Moving Tax Base

OVER 55? CALIFORNIA PROPERTY TAX RELIEF
Since its passage, Proposition 13 prohibits property tax increases until property ownership is changed.
If either spouse is over age 55 (when the old home is sold), PROP 60 allows replacement of a primary residence with a new home of equal or lesser value (but see below) within the same county and transfer of the Prop 13 assessed valuation from the old home to the new property. This is allowed once in your lifetime, and a spouse who has done it before 'taints' both spouses.

PROP 90 allows counties to elect to accept transfers of Prop 13 values for moves from other counties when a primary residence is replaced with a less expensive (but see below) home. If you are over 55 and move into a county which accepts Prop 90, you may take your old, lower Prop 13 value, regardless of from which county you move.

Using Prop 90, you can sell your $400,000 San Francisco home [assessed value $80,000] and move to a new $300,000 home in San Mateo; the new San Mateo assessed value will be $80,000!

7 COUNTIES WHICH ACCEPT PROP 90 (Current as of 6/1/2008)
Alameda, Los Angeles, Orange, San Diego, San Mateo, Santa Clara, and Ventura. [Contra Costa, Inyo, Kern, Riverside, Modoc, Monterey, and Marin have dropped out of the Prop 90 program.]
Props 60 and 90 apply if you "trade down" (i.e. the new home costs less than the sales price of the old home).
> If you buy New Home 1st; then sell the Old Home, you must go down in price.
> If you sell the Old Home1st; then buy the New Home:

Some buyers can pay the commission outside of escrow to lower to sales price. Example: I sold for $100,000 and then want to buy next week for $120,000. The seller will owe a commission of $7,200. The seller will owe $2,800 of other expenses.

I sold 1st so I must buy for no more than $105,000. If I pay the seller's expenses of $10,000, the price is down to $110,000. Hmm. If I buy the stove, refrigerator, and lawn furniture for $6,000, it looks like I qualify. WARNING: I do not suggest this is a valid idea.

Propositions 60 and 90 are constitutional amendments passed by California voters that provides property tax relief for persons aged 55 and over. Implemented by section 69.5 of the Revenue and Taxation Code*, it allows these persons, under certain conditions, to transfer a property's factored base year value from an existing residence to a replacement residence.

Typically the property tax of a newly purchased or constructed residence is based on its current market value upon change of ownership. However, the provisions of Propositions 60 and 90 may result in substantial tax savings since it allows the property tax of the original (sold) property to be transferred to the newly purchased or constructed home if eligibility requirements are met.

* Section 69.5 also sets forth the provisions of Proposition 110 which allows the transfer of a base year value for severely and permanently disabled persons. Except for the disability factor, the qualifications for Propositions 60/90 are same as Proposition 110.

Proposition 60 allows transfers of base year values within the same county (intracounty). Proposition 90 allows transfers from one county to another county in California (intercounty) and it is the discretion of each county to authorize such transfers. As of January 2007, only seven counties have passed an ordinance authorizing intercounty transfers; however, it is recommended that you call your assessor for verification as it could change at any time. See question #17 for a list of the seven counties.

The original property must be subject to reappraisal at its current fair market value at the time of sale, unless the buyer(s) of your original property also qualify the property as a replacement property for a base year value transfer due to disaster relief or a base year value transfer for a severely and permanently disabled person. Therefore, most transfers between parents and children will not qualify.

This is a one-time only benefit. Once you have filed and received this tax relief, neither you nor your spouse who resides with you can ever file again, even upon your spouse's death or if the two of you divorce. The only exception is that if you become disabled after receiving this tax relief for age, you may transfer the base year value a second time because of the disability, which involves a different claim form.

Yes. The exemption is not granted automatically and must be filed for separately.

As a senior citizen, one may transfer his or her base year value only once, with the one exception that if a person first received relief for age and subsequently became severely and permanently disabled after the date of the original claim and had to move because of the disability (Proposition 110), then the base year value may be transferred a second time. The base year value transfer, however, is not available in the reverse situation; if one receives the benefit due to disability, then they cannot subsequently claim the relief for age.
Claimant

A claimant is any person claiming Proposition 60/90/110 property tax relief. A claimant must be an owner or co-owner of the original property as a joint tenant, a tenant in common, or a community property owner. A spouse of the claimant is also considered a claimant if the spouse is a record owner of the replacement dwelling (and thus must provide his/her social security number on the claim).
An owner of record of the replacement property who is not the claimant's spouse is not considered a claimant, and a claim filed for the property will not constitute use of the one-time-only exclusion by the co-owner even though that person may benefit from the property tax relief.

