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Proposition 60 & 90

Proposition 60 & 90

Proposition 60 and 90 are tax laws that provide property tax bill relief to those aged 55 and above. If you fall within this age bracket and are thinking of moving into a new home within California, I would encourage you to take that bold step. Proposition 60 and 90 makes your move so smooth and saves you from the stress related to property taxes. 

To gain a deep understanding of proposition 60 and 90, it is empirical that I take you through proposition 13. Proposition 13 is what is commonly referred to as the People’s Initiative to Limit Property Taxation. Did you know the law could help you minimize proper taxation instead of evading and committing property tax fraud? Proposition 13 sets the base value for your property, protecting you from paying higher taxes in case the market value of your property rises due to real estate inflation. Let us say you purchased a property or constructed it in 2010. The market value of your property is set according to the 2010 market value. Should there be an increase, proposition 13 only allows a 2% increase in the property value annually. This rate saves you from the crazy real estate rates.

Proposition 60 and 90 are transfer tax laws that allow you to move into a new property by purchasing fresh construction and maintaining the tax bill of your original property. This applies to whether the replacement property is larger or smaller than the original property. However, these propositions only apply in certain counties like California. These propositions are also available in counties like Santa Clara, Orange, San Diego, Riverside, Los Angeles, Ventura, El Dorado, and Alameda. Prop 60 and prop 90 are intercountry amendments meaning you can move to the listed counties and still experience the tax reliefs.

Benefits of proposition 60 and proposition 90

Proposition 60 and 90 transfer tax laws allow homeowners to downsize or move to a new location without having to worry about increased property tax bills. If you do the movement or replacement according to the law, you are guaranteed equal tax payment as the previous property. The tax bills will remain constant regardless of the size of the property you moved into or the county you moved into. Prop 60 and 90 further provides other reliefs by ensuring property value remains low and is similar to the value of the property when you purchased and not the current market value of the property.

In counties with no proposition 60 or proposition 90, moving into a new property, whether purchased or freshly constructed, means that you have to pay tax bills equivalent to the market value of the property and inflate it as the market value of the property rises. When you are in California, you are saved from the stress of increased tax bills as you move into a new property. These propositions allow you to shift to the new property as long as you meet the requirements of the propositions 60 and 90.

These propositions allow for balance in the real estate market, and many can acquire permanent homes instead of rental apartments. With the older people moving to newer premises, those without permanent premises can acquire the homes on the purchase, and those without residence will eventually find a living space. These propositions ensure homelessness is minimized since everyone is entitled to a shelter.

Grandparents can transfer their property tax benefits to their grandchildren or children. These benefits, however, only apply to gift, sale, or the hybrid of these two.

Proposition 60 and 90 requirements

To qualify for the proposition 60 and 90, one must comply with the following requirements. 

County 

According to Proposition 60 in California, the original property, the replacement property, and their owners should be located in the same county. Proposition 90 dictates that whenever you are moving into a new county, then the county should have also adopted proposition 90. They must confirm with your country of origin to ensure that you are a member of the county, and you previously owned property there. 

Age

Proposition 60 and 90 are only applicable to those who are at least 55 years and above otherwise is not applicable. Suppose your spouse does not meet the age requirement what happens? The claimant for these propositions must be an owner or co-owner of the original property. Your spouse’s social security details must be provided if he or she is an owner of the replacement property. 

Entitlement and eligibility of the previous property

The original property must have been owned you and must have been registered under homeowners in your name or should have been entitled to disabled veteran exemptions

Value of the property

The replacement value of the property you are seeking must be of the equivalent value to that of the original property. This does not mean equal sales and purchase price. There are further regulation to this requirement as stated

The market value of the property: the market value of the property may differ from its sales price, according to the assessors. This means that if you purchase a replacement property, below its market value, the assessors may contend a higher value to the property than the actual purchase value.

Timeline of the value: 100% of the market value of your original property in case you purchase a replacement property before you sell your original property.105% suppose the replacement property is purchased within one year after the sales of the original property and 110% should the replacement property be purchased within the second year after selling the original property.

Two years 

The replacement property must have been purchased or constructed two years before and after the original property was sold. This does not provide a grace period.

Filing claim

A claim for relief in California County must be filed with a three years duration. This begins from the period when the replacement dwelling was purchased or constructed to receive the full relief. Filing proposition 60 and 90 can only be done once whether your spouse dies or you experience a divorce, and you feel the need to move to a new property. You can be allowed to file more than once after meeting the age requirement, and if you become disable and there is a need to move to a new property. The second and final filing will be based on disability.

When you are interested in exchanging property through prop 60 and prop 90, contact us, and we will be able to help you with the process.

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