Let's take a look at California property tax value basis protection for people 55 years of age and over who want to sell their home and buy a replacement home.  

This is especailly important, because property taxes are essentially one percent per year of assessed value (See Proposition 13).

California Proposition 60 was a constitutional amendment approved by the voters of California in 1986 ~ Section 69.5 of the California Revenue & Taxation Code ~ allowing transfer of an existing Proposition 13 base year value from a former residence to a replacement residence if certain conditions are met.

This benefit is open to homeowners who are at least 55-years of age and meet requirements and conditions:

• Both the original property (former residence) and its replacement must be located in the same county.

There are differents rules by county according to Proposition 90, and some counties do not allow transfering tax basis to location of replacement property.

• As of the date of transfer of the original property, the seller or a spouse living with the seller must be at least 55 years old.

Self-explanatory

• The original property must have been eligible for the Homeowners' Exemption or entitled to the Disabled Veterans' Exemption. 

Self-Explanatory

• The replacement dwelling must be of equal or lesser value than the original property.  

(a) In general, "equal or lesser value" means that 100 percent of the market value of an original property if a replacement dwelling is purchased before the original property is sold.

(b) 105 percent of the market value of an original property if a replacement dwelling is purchased within one year after the sale of the original property.

(c) 110 percent of the market value of an original property if a replacement dwelling is purchased within the second year after the sale of the original property. 

(d) For equal or lesser value, comparison must be made using the full market value of the original property and the full market value of the replacement dwelling as of its date of purchase or completion of new construction. 

(e) Sales prices are not always the same as market value. The Assessor must determine the market value for each property, which may differ from sales price.

• The replacement dwelling must have been purchased or newly constructed on or after 11/06/86.
• Without exception, the replacement dwelling must be purchased or newly constructed within two years (before or after) of the sale of the original property.

When the replacement dwelling is purchased or newly constructed, the Assessor is required by law to issue supplemental assessments (positive or negative) for all transactions that result in a base year value change, including those that qualify under Prop 60. (Revenue and Taxation Code Section 75).  

• The original property must be subject to reappraisal at its current fair market value as the result of its transfer (Sections 110.1 or 5803 of the California Revenue and Taxation Code).
• Without exception, a claim for relief must be filed within three years of the date a replacement dwelling is purchased or new construction of a replacement dwelling is completed.
• Only one claimant, out of several co-owners of a replacement dwelling, need be at least 55 years old as of the date of sale of an original property.  However, that one claimant must be an owner of record, Either the claimant or their spouse must also have been an occupant of the original property and at least 55 years old on the date of sale. 
• A person is eligible to apply for this benefit once in your lifetime.

Be Careful - Before selling and buying a home with idea to take advantage of Prop 60 and 90 basis value protection, consult with your lawyer, your Realtor and ask the advice of your certified public accountant.  

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