Do you ever wonder why seniors in California leave the state when they retire? There are a couple of reasons, but one is because they think they can’t afford the housing. But do some research and you will find that just not may be the case.
Enter California’s Prop 60 and Prop 90. These are propositions that let you take your base tax value from your current home, sell the home, then transfer your base tax to your new residence. Yes, there are some catches but first, let’s learn about the wonderful Proposition 13 that we have here in California.
Proposition 13, adopted by California voters in 1978, mandates a property tax rate of one percent, requires that properties be assessed at market value at the time of sale, and allows assessments to rise by no more than 2 percent per year until the next sale.
In English = This means if you buy a house in California for $200,000 the property tax for the year is $2000…of course you have some other small taxes from individual counties, for instance my property taxes are approximately 1.43% per year.
What this equates to is that you can keep a house for ever and the property tax will only rise by no more than 2 percent per year, and that’s only if the County Tax assessor decides to assess your house (they don’t always perform assessments every year). Sorry to everyone who lives in New Jersey and Texas.
So Prop 13 has been saving us since 1978, but what happens when you become a senior, the nest is empty and you & grandpa want to downsize from your 2500 sq ft 2 story home??? This is where Prop 60 and Prop 90 come in handy.
The reason for these propositions was because the housing market was drying up, young new wanna be home owners couldn’t afford the new house prices and the seniors had most of the larger homes, which most of the space was going to waste. So, in steps Prop 60 and Prop 90 which states:
Proposition 60 allows for the transfers of a base year value within the same county (intracounty).
In English = The property taxes on your current home will transfer over to your new home.
Proposition 90 allows for the transfers of a base year value from one county to another county in California (intercounty) if the county has authorized such a transfer by an ordinance.
IN English = You can sell your home from one county and take the taxes from that property and buy a house in a different county and still use the same low taxes.
The catch is you have to be at least 55 years old when you sell your current home and the new home needs to be of equal or lesser value of the home you are selling and they both need to be in the counties that participate in Prop 60/90.
I just sold the house I lived in for the last 6 years. I bought it for $168,000 (it was a HUD home) and my property taxes were 1.43% which = $2402 per year. I sold it for $340,000 one month after I turned 55.
I then bought a smaller house for $270,000, which if I wouldn’t have used Prop 60, my property taxes would be $3861 per year. But since I found the Prop 60 information I am allowed to take my base value tax from the bigger, more expensive house ($2402) to my new house, saving me approx $1400 per year in property taxes.
Recap and other Catches:
Must be 55 yrs old or older when you sell your home.
New house must be of equal or lesser value of the house you are selling.
There are only 10 counties (as of November 2018) that you can use these propositions:
Please check your local County Assessor’s Office for any updates and/or changes.
The California State Board of Equalization has all the information you need. Just type in Prop 60 or Propositions 60/90 in Google to get the information.
Here’s to reading on!