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Senior Citizen's Replacement Dwelling Benefit
Propositions 60 & 90
If either spouse is over age 55 (when the old home is sold), PROP 60 allows replacement of a primary residence with a new home of equal or lesser value (but see below) within the same county and transfer of the Prop 13 assessed valuation from the old home to the new property. This is allowed once in your lifetime, and a spouse who has done it before 'taints' both spouses.
PROP 90 allows counties to elect to accept transfers of Prop 13 values from moves from other counties when a primary residence is replaced with a less expensive (but see below) home. If you are over 55 and move into a county which accepts Prop 90, you may take your old, lower Prop 13 value, regardless of from which county you move.
In most cases, these constitutional tax initiatives allow senior citizens to transfer the trended base value from their current home to a replacement property if certain requirements are met. This may result in substantial tax savings.
Who Qualifies?
If you or your spouse that resides with you are age 55 or older, you may buy or construct a new home of equal or lesser value than your existing home and transfer the trended base value to your new property.
This is a one-time only benefit. You must buy or complete construction of your replacement home within two years of the sale of the original property. Both the original home and the new home mustbe your principal place of residence, and you must file your claim within three years following the purchase or construction of your replacement home.
Once you have filed and received this tax relief, neither you nor your spouse who resides with you can ever file again.
Eligibility Requirements:
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 ownerof 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 replacemet 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 resideing with you, ust have been at least 55 years of age when the original property was sold.
What is the difference between Proposition 60 and Proposition 90?
Proposition 60 relates to transfers within the same county (intra-county). Proposition 90 relatesto transfers of base value from one county to another county in California (inter-county).
If I qualify for Proposition 60/90 benefits, do I still need to file for a Homeowners' Exemption on the replacement property?
Yes. Homeowners' Exemptions are not granted automatically.
What is the Proposition 60/90 filing deadline?
You must file your claim within three years following the purchase or completion of new construction of the replacement home.
My original home is located outside Orange County, but my replacement home is in Orange County. Do I qualify for relief?
Yes.
I plan to relocate from Orange County to another county. Do I qualify for relief?
You may qualify for relief. As of November 5, 2004, the following counties in California have an ordinance enabling Proposition 90:
Alameda Orange San Mateo Ventura Los Angeles San Diego Santa Clara
Since the counties indicated above are subject to change, we recommend contacting the county to which you wish to move to verify Proposition 90 eligibility.
Do all replacement homes qualify?
If you meet all other eligibility requirements, relief is granted for a single family residence, condominium, unit in planned development, cooperative housing, community apartment, mobile home subject to local real property tax, and living unit within a larger structure consisting of both residential and non-residential accomodations.
If I make an improvement to my replacement home within two years of purchase, can I get additional tax relief for the new construction?
Yes, as long as the total amount of your purchase and the new construction does not exceed the market value of the original property at the time of the sale.
What does "equal or lesser value" of a replacement property mean?
The meaning of "equal or lesser value" depends on when you purchase the replacement property. In general, equal or lesser value means:
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100% or less of the market value of the original property if a replacement property were purchased or newly constructed before the sale of the original property, or
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105% or less of the market value of the original property if a replacement property were purchased or newly constructed within the first year after the sale of the original property, or
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110% or less of the market value of the original property if a replacement property were purchased or newly constructed within the second year after the sale of the original property.
When making the "equal or lesser value" test, it is important to understand that the market value of a property is not necessarily the same as the sale or purchase price.
The Assessor will determin the market value of each property. If the market value of your replacement dwelling exceedds the "equal or lesser value" test, no relief is available. It is "all or nothing" with no partial benefits granted.
Can I give my original home to my son or daughter and still get Proposition 60/90 benefits when I purchase a replacement property?
No. An original property must be sold and subject to reappraisal at full market value.
If an original property has multiple owners, can Proposition 60/90 tax relief be split?
No. The co-owners must determine between themselves which one will get the benefit. Only one original owner can claim Proposition 60/90 tax relief.
How do I file for Proposition 60/90 tax relief?
Claim forms are available from the tax assessors office.
What form do I need?
Claim of Person(s) at Least 55 Years of Age for Transfer of Base Year Value to Replacement Dwelling
For expanded definitions of Propositons 60 and 90, see Revenue and Taxation (R&T) Code Section 69.5. It is available online at http://markusandheidi.com/frame.asp?frameurl=http://www.boetaxes.ca.gov/property.
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