Proposition 60 and 90 Orange County

We are continuing our senior week theme here with our second post in a series related to programs and products that our older residents can take advantage of that are real estate related. Our first post revolved around reverse mortgages, and today we will focus on Proposition 60 and 90.

One of the most common questions that comes up in Costa Mesa is the fact that some people know that you can transfer your property taxes if you are older. The concept is one that was passed by a constitutional initiative by California voters in 1986, and is a great concept if you qualify. In fact, I think this is the single greatest benefit aside from Prop 13 in Costa Mesa real estate for owners. Let’s look at the two propositions which are commonly mixed up, and find out what each one can do for those seniors in Costa Mesa real estate.

Why were they enacted? They encourage a person of 55 years or better to “move down” to a small residence or perhaps a single story residence. When a senior citizen acquires a replacement property worth less than the original property, he/she will continue to pay approximately the same amount of annual property taxes as before, which is a great benefit for our retirees in Costa Mesa real estate.

When the senior citizen purchases or constructs a new residence, it is not reassessed if he/she qualifies. The assessor transfers the factored base value of the original residence to the replacement residence. Proposition 60 originally required that the replacement and the original be located in the same county, but Proposition 90 later enabled this to be modified by local ordinance. Proposition 60 and 90 Orange County.

Sellers 55 and older can take advantage of Propositions 60 and 90 in Orange County.

A county’s participation is not mandatory and is subject to change. Therefore it is important to contact the county for Prop 90 eligibility prior to making any moves. As of 2001, the following counties were participating:

Alameda, Kern, Los Angeles, Modoc, Orange, San Diego, Ventura, San Mateo, Santa Clara

1. At the date of transfer of the Costa Mesa real estate property, the seller must be at least 55 years of age (if married, only one spouse must be 55, but must reside in the residence)
2. The replacement property must be purchased or newly constructed after 11/5/1986. The replacement home must also be purchased or newly constructed within 2 years of the sale of the original residence.
3. The sale of the original Costa Mesa residence must qualify for reassessment as a result of its transfer.
4. The principal claimant must have been eligible for the Homeowners Exemption or have been receiving Disabled Vetrans’s Exemption on the original and replacement residences.
5. The replacement residence must be “equal to or lesser” in market value than the original residence. In general, “lesser or equal” has been defined as: 100% of market value of the original property as of its date of sale if a replacement property is purchased before an original property is sold; 105% of market value of original property as of the date of sale if replacement home is purchased the same day or within one year of sale of original property; 110% of market value of original property as of the date of sale if replacement home is purchased within two years of sale of the original property.
6.  The claimant can only be granted relief under this section one time in their lifetime.

Be sure to look at single story housing if you are considering using one of these propositions, which are abundant in Costa Mesa real estate.

The most important ideas of taking advantage of this are that you can only do this one time. Be sure you have the right property identified, because if it doesn’t work for everyone involved, you will have lost your chance to do this again. Also, be sure you are looking at a home that is slightly lower in value. That is the easiest way to meet the “equal or lesser” value clause. Most importantly, do your homework if you are transferring out of county. Riverside and other counties have the right to turn down these types of requests when they are not in the same county.

We will continue our series this week about other senior benefits and talk about Props 58 & 193, and some typical questions and answers on Props 60 and 90.

Feel free to call me at (714) 743-9882 or e-mail me, or a great resource for these propositions can be found on the state BOE.