young!) you are when you sell your original property, not when you purchase the replacement home. You, or a spouse residing with you, must have been at least 55 years of age when the original property was sold. 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.

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: http://www.boe.ca.gov/proptaxes/assessors.htm

WHAT DOES ALL OF THIS REALLY MEAN FOR ME?

If you are aged 55 or over, and have considered a move, Propositions 60 and 90 essentially make that possibility more affordable by allowing you to keep your tax base the same. The resulting savings could equate to thousands of dollars per year; take the example of a home whose current value is assessed at $300,000, even though the market value of the home is much higher. The current estimated annual property taxes would be $3,750, or 1.25 percent of $300,000. If that home sells for $700,000 and a replacement home is purchased for $650,000 - normally taxes on the new home would be $8,125 (1.25 percent of $650,000.) But if the homeowner applies for and receives Prop 60/90 tax relief, property taxes could remain at $3,750, saving them $4,375 per year.

There is much more to learn about these propositions, how they work and how they can benefit you. There are helpful FAQ’s located HERE. In addition, you can call the Assessment Services Unit at 916-274-3350.

If we can be of any help in calculating the potential sale price of your home, and determine if a move can improve your post-working years, your quality of life and your overall financial positon – we would be honored to assist.

Cheers,

Mark & Jason

team@homesofsv.com

408-596-5526

Resources Used:

Propositions 60/90 (Transfer of Base Year Value)

How to make a move without increasing your property taxes

Article intended for informational purposes only. Consult with your local county and/or county of potential replacement home before making any decisions. Eligibility does not guarantee acceptance.