As a registered domestic partner, you were not considered a claimant. The fact that your partner used the exclusion will not affect your ability to transfer the base year value later. Proposition 60 provides that "any person over the age of 55 years" includes a married couple one member of which is over the age of 55 years. Since a registered domestic partnership is not a married couple, the registered domestic partner of a claimant is not a spouse and is not considered to have used his/her one-time-only exclusion under section 69.5.

No, the age qualification under Propositions 60/90 requires that either the claimant or the claimant's spouse who resides with the claimant be at least 55. Your husband does not have to be an owner of record of either the original or replacement property. Furthermore, there is no requirement that the original property be "purchased" by the claimant and that acquisition of the original property via a parent-child transfer would not disqualify the base year value transfer you are now seeking.

No, you must be at least 55 when your original property sells. While you may be 54 when you purchase your replacement property, you must be at least 55 when you sell your original property.

You qualify for the benefits if you are the present beneficial owner of the trust, not simply the trustee of the trust. For property tax purposes, the property owner is the person who has the present beneficial interest of a trust. The trustee holds legal title to the trust property but may not necessarily be the present beneficial owner of it.

Section 69.5, the property tax law that implemented Propositions 60/90/110, states that any person that is over age 55 or severely and permanently disabled may transfer a base year value to a replacement property. A "person" is defined as "any individual, but does not include any firm, partnership, association, corporation, company, or other legal entity or organization of any kind."
The Board has opined that an original property or a replacement dwelling must be owned, at least in part, by an individual. As long as a portion of the property is owned by an individual, then that individual may qualify as a claimant. If the home is owned in part by a trust, then the individual must have present beneficial interest of the trust in order to qualify. Thus in your example, Proposition 60 benefits would apply if the home is owned 1/6 by a trust and 5/6 by a corporation, if an individual has present to beneficial interest of the trust.
Exceptions to the requirement that an individual must own at least a portion of the original or replacement property occur where an individual owns a lot or unit within a cooperative housing corporation or a manufactured home park and a pro rata interest in a tenant-owned entity that owns the park in which the manufactured home is located. In these circumstances, the base year value of land may be transferred to and from the tenant-owned entities.

No, the base year value of only one original property can be transferred to a replacement dwelling. Either you or your sister can be the claimant and you would have to choose which original property you want to be considered for value comparison. The other property would still be available for a Proposition 60/90 base year value transfer at a later date (two years before or after its sale date).
Value Comparison

The market value of the replacement property as of the date of purchase must be equal or less than the market value of the original property on the date of sale. The meaning of "equal or lesser value" depends on when you purchase the replacement property. In general, equal or lesser value means:

In determining whether the "equal or lesser value" test is met, it is important to understand that the market value of a property is not necessarily the same as the sale or purchase price. The assessor will determine the market value of each property. If the market value of your replacement dwelling exceeds the "equal or lesser value" test, no relief is available.

No, the full cash value of the original property as of the date of its sale must be compared with the full cash value of the replacement property as of its date of purchase or completion of new construction. However, property tax laws presume that the purchase price paid in a transaction is the full cash value unless evidence shows that the real property would not have transferred for that price in an open market transaction.

No. Unless the entire replacement dwelling satisfies the "equal or lesser value" test, no benefit is available. It is "all or nothing." Partial benefits are not granted.

No, there is no deduction for the pool. In this case, the full cash value of the original property is compared to the full cash value of the replacement property.
However, amenities such as a second residence, living quarters over a detached garage, a detached shop for a business, or an orchard may not qualify for relief under section 69.5. In these cases, the market value will be allocated and the value assigned to the residence and its land would be used for comparison purposes. The base year value would be similarly allocated.

No, comparison of values must be between the total properties involved and not just a fractional interest. Only if the property that is being purchased has a market value of $180,000 (or less), will the property qualify for the base year value transfer.

Qualifying Properties

The law that allows for transfers of base year value between counties merely authorizes each county board of supervisors to adopt an ordinance accepting transfers from other counties. It is the discretion of each county to allow such transfers. The county in which your replacement property is located must have an ordinance that accepts intercounty transfers.
As of January 2007, the following seven counties in California have an ordinance enabling the inter county base year value transfer:

Alameda	Orange	San Mateo	Ventura
Los Angeles	San Diego	Santa Clara

Since the counties indicated above are subject to change, we recommend contacting the county to which you wish to move to verify eligibility.

