Downsizing & 55 or Over? There’s a Tax Incentive for That

October 28, 2020


Downsizing & 55 or Over? There’s a Tax Incentive for That

In life, nothing is certain except for change. As time goes on, needs change, dreams take new shape, and inevitably, new situations arise. 

When these things happen, homeowners can rest assured that in California, there are actually certain benefits available when embarking on that next big step.

Whether you’re planning for the future or facing a transition period right now, we’d like to introduce you to California’s Propositions 60 and 90, two programs perfect for California homeowners over the age of 55 who are looking to downsize their living space.

We know, we know… ‘propositions’ and tax incentives sound really confusing. But, if you understand the details, you can strategize your move to leverage substantial tax benefits. It’s tough, but that’s why we’re here to answer any and all FAQs about Props 60 and 90.

Here’s a quick breakdown of California’s tax incentive programs for 55+ homeowners looking to downsize.

What is Proposition 60?

In a nutshell, Proposition 60 allows homeowners to transfer their base year values to their next home within the same county. In other words, California homeowners aged 55 or older can sell their primary residence and transfer its property-tax assessment to a new home. 

Note that the new property’s market value needs to be equal to or less than the market value of your previous home – that’s what makes it a great option for people looking to downsize. However, also note that this is a one-time opportunity–if you use it once, you’ll be ineligible in the future. 

So, if you’re over 55 and looking to move to a smaller home in your current county, Proposition 60 is for you.

What is Proposition 90?

While Proposition 60 enables moves within the same county, Proposition 90 helps those looking to cross county lines.

Prop 90 allows those eligible to transfer from one county to another within California. However, not all counties are included within this ordinance. To take advantage of Proposition 90, the county where you purchase your new home needs to authorize such a transfer  – meaning homeowners need to shop smart.

These 10 counties are currently eligible for Proposition 90’s transfer of base year values:

  • Alameda
  • Riverside 
  • San Mateo 
  • Ventura 
  • Los Angeles 
  • San Bernardino 
  • Santa Clara 
  • Orange
  • San Diego 
  • Tuolumne

To reap the benefits Proposition 90 creates, homeowners need to be sure they’re moving between approved counties, so direct your search toward equal or lesser-priced listings within these 10 counties. 

As with Prop 60, homeowners need to be over 55 and the new home must be of equal or lesser value than the original property.

Who Qualifies?

The biggest difference between Prop 60 and Prop 90 is location–Prop 60 covers moves within the same county, while Prop 90 pertains to eligible intercounty moves.

For both Proposition 60 and 90, the eligibility qualifications are the same. If you or your spouse residing with you are age 55 or older, you may buy or construct a new home of equal or lesser value than your existing home and transfer the trended base value to your new property.

Great! More Details Please 

Now that we’ve covered the basics, here are all those sneaky little details you need to know about:

  • These benefits are one-time only, so the process can’t be repeated. Once you have filed and received the tax relief, neither you nor your spouse who resides with you can ever file again.
  • In order to activate the incentive, you must buy or complete construction of your replacement home within two years of the original property’s sale.
  • These incentives are only valid for primary residences, so no vacation homes or weekend getaways. Both the original home and the new home must be your primary place of residency.
  • A claim must be filed within three years of purchasing or completing new construction of the replacement 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.

Now, you’re a pro on California’s Propositions 60 and 90 – and it was painless!

Don’t ignore the benefits that California has to offer. Take advantage of these powerful tax incentives available to CA homeowners over 55. Official details from the California State Board of Equalization can be found online here. 

Ready to downsize?
Check out the first LEED-collection of smart residences in San Carlos, California.