Property Tax Savings for Sellers 55 and Over

Did you know that if you are over 55 you have an excellent opportunity to sell your home and downsize, while also saving money on property taxes?

There are several propositions in California that allow these sellers to save substantially on property taxes. Proposition 13 was first initiated to prevent drastic increases in property values during the life of ownership, or until ownership changes. Proposition 60 takes this one giant step further and prevents the tax basis from increasing on the purchase of a subsequent replacement home, where the new home is of equal or lesser value. This is allowed only one time.

Here are the requirements:

1. Seller must be at least 55 (if sellers are married at least one must be 55 or older at the time of sale)

2. Home must be the seller’s principal residence and the property purchased must be the new principal residence

3. The replacement home must be purchased no later than 2 years post-sale of the original home

4. Seller must file an application with the San Diego County Tax Assessor.

Keep in mind that this savings is only allowed ONE TIME during the life of the seller. This is a big savings if the sellers purchased the original home years ago and have a low tax basis.

Here is an example: if the homeowners purchased the current property for $75,000 twenty years ago, with a current assessed tax value at about $100,000, the annual tax will be approximately $1,100. Say the current market value of the home is $600,000. If the sellers sell the property and purchase a new home for $600,000 or less they will be able to transfer the taxable value of the original home to the new home–thus keeping their taxes around $1,100. Without the benefit of this rule the tax on the new home would be over $6500. (Thank you to Kevin Kueneke with Primary Residential Mortgage for the example!)

Proposition 90 aids those who want to reap the benefits under Proposition 60 but live outside San Diego County. There are several counties in the state of California that will allow the sellers to transfer the tax basis to a new home within another county. The counties that currently allow this are San Diego, Los Angeles, Orange, Alameda, San Mateo, Santa Clara and Ventura.

If you are in the market for a new home and qualify under Prop 60 for the tax savings, now is a great time to go shopping. Please do not hesitate to contact me if you need further information.


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