**Did You Know That Under Certain Conditions That A Person 55 Years of Age May Transfer Property Tax Base To A New Property?

     Prop 60 was an amendment codified in Section 69.5 of the Revenue and Taxation Code. It allows taking the existing Proposition 13 base year value from a former residence to a replacement residence if certain conditions are met. This benefit is open to homeowners who are at least 55 years of age and meet the requirements outlined in the conditions below.

    √    The county where the property is located must have adopted Proposition 60 in order to take advantage of this code. In Orange County if the replacement dwelling is inside Orange County then the original dwelling must be within the County.

    √    As of the date of transfer of the original property, the seller or spouse living with the seller must be at least 55 years of age.

    √    The replacement dwelling must be of equal or lesser value than the original property, there are no exceptions.

    √    The equal or lesser value comparison must be made using the full market value of the original home and the full market value of the replacement dwelling as of its date of purchase or completion of new construction. This is important because sale prices are not the same as market value.

    √    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.

   

• 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.

   

• 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 originalproperty.

    √    The replacement dwelling must have been purchased or newly constructed on or after 11/06/86.

    √    The original property must have been eligible for the Homeowner's Exemption or entitled to the Disabled Veterans' Exemption.

    √    Without exception, the replacement dwelling must be purchased or newly constructed with two years (before or after) of the sale of the original property.

    √    The original property must be subject to reappraisal at its current fair market value as the result of its transfer.

    √    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.

    √    This benefit can only be granted once.

Common Questions:

Q. If the current full cash value of my replacement dwelling slightly exceeds the value of my original property, can I still receive a partial benefit? A. 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 or completion of new construction. The assessor must determine the market value for the property, which may differ from the sales price.

Q. Can I qualify for the benefits of Prop 60 when I sell my original property (owned alone) and purchase a replacement dwelling with several co-owners? A. Yes. The base year value of your original property can be transferred to your replacement dwelling regardless of how many co-owners of record. In this case the total market value of the original property is compared to the total market value of the replacement dwelling regardless of the fact that the qualified principal claimant may only own a portion of the replacement dwelling.

Q. May I as a co-owner of an original property receive partial benefit on the replacement dwelling along with other co-owners who purchase separate replacement dwellings? A. No. The Law provides that only one co-owner of an original property may receive the benefit in a situation where all co-owners purchase separate replacement dwellings. The co-owners must determine between themselves, which one should receive the benefit.

Q. Does a person qualify for the Prop 60 benefit when she/he sells an original property and buys a replacement dwelling within two years, but no longer qualifies for a Home Exemption on the original property that sold nearly two years before? A. Yes. The statute requires that the original property be eligible for the Homeowners Exemption at the time of sale. It is eligible if the claimant owns and occupies the property as his or her principal residence at the time of sale.

Q. If the transfer of my base year values to the replacement dwelling results in a supplemental assessment that is a refund, do I still have to pay the existing annual tax bill on the replacement property or will that bill be adjusted to reflect the new value? A. Unfortunately, you must pay the existing annual roll tax bill on your replacement property. That bill cannot be adjusted or canceled to reflect the Proposition. Additionally you must pay that bill before any refund resulting from the Proposition's benefit will be sent to you. However, later you will receive a refund that reflects the Prop 60 benefit.

    Remember that the county where the property is located must have adopted the Proposition 60 in order to take advantage of this code. The following are the Web sites for Orange, San Diego and Los Angeles where you can obtain forms: www.oc.ca.gov /assessor, www.sdaarcc.com and assessor.co.la.ca.us.

    Provided upon request is a complimentary no obligation market evaluation giving you the current value of your home. Whether or not you are considering selling, our comprehensive market update and property evaluation report is invaluable and will update your records.

    Sally Martin, REALTOR®, has provided this information as a service. Since every situation varies, it is strongly advised to seek counsel from independent tax advisors, tax attorneys, and/or CPA.

    The information on this page is brought to you courtesy of the California Department of Real Estate.
 

    For more information or to discuss your requirements call me on 949-632-6363 (Cell). You may send me a fax on 949-675-2156 or email me at sally@sallymartinrealtor.com.