Understanding California's Proposition 60/90: A Guide for Homeowners
As a homeowner in California, navigating the complexities of property taxes can sometimes feel overwhelming. However, California offers a couple of unique opportunities for homeowners over the age of 55 to save money when downsizing or relocating to a new home within the state. These opportunities are known as Proposition 60 and Proposition 90.
In this blog, we'll break down what Proposition 60/90 are, how they work, and what you need to know to take advantage of them.
What Are Proposition 60 and Proposition 90?
Proposition 60 and Proposition 90 are California state laws that provide property tax relief for homeowners aged 55 and older when they sell their primary residence and buy a new one.
- Proposition 60 allows eligible homeowners to transfer their base year value (their original property tax basis) from their current home to a new home within the same county.
- Proposition 90 expands on Proposition 60 by allowing eligible homeowners to transfer their base year value to a new home in a different county, as long as that county has opted into the program.
In essence, these propositions enable homeowners to downsize or relocate without the penalty of significantly increased property taxes.
Key Benefits of Proposition 60/90
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Property Tax Savings
- The most significant benefit of Propositions 60/90 is the ability to transfer your current property tax base year value to a new home. This can result in substantial tax savings, particularly if your new home is of equal or lesser value than your current home.
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Flexibility
- Proposition 90 provides additional flexibility by allowing you to move to a participating county. Currently, only a limited number of counties in California have opted into Proposition 90, but the option still opens up more possibilities for your relocation.
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Ease of Downsizing
- If you’re looking to downsize to a smaller, more manageable home, Proposition 60/90 can make this transition more financially feasible by maintaining your lower property tax rate.
Eligibility Requirements
To qualify for Proposition 60/90, there are several key requirements:
- Age: You must be 55 years of age or older at the time of the sale of your original property.
- Primary Residence: The property you’re selling must be your primary residence and eligible for the homeowner's exemption.
- Timing: You must purchase or construct your replacement home within two years before or after the sale of your original home.
- Equal or Lesser Value: The new property must be of equal or lesser value than the original property (with some exceptions allowing for a slight increase if purchased after the sale).
How to Apply
The process to apply for Proposition 60/90 is fairly straightforward:
- Sell Your Original Property: Ensure your current home is your primary residence and meets all eligibility requirements.
- Purchase a New Property: Buy or build your new home within the specified time frame and ensure it’s of equal or lesser value.
- File the Necessary Forms: Complete the appropriate forms with the county assessor's office in the county where your new home is located. You’ll need to provide documentation of the sale and purchase prices, as well as verification of your age.
Things to Keep in Mind
- One-Time Benefit: Proposition 60/90 can only be used once per homeowner or married couple. However, if you become severely and permanently disabled, you may qualify for a second transfer under Proposition 110.
- Market Conditions: While Proposition 60/90 allows you to transfer your tax base, the real estate market will still affect your buying power. Ensure your new home’s value aligns with your financial goals and the stipulations of the propositions.
- Consult a Professional: Always consider consulting with a tax advisor or real estate professional to fully understand how Proposition 60/90 applies to your specific situation.
