How Does California Property Tax Transfer for Seniors Work?

Lucas Smith
Wednesday, May 22nd, 2024
By Lucas Smith

Can you take my taxes with you when I move to California? This is a question I get asked all the time: "How can I take my property taxes with me when I move to California?"

Well, the short answer is "yes."

I'm going to explain it right here: Propositions 60 and 90 allow you to take your property taxes with you. But who qualifies?

To qualify, you must be a homeowner aged 55 or older. For married couples, only one spouse needs to be 55 or older. You must sell your former residence within two years of purchasing your replacement property, and both the former and replacement homes must be your primary residence, meaning you have to live in them.

This rule applies to primary residences, not investment properties. The replacement property's market value must be equal to or less than the market value of your former residence, right? You need to purchase a property that is worth the same or less. So, how does it work? Here's the detailed explanation, which may get a little technical, so please bear with me.

Propositions 60 and 90 are tax savings programs for homeowners aged 55 or older. These programs, passed in 1986 and 1988 respectively, allow eligible homeowners to sell their home and purchase another one of equal or lesser value without an increase in property tax. This is achieved by transferring the taxable assessed value of the original home to the replacement home.

Proposition 60 allows for intra-county transfers, which means you can sell a home in one county and buy a home in the same county. Proposition 90 allows for inter-county transfers, so you can sell a home in one county and buy a home in another county. It's important to note that all counties in California now qualify for this program. Let me explain it in simpler terms, as I know it can be a bit technical.

When you sell your original home and buy a new one, you can transfer the taxable or assessed value of your original home to the replacement home. This means that the assessed value of your current home is not necessarily the same as the selling price. For example, if you sell your former residence for $489,000 and buy a new home for $340,000, and the assessed value of your former residence was $261,000, you can transfer that assessed value to the new home.

Under the guidelines of Prop 60-90, the assessed value plus 2% would be $266,901,000 for their new residence. I understand it may sound complex, but it's actually pretty simple. When selling your former home and wanting to move your taxes with you, simply talk to your agent about it at the time of listing.

If you have a qualified professional assisting you, it's important to clearly communicate your intentions. They will ensure that you are looking for a home of equal or lesser value in your desired area and will inform the title company about your transfer plans. They will also provide you with the necessary paperwork for the transfer.

You don't have to use a real estate agent when making this move. As my old man used to say, there are only two things you have to use in life: death and taxes. And this is neither one, thank God. However, just like anything else, it's always better and easier to use a qualified professional to support you in doing something like this, rather than trying to do it yourself.

Although it is legal to represent yourself in court, most people choose to hire a lawyer when they are in trouble or need to go to court. This is because, let's be honest, lawyers can present information in a way that may not always be completely truthful, much like real estate agents. Additionally, statistics show that the average homeowner who sells their home without a professional agent nets about 6% less than those who use a professional agent.

Commissions are decreasing and negotiable, so you'll keep more money. When it comes to props 60 and 90, it may seem complicated, but it's actually pretty simple once you grasp the basics of what you're transferring.

The assessed value of your former residence determines the taxes you pay, not the selling price. On your new home, you will be taxed at a rate of 2% of the assessed value. Your new home must be of equal or lesser value than your old home. If you need more information about this or any other aspects of relocating or transferring your tax base, feel free to give me a call.

You can reach me at (714) 844-1580, and I'd be happy to be your personal guide and guru as you prepare to move your home.