If you meet all other eligibility requirements, relief may be granted for a single family residence, condominium, unit in planned development, cooperative housing, community apartment, manufactured home subject to local real property tax, or living unit within a larger structure consisting of both residential and non-residential accommodations. Although a vessel or a mobile home subject to annual vehicle license fee is eligible for the exemption, neither qualifies as an original or a replacement property as they do not have base year values.

No. You must choose which exclusion you wish to apply your base year value. If you sell to your child and choose to transfer your base year value using the parent-child exclusion, then the base year value is no longer yours to transfer to a replacement property. An original property must be sold and subject to reappraisal at full market value, unless the buyer also is claiming benefits via a base year value transfer.

A property that is given away or acquired by gift or devise will not qualify because nothing of value was exchanged. Section 69.5 requires a "sale" of the original property and a "purchase" of a replacement dwelling. Sale and purchase are statutorily defined as a change in ownership for consideration. This is a two-part test: (1) the property must be subject to change in ownership and (2) something of value must be exchanged for the property.

No. Only one of you can receive the benefit. Assuming you both qualify, you must decide between yourselves who will get the benefit. Only in the case of a multiple unit original property where several co-owners qualify for separate exemptions may portions of the factored base year value of that property be transferred to several replacement dwellings.

No. A partial or fractional interest purchase is not eligible, unless you and your friend together purchase the house. The entire interests in both the replacement and the original property must be purchased and sold.

If the original property has a separate living unit that is used as a rental, its full cash value would be allocated between the main residence and the rental unit and only the value of the unit the claimant occupies would be compared to the value of the replacement dwelling. The factored base year value being transferred would be adjusted for both the separate unit and that portion of land used to support the second unit. A unit would be considered separate from the main residence if it has its own kitchen, bathroom facilities, and entrance and is used for purposes incompatible with the homeowners' exemption.
The market value of the separate living unit (land and improvements) would be deducted from the market value of the total property. Only the amount of the indexed base year value allocated to the original residence would be transferred.
If, however, the separate living unit is used solely as a guest house, it may be considered part of the principal residence and the full cash value of the entire property may be transferred to the replacement property, even if the new property does not have such a separate living unit.
Principal Place of Residence

No. The original property must be eligible for the homeowners' exemption because you own it and because it was your principal place of residence, either 1) at the time of its sale or 2) within two years of the purchase or new construction of the replacement dwelling. If you did not have the homeowners' exemption on your property, you may need to provide documents to the assessor that prove it was your principal place of residence. Proof of residency may include voter or vehicle registration, bank accounts, or income tax records.

Original / Replacement Properties

Yes, but the equal or lesser value comparison must be made between each side of the duplex with each of your replacement dwellings. If the total value of the duplex is $400,000, but your side is smaller with fewer bedrooms and baths and the value of your side is $175,000, then your replacement dwelling may not exceed your allocated value of the duplex. It is not a simple division of value by one-half.

An "area of reasonable size" that is used as a site for a residence includes all land within the parcel provided that any nonresidential uses of the property are merely incidental to the use of the property as a residential site. For example, if a claimant sold a home located on a 9,000 square foot lot and replaced it with a home located on a 20-acre parcel, the base year value transfer would qualify as long as the 20-acre parcel was used only for a residential site and incidental uses as a residential site. For example, any commercial use (i.e. crops, raising cattle, etc.) would disqualify that portion of the land.

Open space land that is enforceably restricted by a Williamson Act contract is assessed under article XIII, section 8, of the California Constitution, and section 421, et seq. These special valuation provisions do not apply, however, to a residence or land of reasonable size that is used as a site for the residence. Instead, a residence and its underlying land are assessed as other residential property under article XIII A (Proposition 13) and are, thus, eligible for the base year value transfer under section 69.5. Similarly, if the replacement property is under a Williamson Act contract, the home and homesite is eligible for the base year value transfer.

Yes. Although a property restricted to timberland use is valued under the Timber Yield Tax Law rather than Proposition 13, any residence on this land and land of reasonable size that is used as a site for the residence is valued according to the provisions of Proposition 13 and is, thus eligible for the base year value transfer under section 69.5. Similarly, if a replacement property is a TPZ property, the home and homesite is eligible for the base year value transfer.

If the home you purchased was of equal or lesser value than the home you sold and all the other requirements of section 69.5 are met, then the base year value (Proposition 13 value, not the Mills Act restricted value) can be transferred to your replacement property.

You may transfer the base year value of your original property to the land in which the licensed manufactured home is situated and any miscellaneous improvements taxed as real property. The original property base year value land and improvements should not exceed the combined market value of replacement property land and any miscellaneous improvements. If the licensed manufactured home is converted to local property tax status, it will be eligible for section 69.5 benefits along with the land and miscellaneous improvements after it is placed on the assessment roll (i.e., after the next January 1—the lien date). At that time, any unallocated portion of the base year value of the original property should be applied and enrolled.

