Proposition 60 & 90
Senior Citizens Replacement Dwelling Benefit
Provided certain requirements are met, California’s Proposition 60 and 90 are tax initiatives that allow senior citizens to transfer the trended base value from their current home to a replacement property.
What is the difference between Proposition 60 and Proposition 90?
Proposition 60 allows transfers of base year values within the same county (intracounty) while Proposition 90 permits transfers from one county to another county in California (intercounty) at the discretion of each county.
The following county in California have an ordinance enabling Proposition 90:
Alameda, El Dorado, Los Angeles, Orange, Riverside, Santa Clara, San Diego, San Mateo, Ventura and San Bernardino. Be sure to call your assessor for verification as it could change at any time.
· You, or a spouse residing with you, must have been at least 55 years of age when the original property was sold.
· The replacement property must be your principal residence and must be eligible for the homeowners’ exemption 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 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 residence, even if the owner of the original property acquires only a partial of interest in the replacement residence.
· The replacement property must be purchased or built within two years (before or after) of the sale of the original property at the time of the sale.
· While submitting a claim for eligibility, it must be filed within three years of purchasing or completing new construction of the replacement property. If a claim is filed after three years, relief will be granted start of the calendar year when the claim was filed.
· Relief is granted for a single family residence, condominium, unit in planned development, cooperative housing, community apartments, mobile home subject to local real property tax, and living unit within a larger structure comprised of both residential and non-residential accommodations.
· If you make improvements to a replacement property within two years of the purchase, you can qualify for additional tax relief for the new construction as long as the total purchase amount combined with new construction amount does not exceed the market value.
Proposition 60 & 90 FAQ
Do I still need to file for a Homeowners’ exemption on the replacement property if qualify for Proposition 60/90 benefits?
Yes. Homeowners’ exemptions are not granted automatically.
What is “Equal or Lesser” value?
The market value of a property is not necessarily the same as the sale or purchase price. An assessor will determine the market value of each property. In some new developments, the indicated sale price does not include upgrades paid for outside of escrow so an Assessor must consider the value of these upgrades when determining the market value of the property. If the market value of your replacement dwelling exceeds the “equal or lesser value” test, no relief is available and partial benefits are not granted.
· 100% or less of the market value of the original property was purchased or newly constructed before the sale of the original property.
· 105% or less of the market value of the original property if a replacement property was purchased or newly constructed within the first year after the sale of the original property.
· 110% or less of the market value of the original property if a replacement property was purchased or newly constructed within the second year after the sale of the original property.