Under Proposition 13, the value of a home (for property tax purposes) is generally reassessed to its current value whenever a change of ownership takes place. If you are a senior who has owned your home for a long time and currently benefit from a lower Prop 13 tax valuation, the prospect of dramatically higher property taxes can be quite a deterrent if you’d like to sell your home and replace it with one that better suits your current lifestyle and needs.
Prop 60: Property Tax Relief for Senior Citizens
In 1986 California voters passed Proposition 60 which allowed senior citizens to keep their adjusted base year value of their current home and transfer it to a replacement home located within the same county if certain conditions are met.
Proposition 60 allows any person who is at least 55 years old and resides in a property eligible for the Homeowner’s Tax Exemption (complicated way of saying their place of residence) to transfer the base year value of the original property to a replacement dwelling of equal or lesser value within the same county.
Other requirements are:
- The replacement dwelling must be purchased or newly constructed within two years of the sale of the original property;
- The original property must be subject to reappraisal at its current fair market value.
- A claim for relief must be filed within 3 years of the date a replacement dwelling is purchased or new construction of that replacement dwelling is completed. If you file your claim after the 3-year period, relief will be granted beginning with the calendar year in which you file your claim. If you sold the original property to your parent, child, or grandchild and that person filed a claim for the parent-child or grandparent-grandchild change in ownership exclusion, then you may not transfer your base year value under section 69.5.
In general, equal or lesser value means that the fair market value of a replacement property on the date of purchase or completion of construction does not exceed:
- 100 percent of market value of original property as of its date of sale if a replacement dwelling is purchased before an original property is sold.
- 105 percent of market value of original property as of its date of sale if a replacement dwelling is purchased within one year after the sale of the original property;
- 110 percent of market value of the original property as of its date of sale if a replacement dwelling is purchased within the second year after the sale of the original property.
Prop 90: More Property Tax Relief for Seniors
Passed into law in 1988, Prop 90 extends the the benefits of Prop 60 to include transferring your adjusted base year value of your current home to a replacement home located in another county in California. There is a catch however. Each county has the ability to decide at their option whether or not to participate. At this time only 10 counties have an ordinance allowing intercounty transfers. They are:
- El Dorado
- Los Angeles
- San Bernardino
- San Diego
- San Mateo
- Santa Clara
As long as the county you are moving to has passed the Prop 90 ordinance, you can enjoy the benefits even if the county you are moving from does not participate. In other words, if you are moving to Ventura County from ANY other county in California, you’re covered. If you are selling a Ventura County home, then you have to move within Ventura County or move to one of the nine other counties that participate to transfer your current property tax basis.
The counties that participate can change. For example, Riverside passed an ordinance to allow Prop 90 transfers in 2013 and San Bernardino County passed theirs in 2014. You should verify with the county you plan to move to prior to doing anything to be safe.
Important Prop 90 and Prop 60 Resources for Ventura County seniors
This is a must-read faq. It covers all manner of variables that might affect whether or not you are eligible for the benefits of Prop 60 and Prop 90.
If you are moving to or from Ventura County and would like some help figuring out how all of this applies to your circumstances, I would be happy to assist you. I have helped numerous clients purchase and sell homes and save on their property taxes by transferring their tax basis to a replacement home.
Joe Virnig is a real estate agent with RE/MAX Gold Coast REALTORS in Ventura County, California. He has 30 years experience helping locals and folks moving to Ventura County find the right home and community to fit their lifestyle and needs. He is also a photographer and enthusiast of all things Ventura County. You can reach him at (805)644-5005 or email@example.com.