Aging Baby boomers… there is great news! No, not Senior Citizen discount meals at Denny’s or reduced lift tickets at Mammoth Mountain... it’s much better then that. If you sell your home in Orange County and buy a replacement home in the OC (or other reciprocal counties), you can maintain your current property tax rate for this replacement home !!! For many of you, that would be a huge property Tax savings year after year. The state law that made this property tax savings possible is called Proposition (Prop) 60 which was passed by Clalifornia voters in 1986. Of course, there are conditions and restrictions that apply as follows.
To qualify for Prop 60, you must be 55 years or older, and it only applies to the sale of your principal home. Vacation homes or rental property do not apply. The replacement home you buy must be at the same or lower value of the home your selling. In addition, I’ve talked with the Orange County Tax Assessor about this issue, and I have heard that the replacement home can even be as high as 5% more then the home being sold.
As you may know, Proposition 13 (Prop 13) which passed in 1978 in the state of California, basically set your Orange County property Taxes to a rate of approximately 1.15% of the purchase price. So if you bought your home 15 years ago for $200,000, your property Taxes today would be about $2,300 per year. Without Prop 60, if you sold this home today for $1,000,000 and downsized a bit and bought an $800,000 replacement home, your new Property Tax bill would be $9,200 per year. If you qualify for Prop 60, in this example your property taxes would remain at $2,300 which would save you $6,900 per year ! (That’s a lot of Denny’s senior citizen meals).
Proposition 90 (Prop 90) was adopted in 1988, and it basically extends Prop 60’s benefits to a home owner who sells an buys in two different California counties, only if the other county outside of Orange County has adopted this county ordinance permitting this transfer to occur. This are generally called reciprocal Prop 90 counties. As of June of 2005' , there are 7 ‘reciprocal’ counties that haveadopted the Prop 90 ordinance making Prop 60 benefits available to local replacement dwellings, and these 7 counties are: Alameda, Los Angeles, Orange, San Diego, San Mateo, Santa Clara, and Ventura
A few other conditions and restrictions apply such as you have up to two years before or after the sale of the original residence in order to buy a replacement. Also, if you are married, and either the husband or wife are at least age 55 at the date of transfer, then both of you qualify for the property tax saving. These Tax codes do not apply to Mello-Roos, for Mello-Roos is a local community tax bond and is not based upon the purchase price of the property, and does not apply in many areas throughout Orange County.
These (and all other) Property Tax codes are subject to change at any time, so please consult with your Tax advisor before you make a decision to sell or buy a home if you plan to take advantage of Prop 60 and 90. If you have any questions about Prop 60 or 90, or if you would like to view all homes listed for sale in Orange County, fell free to visit the our website at: Orange County Real Estate.
