Are you a California homeowner who is considering downsizing? Do you know about Props. 60 and 90?
In 1978, California voters approved Prop. 13 which capped the property tax at a 1% of the full cash value at the time of acquisition. This is great for folks whose home values have wildly appreciated over the last 20 years. What happens to your tax base though if you are looking to sell?
If you are over the age of 55 or at least one of the owners (joint tenant, community property, tenant-in-common) is over 55, or are severely disabled, you may qualify to keep your low property tax base under Prop. 60 or Prop. 90. The idea behind these two propositions is to allow older homeowners or homeowners who become disabled to downsize or find a home that will accommodate their needs.
The exchange must be for a property of equal or lesser value, unless you sell first and buy later. If you purchase a home within a year after you sell, you may spend up to 5% more. If you purchase a home between 1 and 2 years after you sell, you can spend up to 10% more. You must file for the tax exemption within 3 years of the exchange.
Prop. 60 says that the homeowner must purchase within the same county. Prop. 90 lets the homeowner transfer their assessed value tax base to a home of equal or lesser value in a different county, but only if that county accepts incoming transfers. Right now only 10 counties in California allow incoming tax transfers.
As you can see, there are quite a few requirements in place to take advantage of Props 60 and 90. If you do want to or need to downsize, this property tax exemption will help you get into a property that is more manageable and comfortable at an affordable price. Make sure you talk to a tax advisor to be sure you qualify.
If you are considering downsizing, call me. I will help you get your home ready for market as well as help you find the home that suits your needs perfectly!