Proposition 60 and Proposition 90

Many Buyers and Sellers Team Whitney works with in the South Bay area in California have questions on Proposition 60 and Proposition 90.

These propositions apply to people who are 55 or older in age, allowing them to potentially transfer their property tax basis to a new home, which can result in substantial property tax savings.  For example, let’s say Frank and Danielle bought their primary residence several years ago for $200,000.  Their property taxes in Los Angeles County should be around $2,500-$3,500 give or take per year.  Let’s say their property today is worth $900,000.  If either Frank or Danielle is over the age of 55, they can take advantage of Proposition 60 or Proposition 90.  If they sell their property for $900,000, and go out and purchase a property for $650,000 to essentially “downsize”, they can move their $2,500-$3,500 yearly property tax payment over to this new property.  The property taxes on $650,000 would normally be about $8,125 per year, so this is over a $5,000 savings for them each year.  Proposition 60 applies to a transfer of property tax basis within the same county, while Proposition 90 applies to a transfer of property tax basis from one county to another in California.  There are five stipulations I will go through to be able to utilize these Propositions.

1.   The replacement property must be of equal or lesser value to the current property.  If your original property is a multi-unit property, such as a duplex, the “equal or lesser value” rule only allows you to utilize the market value of the unit you reside in, and not the market value of the entire duplex.      

2.    This proposition can only be used one time.

3.    One of the people using these Propositions must be 55 or older.

4.    The replacement property purchase must be complete within two years of selling the current residence.

5.    Both the original property you are selling and the new property you are purchasing must be your principal place of residence.

Every client’s situation is unique, so for more information, or any additional questions you may have, please contact Danielle Whitney Moore with Team Whitney (Keller Williams Realty L.A. Harbor) at (310) 987-9103.