12/04/2013

Proposition 90 Update: California Property Tax Transfer

Proposition 90 was passed in 1988 so that a California county could "opt-in" to allow transfer of property tax base of anyone over the age of 55.  Actually, only a minority of counties have participated, but recently the County of Riverside, which had opted out a number of years ago, has recently opted back in as of September 19, 2013.

Now, if anyone over the age of 55 sells in one of the participating counties and relocates to another participating county, they are allowed to keep their original tax base. 

The counties currently participating in this program are:  Los Angeles, Orange, San Diego, San Mateo, Alameda, El Dorado, Santa Clara, Ventura and Riverside Counties.

The replacement property must be a principal residence, and must be of equal or lesser value; for Los Angeles County, see these guidelines for both Proposition 60 and 90.  Proposition 60 is a state law which allows such tax base transfers within all California counties.  Proposition 90 concerns moves from one eligible county to another and was designed to encourage moves by the 55+ population, thus helping housing turnover in general.   See the link for all California counties' information sites for more information.

Note:  The homeowner should study the "equal or lesser value" guidelines carefully, or consult a tax advisor for complete information.  Partial information here includes:
  • "If the replacement dwelling is purchased or built prior to the sale of the original property, then "equal or lesser value" means the full cash value (i.e., sales price) of the replacement dwelling cannot exceed the full cash value (sales price) of the original property.
  • "If the replacement property is purchased or constructed during the first year after the sale of the original property, then "equal or lesser value" means that the full cash value of the replacement property cannot exceed 105 percent of the full cash value of the original property.
  • "If the replacement property is purchased or constructed during the second year after the sale of the original property, then "equal or lesser value" means that the full cash value of the replacement property cannot exceed 110 percent of the full cash value of the original property." Courtesy of California Association of Realtors.

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