Resources: Newsletter Articles: Property Taxes - Planning For The Future (Propositions 60 and 90)

Recently a client explained that he was planning to retire and sell his existing home and buy a smaller, low maintenance home. His retirement goal is to travel without concern about property upkeep. Since he purchased his home some time ago his current tax base is low and he hopes to take advantage of Proposition 60 by transferring his present property tax base to a new home that meets his current needs.

Following is information about Proposition 60 and 90

California seniors who have owned their homes for several years have paid relatively low property taxes even though the homes' value has risen. This is due to the passing of Proposition 13, the property tax-limitation initiative passed by the state's voters in 1978. Prop. 13 limited the property tax rate to 1 percent of assessed value at 2 percent. One of the reasons Prop. 13 passed was the fear among many Californians, particularly seniors and others on fixed incomes, that they would be taxed out of their homes. Tax bills had skyrocketed because real estate was reassessed annually. Under Prop. 13, however, when a property is sold, the assessed value must be raised to the market value, which is most often the sales price.

That means that people who have owned their homes for a long time can sell them for much more than they paid for them, but if they buy another house, they'll see a hefty increase in their property tax bill. This part of Prop. 13 kept some seniors from selling their large houses and buying something smaller due to higher property taxes. Prop. 60 was passed in 1986 which allows homeowners over the age of 55 to keep their present assessed value if they buy a house that costs the same as, or less than, the sales price of their old house.

According to the Contra Costa County assessor's office: the seller must be at least 55 years old on the day the house is sold. In the case of married couples , only one spouse must be at least 55, but both must live in the house and the exemption can only be claimed once. The new house must be purchased or constructed within two years before or after the old house is sold. Until Prop. 90 was passed, the new house was required to be in the same county as the old house. Prop. 90 allows a homeowner to take the Prop. 60 tax break to another county if its board of supervisors has voted to accept it. Counties that currently accept Prop. 90 are Alameda, Los Angeles, Orange, San Diego, San Mateo, Santa Clara and Ventura. Because county supervisors can change this decision it is important to check with the county that you plan to relocate to.

Please contact the county assessor office for all applicable restrictions regarding these Propositions.

sherrybenninger@grubbco.com

The GRUBB Co., 1960 Mountain Blvd., Oakland, CA 94611

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