Seniors often live in homes that no longer meet their needs because their homes may be too big or too far from family. If these homeowners want to downsize or move closer to their children, they could face a doubling or tripling of their property taxes, or what’s being called a moving penalty.
Proposition 5 provides appropriate relief by allowing those eligible the ability to transfer their current property tax base to the purchase of another home in any of California’s 58 counties. The new property tax for that individual would be based on their original home’s assessment, in addition to an adjustment consisting of the difference in value between the sale price of the original home and the sale price of the new home.
You may have heard of something like this already. In California, Proposition 60 and Proposition 90 already exist for persons age 55 and over and Proposition 110 already exists for disabled persons.
Prop. 60 allows the transfer of base-year property values within the same county (intracounty).
Prop. 90 allows transfers from one California County to another (intercounty)
Prop. 110 allows transfers for severely and permanently disabled property owners within the same county and from one California County to
another.
As of now, there are 11 counties in California that have an ordinance enabling the intercounty base, and those are Almeda, El Dorado, Los Angeles, Orange, Riverside, San Bernardino, San Diego, San Mateo, Santa Clara, Tuolumne and Ventura.
Proposition 5 would allow for all of California’s 58 counties be eligible for this benefit.
Before you consider a move, check to see if you’re eligible:
Eligibility requirements for Propositions 60/90:
Claimant
- You, or a spouse residing with you, must have been at least 55 years of age when the original property was sold.
- 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.
Original Property
- 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.
Replacement Property
- The replacement property must be your principal residence and must be eligible for the homeowners’ exemption or disabled veterans’ exemption
- The replacement property must be of equal or lesser “current market value” than the original property.
- 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.
- The replacement property must be purchased or built within two years (before or after) of the sale of the original property
File a Claim
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.
Source: https://www.boe.ca.gov/proptaxes/prop60-90_55over.htm
Before you consider your next move, contact us today!