Yes, assuming that all the requirements are met. A leasehold interest in land is considered land owned by you and assumes that you hold a leasehold interest for a term of 35 years or more (including renewal options), regardless of whether the renewal option actually exists.

Yes, but only if both parcels comprise an appraisal unit – that is, property that is commonly purchased and sold as a unit. Such properties include property that cannot be separated (i.e. two 5-acre parcels in a 10-acre zone), or if the residence straddles the parcel line, or if the house is on one parcel and the garage on the adjoining parcel, since a garage is normally part of the residential site.

The transfer would be granted only if physical construction is undertaken to convert multiple units into a single merged unit. The construction must be completed within two years of the sale of the original property. In addition to a traditional single family residence, the original or replacement property may be a single unit in a cooperative housing corporation, a community apartment project, a condominium project, or a planned unit development.

Yes, the base year value may be transferred to the portion of the property that is the principal place of residence of the owner. For the value comparison test, the full cash value of the total property must be allocated between the living unit and the commercial unit. The base year value may be transferred only to that unit that qualifies for the homeowners' exemption (upstairs unit); the remaining portion should be reassessed at current market value.

Sale / Purchase

No. Such a purchase is excluded from change in ownership per section 63 because it is a transfer between spouses. Since a transfer between spouses is automatically excluded from change in ownership as a matter of law, a claimant cannot "choose" between sections 63 and 69.5. Accordingly, since the replacement property was not subject to change in ownership, it does not qualify for property tax relief under section 69.5.

Since the property you purchased for $200,000 did not meet the requirements of section 69.5, you did not use the one-time-only benefit and you are paying taxes on the market value of the $200,000 home. You may purchase another qualifying replacement property, but it must be within two years of the sale of your original home to benefit from the lower base year value.

No, the law does not provide for transfers of partial interests; only entire interests in the original and replacement properties are permitted. Additionally, the "equal or lesser value" comparison demonstrates a whole-property to whole-property approach. The entire original property is not subject to reappraisal at full cash value at the time of sale because only 50 percent underwent a change in ownership. You and your sibling would need to sell the entire property for you to qualify.

Yes, the law requires you to sell the entire original property, but does not specify that the sale must occur in a single sales transaction. The multiple sales of fractional interests comprising all interests of the property must all be completed within two years of the purchase of the replacement dwelling. Each fractional interests is subject to reappraisal and for the purpose of value comparison, the full cash value of the original property would be determined by adding the fair market value of each interest sold as of its date of sale plus any applicable inflationary adjustments for that interest from the date of its sale.

The date of completion of a newly constructed replacement home shall be the date that the property has been inspected and approved for occupancy by the local building department, or, if there is no such inspection and approval procedure, when the prime contactor has fulfilled all of the contractual obligations. If inspection and approval procedures are non-existent and there is no prime contractor, the date of completion is when outward appearances clearly indicate it is immediately usable for the purpose intended.
The construction on replacement property must be completed within two years of the sale of the original property to qualify for Proposition 60/90/110 tax relief.

Regardless of the reason, if the new construction is not completed within two years, the property will not qualify for property tax relief. There is no provision for exceptions due to hardship or other factors which may have prevented compliance with the two-year time period from the date of sale of the original property.

No, the replacement home will not qualify for relief under section 69.5 because the new construction was not completed within two years of the sale of the original property. It does not matter when the lot was purchased.

Yes, provided (1) the construction is completed within two years of the sale and (2) the full cash value of your new construction plus the market value of your replacement home when purchased does not exceed the market value of the original property as determined for the original claim. You must notify the assessor in writing within 30 days after completion of the new construction.

Yes. The date of your lot purchase has no bearing on the qualifying time period for base year value transfers. Section 69.5, subdivision (h)(1) provides that a base year value shall be transferred as of the latest qualifying date:

Thus, if your new home is completed within two years of the sale of your original home the time period requirement will be satisfied.
The full cash value of the lot and improvements as of the date of completion of new construction must be equal to or less than the full cash value of the original property as of the date of sale.

No. Section 71 provides that new construction in progress on the lien date is appraised at its full cash value. Section 69.5 provides that a base year value is transferred as of the latest qualifying date:

Since the base year value cannot be transferred until the residence is completed and all the qualifications are met, the assessment of the partially completed residence on the lien date would not be affected. The property under construction as of lien date will be assessed at market value.

