Prop. 60 was a constitutional amendment approved by the voters of California in 1986. It is codified in Section 69.5 of the Revenue & Taxation Code, and allows the transfer of an existing Proposition 13 base year value from a former residence to a replacement residence WITHIN ORANGE COUNTY, if certain conditions are met. This benefit is open to homeowners who are at least 55-years old and are able to meet all qualifying conditions, (see below).
Proposition 90 has the same provisions and qualifications as Proposition 60. The difference is that it allows base year transfers from one county to another county in California. The only counties that have adopted an ordinance to allow values from other counties are: Alameda, El Dorado, Los Angeles, Orange, Riverside, San Diego, San Mateo, Santa Clara and Ventura
How do I qualify for these property tax benefits?
1. Proposition 60 - Both the original property (former residence) and its replacement must be located in the same county.
2. Proposition 90 - The original property is located in a different county from replacement, (see Proposition 90 information above).
3. As of the date of transfer of the original property, the seller or a spouse living with the seller must be at least 55 years old.
4. The original property must have been eligible for the Homeowners' Exemption or entitled to the Disabled Veterans' Exemption.
5. The replacement dwelling must be of equal or lesser value than the original property.
6. The replacement dwelling must have been purchased after 11/06/86 (this is the date the proposition was created).
7. Without exception, the replacement dwelling must be purchased within two years (before or after) of the sale of the original property.
8. The original property must be subject to reappraisal at its current fair market value (normally what you sold it for) as the result of its transfer, in accordance with Sections 110.1 or 5803 of the Revenue and Taxation Code.
9. Without exception, a claim for relief must be filed within three years of the date a replacement dwelling is purchased or new construction of a replacement dwelling is completed to receive the full relief. A claim filed after the three year time period will receive a prospective relief only.
Can a taxpayer apply for and receive the benefit of Prop. 60/90 more than once?
No, this is a one-time benefit.
What is meant by "equal or lesser value" than the original dwelling?
In general, "equal or lesser value" means:
100 percent of the market value of an original property if a replacement dwelling is purchased before the original property is sold. (closed on new property, then sold old property)
105 percent of the market value of an original property if a replacement dwelling is purchased within one year after the sale of the original property. (this is a typical situation where home is sold then proceeds go to purchase new home)
110 percent of the market value of an original property if a replacement dwelling is purchased within the second year after the sale of the original property.
Is the "equal or lesser value" test a simple comparison of the sales price of the original property and the purchase price of the replacement dwelling?
No. The comparison must be made using the full market value of the original property and the full market value of the replacement dwelling as of its date of purchase. This is important because sales prices are not always the same as market value. The County Assessor will determine the market value for each property, which will normally be different from the sales price. This is done by the County running market comparables.
If the transfer of my base year value to the replacement dwelling results in a supplemental assessment that is a refund, do I still have to pay the existing annual roll tax bill on the replacement property or will that bill be adjusted to reflect the new, lower value?
Unfortunately, you must pay the existing annual roll tax bill on your replacement property. That bill cannot be adjusted or canceled to reflect the Prop. 60 benefit. Additionally, you must pay that bill before any refund resulting from the Prop. 60 benefit will be sent to you. However, after the existing bill has been paid, you will later receive a refund that will reflect the Prop. 60 benefit. In other words, when the entire process is complete, you will not have overpaid any taxes, (Revenue & Taxation Code Section 75.43.c).