Over 55? You can move your property tax base

If you are over 55 years of age, you can benefit from California Propositions 60,90, and 110, which allow you to move your property tax base with you if you move.  Below are some facts and links about Props 60, 90, and 110 from the California Board of Equalization.

Propositions 60 & 90

What is the difference between Proposition 60 and Proposition 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. As of September 19, 2013, only nine counties have passed an ordinance authorizing intercounty transfers; however, it is recommended that you call your assessor for verification as it could change at any time.

What are the eligibility requirements for Propositions 60/90?
  1. You, or a spouse residing with you, must have been at least 55 years of age when the original property was sold.
  2. The replacement property must be your principal residence and must be eligible for the homeowners’ exemption or disabled veterans’ exemption.
  3. 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. Owners of two qualifying original properties may not combine the values of those properties in order to qualify for a Proposition 60 base-year value transfer to a replacement property of greater value than the more valuable of the two original properties.
  4. The replacement property must be purchased or built within two years (before or after) of the sale of the original property.
  5. 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.
  6. 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 original property must be subject to reappraisal at its current fair market value at the time of sale, unless the buyer(s) of your original property also qualify the property as a replacement property for a base year value transfer due to disaster relief or a base year value transfer for a severely and permanently disabled person. Therefore, most transfers between parents and children will not qualify.

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 many times can one receive the benefit of Propositions 60/90?

As a senior citizen, one may transfer his or her base year value only once, with the one exception that if a person first received relief for age and subsequently became severely and permanently disabled after the date of the original claim and had to move because of the disability (Proposition 110), then the base year value may be transferred a second time.  The base year value transfer, however, is not available in the reverse situation; if one receives the benefit due to disability, then they cannot subsequently claim the relief for age.

What does “equal or lesser value” of a replacement property mean?

The market value of the replacement property as of the date of purchase must be equal or less than the market value of the original property on the date of sale. The meaning of “equal or lesser value” depends on when you purchase the replacement property. In general, equal or lesser value means:

  • 100% or less of the market value of the original property if a replacement property were purchased or newly constructed before the sale of the original property, or
  • 105% or less of the market value of the original property if a replacement property were purchased or newly constructed within the first year after the sale of the original property, or
  • 110% or less of the market value of the original property if a replacement property were purchased or newly constructed within the second year after the sale of the original property.

In determining whether the “equal or lesser value” test is met, it is important to understand that the market value of a property is not necessarily the same as the sale or purchase price. The assessor will determine the market value of each property. If the market value of your replacement dwelling exceeds the “equal or lesser value” test, no relief is available.

I plan to relocate from Los Angeles County to San Francisco County, but San Francisco County says they don’t allow base year value transfers from another county. I thought there was a law that allows that.

The law that allows for transfers of base year value between counties merely authorizes each county board of supervisors to adopt an ordinance accepting transfers from other counties. It is the discretion of each county to allow such transfers. The county in which your replacement property is located must have an ordinance that accepts intercounty transfers.

As of September 19, 2013, the following nine counties in California have an ordinance enabling the intercounty base year value transfer:

Alameda Orange San Mateo
El Dorado Riverside Santa Clara
Los Angeles San Diego Ventura

Since the counties indicated above are subject to change, we recommend contacting the county to which you wish to move to verify eligibility.

 Click here to learn more about Propositions 60 & 90

 

Proposition 110

What is Proposition 110?

Proposition 110 is a constitutional initiative passed by California voters that provides property tax relief for severely and permanently disabled claimants when they sell an existing home and buy or build another.

Implemented by section 69.5 of the Revenue and Taxation Code it allows the transfer of the base-year value of an existing home to a newly purchased or constructed home. Transfers are allowed within the same county (intracounty) and in select counties, transfers are allowed from one county to another county (intercounty). See question #9 for a list of counties.

In addition, the initiative provides relief for modifications that make a home more accessible for a severely disabled person (section 74.3).

If you or your spouse that lives with you is severely and permanently disabled, you can buy a home of equal or lesser value than your existing home and transfer the factored base year value of your existing home to your new property. Also, you can modify your current home as long as the modifications directly satisfy disability requirements without the modifications being assessed as new construction.

Once you have filed and received this tax relief, neither you nor your spouse who resides with you will qualify to receive this benefit again.

What are the eligibility requirements for Proposition 110?
  1. You or a spouse residing with you must be severely and permanently disabled when the original property was either sold or modifications were completed.
  2. Both your original and replacement property must be eligible for the homeowners’ or disabled veterans’ exemption and the replacement property must be your principal residence.
  3. The replacement property must be of equal or lesser value than the original property. The “equal or lesser” test is applied to the entire replacement property, even though the owner of the original property may acquire only a partial interest in the replacement property. Owners of two qualifying original residences may not combine the values of those properties in order to qualify for a Proposition 110 base-year transfer to a replacement property of greater value than the more valuable of the two original residences.
  4. The replacement property must be purchased or built within two years (before or after) of the sale of the original property.
  5. To receive retroactive relief from the date of transfer, you must file your claim within three years following the purchase or completion of new construction of the replacement property.
  6. The disabled person, spouse or legal guardian must submit a Physician’s Certificate of Disability (Form BOE-62A) with the claim.

The original property must be subject to reappraisal at its current fair market value unless the buyer(s) also qualify the property as a replacement property for a base year value transfer due to intracounty/ intercounty disaster relief or a base year value transfer for persons aged 55 or over. Therefore, most transfers between parents and children will not qualify.

What is the definition of a severely and permanently disabled person?

For property tax purposes, a severely and permanently disabled person is defined as “any person who has a physical disability or impairment, whether from birth or by reason of accident or disease, that results in a functional limitation as to employment or substantially limits one or more major life activities of that person, and that has been diagnosed as permanently affecting the person’s ability to function, including, but not limited to, any disability or impairment that affects sight, speech, hearing, or the use of any limbs.”

 Click here to learn more about Propositions 110