Maintaining A Beautiful Home …

You Make It Look So Easy, But It’s Not!

Now that the kids are grown, you may want to consider moving to a smaller home and taking your base year tax rate with you!

Propositions 60 and 90 are constitutional initiatives passed by California voters and commonly known as the Senior Citizen’s Replacement Dwelling Benefit or Empty Nest Act.  They provide property tax relief by preventing reassessment when an adult, age 55 or over, sells his or her existing residence and purchases or constructs a replacement residence of equal or lesser value.

This enables active adults who have raised their family to buy a smaller home and not be penalized by having to pay a higher property tax based on the current value of the new property.  Qualified individuals will continue to pay approximately the same amount of annual property taxes as before.

Getting Specific ….

When a qualified senior citizen purchases or constructs a new residence, it is not reassessed.  The Assessor transfers the factored base value of the original residence to the replacement residence.  Prop. 60 originally required that the replacement and the original be located in the same county.  Later, Prop. 90 enabled this to be modified by local ordinance.

 Equal or Lesser Value

 The comparison must be made using the full market value of the original property as compared to the full market value of the replacement dwelling as of its date of purchase/completion of new construction.

 This is important because the sales/purchase price is not always the same as market value.  The Assessor must determine the market value of each property, which may differ from sales price.

Qualification is Easy but Exact

 The seller of the original residence, or spouse who resides with the seller, must be at least 55 years of age at the time of sale.

 Please check with the Office of the Assessor in your county to determine the applicable time frames for sale and purchase of a replacement residence.

 For example, in Los Angeles County, the replacement residence must have been purchased or constructed on or after November 6, 1986, if the original was located in Los Angeles County.  The replacement residence must have been purchased or constructed on or after November 9, 1988, if the original was located in any other California county.

 Did You “Move Down” To A Smaller Home Recently?

 Claims must be filed within three years following the purchase of the replacement residence.

 Claim forms are available from the public counters in the Assessor’s Office of participating counties.

 Eligibility Requirements

1.        The replacement property must be the owner’s principal residence and eligible for the Homeowner’s Exemption.  The original property, at the time of its sale, must have been eligible for the Homeowner’s Exemption, or entitled to the Disabled Veteran’s Exemption.

After you have received Prop. 60/90 benefits, you must file a Homeowner’s Exemption on the replacement property.  It is not granted automatically.

2.        The seller of the original residence, or a spouse residing with the seller, must be at least 55 years of age as of the date that the original property is transferred.

Additional record owners need not identify themselves as a claimant; to do so is to use the “once in a lifetime” benefit as a principal claimant.

3.        The replacement property must be of equal or lesser “current market value” than the original.

The Assessor must determine the market value of both the original and the replacement property, which may differ from sale price.

4.        The original and replacement properties must be sold and purchased respectively on or after the dates specified in the individual county ordinances.

5.        The replacement property must be purchased or newly constructed within two years (before or after) of the sale of the original property.

6.        The owner must file an application within three years following the purchase date or new construction completion date of the replacement property.

7.        This is a one-time only filing. Prop. 60/90 relief cannot be granted if the claimant or spouse was granted relief in the past.

8.        Prop. 60/90 relief includes, but is not limited to:  single family residence, condominiums, units in planned unit developments, cooperative housing corporation units or lots, community apartment units, mobilehomes, subject to local real property tax, and owner’s living premises which are a portion of a larger structure.

9.        In most instances, if more than one owner of an original property is eligible for Prop. 60/90, they must choose among themselves which one will use the benefits.

NOTE:  The co-owners of the original residence cannot divide the benefit and transfer half to separate replacement residences.  The co-owners must determine between themselves which one would receive the benefit if they are establishing separate residences.

 Supplemental Assessments

 When the replacement property is purchased or newly constructed, the Assessor must issue positive or negative supplemental assessments.  The Assessor processes the factored base value of the original property for the replacement property.  If this value is higher than the prior value of the replacement property, positive supplemental assessment is issued and a supplemental tax bill is mailed.  If this value is lower than the prior value of the replacement property, a negative supplemental assessment is issued, and a refund is mailed.

 Time Plays a Part in the Market Value of the Replacement Property

 Depending on when you purchase the replacement property, equal or lesser value means:

·         100 percent or less of the market value or the original property if a replacement property is purchased before an original property is sold.

·         105 percent or less of the market value of the original property if a replacement property is purchased within the first year after an original property is sold.

·         100 percent or less of the market value of the original property if a replacement property is purchased within the second year after an original is sold.

 New Construction of the Replacement Property

A qualified claimant may purchase a replacement dwelling and within two years make an addition to the new property as long as the total amount of the purchase and the new construction (as determined by the Assessor) do not exceed the market value of the original property.

