| Rules for Transferring Your Property Tax Basis if You are Over 55 | April 20th, 2007 |
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California’s Prop 60, allows those who are over 55 to transfer their property tax base to a new home. This means that if you paid $200,000 for your home in 1990 and are now 55 or older, you can sell your home and buy another one, but keep your property tax bill tied to the original $200,000 valuation. I hardly paid attention when voters passed Prop 60 in 1986, but back then it was hard for me to imagine turning 55! But now that many of my contemporaries and clients are at or past that milestone, it’s worth revisiting the rules for Prop 60: Digging up an up-to-the-minute interpretation of Prop 60 rules is a little difficult, and I’m not a tax expert—you should verify everything I’m saying here with your CPA or tax attorney: Here’s what you should keep in mind when considering Prop 60: Rule 1: When you sell the original property you have to be at least 55. If you are married, just one of you has to be 55 in order to qualify. Corollary to Rule 1: You can only transfer your tax rate once during your lifetime. A spouse who has used this exemption before ‘taints’ both spouses. Rule 2: You can buy your replacement home within two years before or after the sale of the original residence. Rule 3: Your replacement home must cost less than the home your sell. Corollary to Rule 3: If you buy New Home 1st; then sell the Old Home, you must go down in price. If you sell the Old Home first then buy the New Home, you can go up 5% on the purchase price within first year and 10% up on purchase price in the second year. Some of my clients are asking about Prop 90, which is tied to Prop 60. Prop 90 allows counties to elect to accept transfers of Prop 13 values for moves from other counties. For example, using Prop 90, you can sell your $900,000 San Francisco home with its assessed value of $80,000 and move to a new $800,000 home in San Mateo; the new San Mateo assessed value will be $80,000. Very few counties accept Prop 90— according to what I could find online, only Alameda, Los Angeles, Orange, San Diego, San Mateo, Santa Clara, and Ventura are gracious enough let you get away with the lower property tax rate. Counties that used to participate but have since dropped out are Contra Costa, Inyo, Kern, Riverside, Modoc, Monterey, and Marin. ******************************************* Ready to trade down, move up or move on? I’d love to help! Call me today for information about the current market and how we can make your transition to a new home smooth and easy! |
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