No. Over two years have elapsed since the time you purchased your replacement property and when you sold your original property. The completion of the addition was within two years but it is not a qualifying date for the tax relief.

The full cash value of the land and completed improvements must be determined as of the date of completion of new construction. This is not a simple summation of the (factored) purchase price of the lot plus construction costs.
Damaged Property

Yes, your new house qualifies since your replacement home is 110 percent or less than the fair market value of your original home (plus inflationary factoring of 2 percent or less per year between the time of fire and when you purchased the replacement property). Additionally, to qualify, it is assumed that you were 55 when your original property was sold and that the damage was more than 50 percent of its full cash value immediately before the fire.
The base year value to be transferred is the original property's factored base year value just prior to the fire plus inflationary factoring for the period between the fire and the purchase of the replacement property.

Timing

Assuming you meet all the qualifications of section 69.5, the base year value is transferred as of the latest qualifying date:

In your case the base year value should be transferred as of November 2004 because that is the latest qualifying date.
You are responsible for the increased taxes from the time the replacement property was purchased until the original property was sold. Thus, any supplemental assessments on the property prior to your November purchase must be paid. The difference between the new base year value and the transferred base year value from November to the end of the fiscal year should be cancelled or refunded.

No, the replacement lot may be purchased any time, but completion of new construction on the lot must occur within two years of the sale of the original property.

There is no exception to the two-year time limit. The two-year period to purchase is part of the California Constitution. Since this requirement is in the Constitution, neither the Board of Equalization nor the assessor has the authority to extend this time period, regardless of the circumstances.
Claim Filing

After both transactions are complete, an application must be filed with the county assessor where the replacement property is located. The claim form, BOE-60-AH, Claim of Person(s) at Least 55 Years of Age for Transfer of Base Year Value to Replacement Dwelling, may be obtained from the assessor's office. Some counties offer a downloadable form from their internet website, which can be accessed via the Board's website: /proptaxes/assessors.htm.

Yes, as of January 1, 2007, a claim that is filed after the three-year filing period may receive the benefits commencing with the lien date of the assessment year in which the claim is filed. Retroactive benefits from the date of transfer will not be granted. The full cash value of the replacement property in that assessment year shall be the base year value from the year in which the property was transferred, factored to the assessment year in which the claim is filed. The factored base year value of any new construction which occurred between the date of sale and the date the prospective relief is being applied should also be added.

No, unfortunately, statute requires that the claimant own and occupy the replacement property as a principal residence when the claim is filed. As your father is deceased, the property would not qualify. Normally, the executor of the estate is legally authorized to file a claim for the claimant; however, the claimant must have occupied the residence as his or her principal place of residence, as of the filing date.

Yes. If you do not agree with the full cash value that was placed on the original property and your claim was denied because the replacement property did not meet the value comparison test, the appeals board would have to determine the full cash value of the original property for purposes of qualification. An appeals board has the jurisdiction to hear such an appeal if 1) the original property is located in the same county as the replacement dwelling and 2) the new base year value of the original property can still be challenged pursuant to section 80 of the Revenue and Taxation Code.
Appeals can be filed with the county assessment appeals board either within 60 days of the date of mailing of the assessment notice (section 1605) or during the regular equalization period (section 1603). A base year value may be appealed during the regular equalization period for the year in which it is place on the assessment roll or in any of the three succeeding years.

Yes, any overpayments you made will be refunded for the period following the effective date of the base year value transfer (i.e., the latest qualifying transaction).

Rescission

Effective September 30, 1990, you may rescind your claim only if all of the conditions are met:

If either of these conditions is not met, then the claim cannot be rescinded, and the base year value will remain with the first replacement property (section 69.5(i)(2)(A)).
In addition to the above, effective January 1, 2001, a claim may be rescinded if all of the following conditions have occurred (section 69.5 (i)(2)(B)):

Rescissions are available under very specific requirements and there are no exceptions or time extensions for extenuating circumstances.
If a claim is successfully rescinded, the taxpayers may purchase another property and file a claim to transfer the base year value to that property. However, the second property must also meet all the requirements of section 69.5 (e.g., it must be purchased within two years of the sale of the original property, and it must meet the equal-or-lesser-value test).
For complete details, you may find this section of the Revenue and Taxation Code on the California Legislative Counsel's website at:
http://www.leginfo.ca.gov/cgi-bin/displaycode?section=rtc&group=00001-01000&file=60-69.5

If you still have questions about Propositions 60/90, you may find the answers in Letter To Assessors No. 2006/010 or, you may call the Technical Services Section at 916-445-4982.