Real Estate Tax Savings For Homeowners 55 And Over

What is Prop 60 and Prop 90 And How It Can Benefit You?

Real Estate Tax Savings For Homeowners 55 And Over

What is Proposition 19 How It Can Benefit You?

Effective April 1, 2021, Proposition 19 allows homeowners 55 or older, those with severe disabilities, and victims of wildfires and natural disasters to transfer their tax assessments anywhere within the state of California to a primary residence of equal value with no property tax increase, or a more expensive primary residence with an upward adjustment within two years of the sale of the original primary residence.
Increases the number of times that these eligible homeowners can transfer their tax assessments from one to up to three times.
Effective February 16, 2021, Proposition 19 requires that inherited homes that are not used as principal residences, such as second homes or rentals, be reassessed at market value when transferred to children or grandchildren.
Allocates additional revenue or net savings resulting from the ballot measure to wildfire agencies and counties.

Eligibility Requirements:

Homeowners must be age 55 or better
For married couples, only one spouse must be 55 or better to qualify
Homeowners must sell their former residence within 2 years of purchasing the replacement property
Both the former and replacement properties must be the owner’s primary residence
The market value of the replacement property must be equal to or less than the market value of the former residence
Is your home in a trust? To be able to apply for Prop 60/90, you will need to be the beneficial owner of the trust, not only the trustee

Proposition19 builds off of Proposition 13, passed in 1978, which limits property taxes to 1% of a home’s value, based on the year the house was purchased. Proposition 13 also restricts the amount that taxable value can go up every year to 2%, even if a home’s market value increases much more.

Currently, as soon as residents move to a new home after living in their old home for a long time, their property tax increases by a lot — this is the issue that Proposition 19 seeks to address. Proposition 19 allows homeowners who are 55 or older to transfer the taxable value of their old house to a new home of equal value or a more expensive home, thereby avoiding the big jump in property taxes they would otherwise face. This is designed to encourage seniors to enter the real estate market.

Proposition 19 also changes tax reassessments on inherited properties. Currently, under Propositions 58 and 193, primary residential homes are not reassessed when transferred to heirs, so any property that is benefitting from the low tax rates created by Proposition 13 would continue to benefit if a parent passes the property to a child or grandchild. Rental properties or vacation homes can also currently be transferred from parent to a child or grandchild with the first $1 million tax basis exempt from re-assessment when transferred.

However, Proposition 19 makes it no longer possible for inherited homes to maintain the same low property tax rate enjoyed prior to the inheritance if the heir does not move into it as a primary residence. Children who inherit their parents’ home, but only intend to keep it as a second home or rent it out, would see a big increase in property taxes under Proposition 19. Further, when the inherited property is used as the recipient’s principal residence, but has a market value of $1 million more than the property’s taxable value, an upward adjustment in assessed value would occur.