Taking Your Property Tax Rate with You When You Sell

I have blogged on this topic before but I get some many questions on it that I am writing it up again.  In California Propositions 60/90 amended section 2 of Article XIIIA of the California Constitution to allow a person who is over age 55 to sell his or her principal place of residence and transfer its base year value to a replacement dwelling of equal or lesser value that is purchased or newly constructed within two years of the sale. .

Proposition 60 allows for the transfers of a base year value within the same county (intracounty). Proposition 90 allows for the transfers of a base year value from one county to another county in California (intercounty) if the county has authorized such a transfer by an ordinance.

As of November 7, 2018, the following ten counties in California have an ordinance enabling the inter-county base year value transfer:

• To qualify, the replacement property must be your principal residence and must be eligible for the Homeowners' Exemption or Disabled Veterans' Exemption
• The replacement property must be of "equal or lesser value" than the original property.

  In general, equal or lesser value means:

  • 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
  • 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
  • 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.

Note: 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 replacement property must be purchased or built within two years (before or after) of the sale of the original property.
• Many of my clients qualify for the transfer as they downsize.  I hope this helps clarify the issue.  For further information on how this impacts you specifically talk to your accountant.   If you want help selling your home to take advantage of this allowance in California let me know.