55 Years or Older and Want to Save Money When Buying Your Next Home?

The Real Estate Dads
The Real Estate Dads
Published on February 27, 2018

Many Californian homeowners would love to sell their current primary home to be closer to family, cash out and take advantage of appreciation, live closer to medical facilities or for many other reasons. However, current restrictions in property tax law make it cost prohibitive for far too many.

A proposed bill called the California Property Tax Fairness Initiative would make it easier for the 55-plus community to sell their home and move throughout the state of California by making their property tax more portable.  Sponsored by the California Association of Realtors, this bill would let longtime homeowners who have a low property tax assessment, thanks to Proposition 13, avoid a potentially steep tax increase upon purchasing their replacement home. This could equate to thousands of dollars saved and open the doors for many to make the move they have been dreaming about.

Under the proposed California Property Tax Fairness Initiative:

  • Prop 60 and Prop 90 (see below for more details about prop 60 and 90) shall be repealed on January 1, 2019
  • After that date, any person over 55 may transfer their tax base ANYWHERE in the state of California. (No county may opt out)
  • The homeowner may have purchased their original principal dwelling AT ANY TIME with no restrictions and will purchase the new replacement home within 2 years of the first’s home sale
  • You may transfer their tax base AS MANY TIMES as they wish
  • The new home may cost SAME, MORE OR LESS than the original home with a blended tax on the more expensive new home. (Any amount over the sales price of the original home will be taxed as a new purchase – approx. 1.3% of that overage amount) I. E. Base tax+ 1.3% of overage = Blended Tax
  • Should a married couple, BOTH over 55, holding their original home as community property divorce, each partner may transfer their respective portion of the tax base to their new properties

Current Property Tax Code:

Currently in the state of California there are two propositions on the books dealing with the possibility of transferring a homeowner’s property tax base to a replacement ·home:

Proposition 60 allows any person over the age of 55 to transfer the property tax base of their principal home (where they reside) to another (in which they will in future reside) in the SAME COUNTY under the following conditions:

  • You purchased the original home AFTER November 6, 1986 and purchased or will purchase the new home prior to January 1, 2019 and within 2 years of the sale of their original home
  • The new home costs the SAME OR LESS than what you sell the old home for.
  • You may only transfer your tax base ONE TIME in your life
  • Should a married couple divorce ONLY ONE person over the age of 55 may transfer the tax base to their next home

Proposition 90 allows any person over the age of 55 to transfer the property tax base of their principal dwelling (where they reside) to another (in which they will in future reside) In ANOTHER COUNTY in California under the following conditions:

  • You purchased the original home AFTER November 9, 1988 and purchased or will purchase the new home prior to January 1, 2019 and within 2 years of the sale of their original home
  • The new county has opted into the Prop 90 program. (At present only 11 out of the 58 California counties have opted in)
  • The new home costs the SAME OR LESS than what they sell the old home for
  • They may only transfer their tax base ONE TIME in their lives
  • Should a married couple divorce ONLY ONE person over the age of 55 may transfer the tax base to their next home