The New PROPOSITION 19 & 58 Explained
Propositions 19 is designed to make it more affordable for retirees or older homeowners to sell their primary residence and move to another part of California. Set to begin April 1, 2021, eligible California properties may be sold and enjoy a property tax base transfer. That means you can carry over the same property tax basis when you move throughout the state.
Proposition 58 also allowed certain homeowners to avoid property tax reassessment and save money by using their previous home’s assessed value, only if they moved within the same county. Under Prop 19, there’s an expansion of how this works that allows eligible homeowners to transfer their tax basis not just within the same county, but anywhere across California. Homeowners will also be able to move up to three times and carry their property tax basis (subject to certain restrictions), not just once. Finally, if they purchase a much more expensive home, they will be subject to a blended assessed tax value. The law is meant to promote more real estate transactions and ease the property tax burden of such on older Californians.
Prior to the passage of Prop 19, Prop 58 allowed for this tax basis transfer, however with many more limitations. Here’s a brief overview of what’s changed with Prop 19.
Expanded property eligibility • Expanded value limits • Expanded number of uses
Eligible homeowners include those who are over 55 years old, disabled, or lost their homes in a natural disaster. 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. These propositions are implemented by Revenue and Taxation Code section 69.5.
The New PROPOSITION 60 & 90 Explained
Proposition 60 allows for the transfers of a base year value within the same county (intra-county). Proposition 90 allows for the transfers of a base year value from one county to another county in California (inter-county) 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: Alameda, Los Angeles, Orange, Riverside, San Bernardino, San Diego, San Mateo, Santa Clara, and Ventura Counties
Eligibility Requirements for Propositions 60/90 – Claimant – You, or a spouse residing with you, must be at least 55 years of age when the original property is sold. This is a one-time only benefit. Once you have filed for and received this tax relief, neither you nor your spouse who resides with you, can ever file again, even upon your spouse’s death or if the two of you divorce. However, if you become disabled after receiving this tax relief, you may transfer the base year value of your personal residence a second time due to the disability, which involves a different claim form.
Original Property – Your original property must be eligible for the Homeowners’ Exemption or Disabled Veterans’ Exemption either at the time it was sold or within two years of the purchase or construction of the replacement property. The original property must be subject to reappraisal at its current fair market value at the time of sale.
Replacement Property – 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. The replacement property must be purchased or built within two years (before or after) the sale of the original property.
If a claim is filed after the three-year period, relief will be granted beginning with the calendar year in which the claim was filed.