For home owners age 55 years of age or more in California, it's possible to plan and protect property tax assessed value basis on the sale of a home and buying replacement.
Home value basis protection is important in California where most property taxes are paid at one percent of assessed value.
Assessed value protection for people 55 years of age and over who want to sell their home and buy another is especially important.
California Proposition 60 was a constitutional amendment approved by the voters 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 OK for 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. However, there are are differents rules for each county in CA according to Proposition 90, and some do not allow transfering tax basis to county 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.
- A Person is eligible for this possible protection only once during their lifetime.
The REPLACEMENT dwelling MUST BE OF EQUAL TO OR LESSOR VALUE THAN THE ORIGINAL PROPERTY. But what is equal or lesser value?
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.
a. 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.
b. 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.
c. 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.
Contact your local county assessor on other requirements, such as homeowners exemption required, market value determined, whether it can be constructed after 198, whether replacement to be constructed within two years of sale of original, whether original is subject reappraisal at current market value.
TIMING OF CLAIM: 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.
Qualifying for this property tax value basis protection under Prop 60 is complicated, and you should consult with an experienced professional REALTOR.
Disclaimer: This is for information only and is not the providing of professional tax or legal services. Before selling and buying a home with an idea to take advantage of Proposition 60 and 90 property tax assessed value basis value protection in California, you should consult with a lawyer and with an experienced REALTOR.
Harrison K. Long - Business Solutions and Advisory - REALTOR® and broker associate, Coldwell Banker Residential Brokerage - Phone: 949-854-7747 - CA DRE 01410855
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