PROPOSITION 60/90 INFORMATION (Reappraisal exclusion for seniors)
What does Proposition 60/90 Reappraisal Exclusion for Seniors provide?
This is a property tax savings program for those aged 55 or older who are selling their home and buying another of equal or lesser value. Under Proposition 13, a home is normally appraised at its full market value at the time it is purchased. This program allows the taxable value on the original home to be transferred to the replacement home thereby preventing an increase in property tax. This property tax exclusion, when combined with the current $500,000 capital gains exclusion, provides a powerful reason to sell a property and purchase another.
Is there an age requirement to qualify?
Yes. The property owner must be 55 years of age or older at the time the original property is sold in order to qualify. For married couples, only one spouse must be 55 years of age or older in order to qualify.
Must the property be owner-occupied?
Yes. Both the original and replacement property must be eligible for a homeowner’s exemption. This means that the property must be the owner’s principal place of residence.
May I take advantage of this program more than once?
No. This is a one-time only program.
Is there a time limit for this program?
Yes. You must sell your original home and buy your new property within a two-year period in order to qualify. Effective January 1, 2007, applications can be filed anytime after the date a replacement home is purchased or new construction of a replacement home is completed. However, if the application is filed after three years, the exclusion will only be applied prospective from the date the application is filed.
If I buy a replacement home with a much higher value than my present home, can I qualify for a partial exclusion?
No. Partial exclusions are not allowed under this program, it is either all or nothing.
Are there property value limits on this program?
Yes. Generally, the value of the replacement property must be equal to or less than the market value of the original property. Specifically, the following percentages apply:
• 100% of the market value of an original property if a replacement home is purchased before the original property is sold.
• 105% of the market value of an original property if a replacement home is purchased within one year after the sale of the original property.
• 110% of the market value of an original property if a replacement home is purchased within the second year after the sale of the original property.
If I decide to build my replacement property, does this qualify for this program?
Yes. New construction does qualify for this program, although there are specific requirements that must be followed. If you are interested in pursuing this option you may contact the Assessor’s Office at (619) 531-5481 to go over the requirements.
How will the Assessor’s Office determine the market value of my replacement home if I build it myself?
The Assessor’s Office will determine the value of the newly constructed residence by looking at comparable sales of similar property. The value can often be substantially higher than the actual cost of construction especially if the work is completed by the homeowner and not by an outside general contractor.
Is the “equal or lesser value” test a simple comparison of the sales price of the original property and the purchase price or cost of new construction of the replacement home?
No. The comparison must be made using the full market value of the original property and the full market value of the replacement home as of its date of purchase. This is important because the sales price is not always the same as market value. The assessor must determine the market value for each property, which may differ from the actual sales price.
May I give my original property to my child and still receive the Proposition 60/90 benefit when I purchase a replacement property?
No. The law provides that an original property must be sold for consideration and subject to reappraisal at full market value at the time of sale. Original property transferred to a child or disposed of by gift or inheritance does not qualify.
Can two otherwise qualified property owners who have recently sold their separately owned original properties combine their claim when they buy a single replacement home together?
No. They can only receive the benefit if one or the other, not both together, qualifies by comparing his or her original property to the jointly purchased replacement home. The implementing legislation specifically disallows combining a claim in this manner, regardless of whether the co-owners of the replacement home are married or not.
