Property Tax Transfer

California property values have increased dramatically over the last decades. Property taxes are based on the assessed (usually market) value of the property, and because of Proposition 13, annual increases in the assessed value are capped at 2%.

 

If you sell your home and downsize into a smaller home with a market value of more than your current home's assessed value, you will pay more in property taxes - sometimes a LOT more. This can make it very difficult for people who are over 55 if their incomes have decreased or are now on fixed incomes.

California has addressed this via Proposition 60 and Proposition 90. Proposition 60 lets someone over 55 transfer their tax basis from their old home to their new home - as long as the new property is in the same county.

Proposition 60 is a one time only transfer, and there are specific criteria that must be met. 

  1. You or your spouse must be at least 55 years old when the original property is sold.

  2. The original property and the replacement must be in the same county.

  3. You can only use the transfer once in a lifetime.

  4. The new replacement property must be of equal or lesser value than the original property sold for.

  5. The replacement property must be built or bought within 2 years of selling the original property. 

  6. The original property must be your primary residence and have been eligible for the homeowner's exemption or disabled veteran's exemption.

  7. The replacement property must be your primary residence and must be eligible for the homeowner's exemption or disabled veteran's exemption.

Proposition 90 allows counties to allow transfer of the tax basis between counties. However, not all of California's counties allow this. You will need to check with the county where the replacement property is located.