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Propositions 60 and 90 can help seniors move while taking their current tax base with them


System - Sunday, April 29, 2018

In my conversations with many homeowners (and even realtors!), it is surprising to find a large number of people who are not aware of specific tax-saving propositions. As a real estate professional, it is nearly a form of due diligence to make sure my clients and neighbors are well-informed of any real estate information that will be of benefit to you and your families. It is quite unfortunate that Propositions 60 and 90 are not advertised nearly enough, because many people could have qualified to purchase a new home while avoiding reassessment!

The origin story of the infamous Prop 13 is one many of us are already very familiar with - inflation and rising property tax rates in the 1970s created a condition where many could no longer afford to live in the homes they once could. This crisis led to one of the most important - if not the most significant - voter initiative in the history of California politics. Prop 13 was followed by other advantageous propositions in the following decade: Prop 60 in 1986 and Prop 90 in 1988. Interestingly enough, with the political climate that ensued post-Prop 13, Props 60 and 90 were proposed by the California state legislature in 1986 and 1988 and then passed by voter referendums.

So what exactly do these propositions do for California homeowners?

Props 60 and 90 essentially provide the same benefit: homeowners 55 years of age and older can purchase or construct a new property of equal or lesser value while preventing reassessment. The difference is that Prop 60 allows you to move within the same county, while Prop 90 exists for homeowners seeking to move from one California county to another. An individual and their spouse (as one entity) can only file once. Of course, there are numerous requirements that homeowners must meet to qualify. A few are listed below.

Eligibility Requirements verbatim from the Los Angeles County Assessor's website:

  1. "The replacement property must be your principal residence and must be eligible for the Homeowners' Exemption or Disabled Veterans' Exemption.
  2. The replacement property must be of equal or lesser "current market value" than the original property. The "equal or lesser" test is applied to the entire replacement residence, even if the owner of the original property acquires only a partial interest in the replacement residence. Owners of two qualifying original residences may not combine the values of those properties in order to qualify for a Proposition 60 base-year transfer to a replacement residence of greater value than the more valuable of the two original residences.
  3. The replacement property must be purchased or built within two years (before or after) of the sale of the original property.
  4. Your original property must have been eligible for the Homeowners' or Disabled Veterans' Exemption.
  5. You, or a spouse residing with you, must have been at least 55 years of age when the original property was sold."

If you have any questions regarding these propositions, need information regarding other property tax-saving benefits, or have any real estate related concerns, please contact my team.

You can learn more about Propositions 60 and 90 at the LA County Assessors website at https://assessor.lacounty.gov/propositions-60-and-90/