Prop 60/90: Super Senior Tax Savings When Relocating

I was recently told that a senior would love to downsize their current home and retire,  but when they saw how much the new taxes on the new smaller home would be, they put that plan to rest quickly. True, a new tax rate can be a hefty increased obligation,  especially if you have had a residence for many years at a low tax rate, as many seniors commonly do. However,  in California, tax relief for seniors 55 and older helps ease the cost of moving and finding a replacement home by transferring the taxable value on the senior’s original home to the replacement home.

Here’s how it works: If you or your spouse who resides with you is age 55 or older, you may buy or construct a new home of equal or lesser value than your existing home and transfer the trended base value to your new property. This is a onetime only benefit. You must buy or complete construction of your replacement home within two years of the sale of the original property. Both the original home and the new home must be your principal place of residence and file the necessary application with the Tax Assessor.

This is a huge benefit for those seniors that are held back by the property tax increases. Now, the main difference between Proposition 60 and 90 is that 60 requires that you remain in the same county, while following the other requirements. Proposition 90 allows you to transfer the current taxable value into a different participating county! However, it’s important to understand a few other specifics of Proposition 60/90 Reappraisal Exclusion for Seniors.

For instance, no partial exclusions are allowed. So if you decide to buy a home that is of a higher value than your current home, you will not qualify for the program. A notable benefit is how the value limits work (to get the most for your tax rate). Some counties (such as San Diego) will allow you to buy a replacement  property before you sell your current home then limit is 100% of the market value of your original property. But if you sell your original property, and purchase another within the first year the limit increases to 105%, and to 110% if the purchase is within the second year. Another other significant benefit with this program is that if an addition is made to a replacement home it may qualify for a reassessment exclusion.

If you’re considering using Proposition 60/90, be sure to check with your  local county tax assessor for more specific details and restrictions about the program and participating programs.