Unless the replacement dwelling completely satisfies the “equal or lesser value test,” no benefit is available.

 Some Final Notes

The law provides that an original property must be sold for consideration and subject to reappraisal at full market value.  You cannot dispose of your original property by gift or devise and expect the purchase of replacement property to qualify for tax relief under Prop. 60/90.

 A claimant may transfer the factored base year value from an original single family residence to a replacement duplex or multi-unit (living in one unit and renting the others) as follows:

·         The owner could carry the factored base year value of the original property to that portion of the replacement residence and the land that constitutes a reasonable size to embody a site for the residence.  However, that portion comprising the abode must be of equal or lesser value than the original property.  The rest of the parcel will be appraised at its market value.

·         The disclosure of social security numbers by all claimants of a replacement dwelling is required by Revenue and Taxation Code, Section 69.5.  The numbers are used by the Assessor to verify the eligibility of persons claiming this exclusion and by the state to prevent multiple claims in different counties.  The claim is not subject to public inspection.

·         The counties that are currently participating in the program can, in the future, enact an ordinance that would not accept the transfer of base year value to a replacement dwelling except as defined in Proposition 60.  Always check with the local county Assessors office for current participation details and compliance.

Very important Follow-Up Steps

1.        Check with your County Assessor to determine precisely how Propositions 60/90 are implemented in your area. 

2.        Call your local real estate agent or broker to accomplish the sale of your original property and assist in finding the replacement residence.

3.        Rely on Chicago Title to insure the purchase of your new home.

The following counties have enacted an ordinance to accept approximately the same amount of annual property taxes from any California county when the replacement residence is located within their county.  You may contact the Office of the Assessor for more information and forms in each of the following counties:

Alameda

County Assessor’s Office

1221 Oak Street, Room 145

Oakland, CA  94612

(510) 272-3755

Los Angeles

500 West Temple St., Room 205

Los Angeles, CA  90012-2770

(213) 893-1239

Orange

630 North Broadway

12 Civic Center Plaza, Room 148

Entrance, P.O. Box 149

Santa Ana, CA  92702

(714) 834-2727

San Diego

1600 Pacific Highway, Room 103

San Diego, CA 92101-2480

(619) 531-5507

San Mateo

555 County Center Blvd.

Redwood City, CA  94063-1639

(650) 363-4500

Santa Clara

70 West Hedding St.

San Jose, CA  95110

(408) 299-5500

Ventura

800 South Victoria Avenue

Venture, CA  93009

(805) 654-2181

Contra Costa

834 Court St.

Martinez, CA  94553

(925) 313-7400

Contra Costa has restricted Proposition 90.  To qualify for benefits during the time ordinance was in effect, a senior must have purchased and sold by November 8, 1993.

Inyo

Courthouse, North Edwards, Drawer J

Independence, CA  93526

(760) 878-0302

Inyo County has restricted Proposition 90.  To qualify for benefits during the time ordinance was in effect, a senior must have purchased and sold by October 13, 1994.

Marin

Civic Center

P.O. Box 4220

San Rafael, CA  94913-4220

(415) 499-6133

Marin County has restricted Proposition 90.  To qualify for benefits during the time ordinance was in effect, a senior must have purchased and sold by January of 1997.

Riverside

2720 Gateway Dr.

Riverside, CA  92507

(951) 486-7474

Riverside has restricted Proposition 90.  To qualify for benefits during the time ordinance was in effect, a senior must have purchased and sold by June 30, 1995.

Transfers between counties are allowed only if the county in which the replacement dwelling is located has passed an authorizing ordinance.  The acquisition of the replacement dwelling must occur on or after the date specified in the county ordinance.

There are a number of counties that have rejected Prop. 90 and would therefore, only allow the replacement dwelling benefit for transfers within the county.

                Amador

                Butte

                Calaveras

                Colusa

                Del Norte

                El Dorado

                Fresno

                Glenn

                Humboldt

                Imperial

                Kings

                Lake

                Lassen

                Madera

                Mendocino

                Merced

                Mono

                Napa

                Nevada

                Placer

                Plumas

                Sacramento

                San Benito

                San Bernardino

                San Francisco

                San Joaquin

                San Luis Obispo

                Santa Barbara

                Santa Cruz

                Shasta

                Sierra

                Siskiyou

                Solano

                Sonoma

                Stanislaus

                Sutter

                Trinity

                Tulare

                Tuolumne

                Yolo

                Yuba

The remaining counties have not implemented the proposition. There is no limit on implementation and counties can elect to take no action.

                                    Alpine

                                    Mariposa

                                    Tehama