Prop 60 and Prop 90 in Contra Costa can save taxes!
Over 55? Selling your home? Do you know about Prop 60?
Here in Contra Costa County (the San Francisco East Bay) - if you are over 55 years of age and thinking of welling your home this year, you should know about Proposition 60.
After Prop 13 took effect, property taxes are now reassessed only upon the transfer or sale of a property (arms length transfers). This very event sure can discourage some people from making that move if you've been in your home a long time.
Just think.... You bought your home for $53,000 in the 1970's and your property taxes are just $1,200! Your home now will yield you over $650,000. Here comes 2005 and you're ready to retire to golf course living and you find the home of your dreams for $550,000. You can essentially buy that new home outright. No mortgage, no payment... ahhhh, what a life.. BUT WAIT... taxes... you now might expect to pay over 6 times your current tax amount! $6000 or more per year on taxes based on that new purchase price!
Hold your hat, Proposition 60 allows you (within certain guidelines) the ability to transfer that original $1,200 tax to your new house. How cool is that? Buy your dream home, no mortgage, $1200 a year taxes and now your only care in the world is your golf score. (But talk to your tax professional about whether it is wise for you to have no mortgage payment).
Well so what are the parameters?
- You must stay in Contra Costa County**
- You must purchase or construct a home worth the same or less than the original property (sometimes hard to do in our area to be sure).
- The original property must be sold for consideration (i.e. no giving it or transferring to family members), it must be an "arms-length" transaction.
- Just one person on title (husband or wife) needs be over 55.
- Depending on timing you may be able to buy a house for 10% more . Read this clause very careful to avoid a big problem. Here's more information directly from the Contra Costa Assessor's Office
**A related proposition (90) allows you to move outside of Contra Costa County. Not many counties participate in this - at last check only Alameda, Los Angeles, Orange, Santa Clara, San Diego, San Mateo, Ventura - but this can change at any time, so PLEASE check with your local county tax office before making any moves. Definitely some promising destinations within those counties, but some of the local popular retiree places are noticeably not included i.e. Placer County (Lincoln), El Dorado County (Serrano). But Somerset in Brentwood, Rossmoor in Walnut Creek are winners!