Costa Mesa Real Estate - Prop 60 and Prop 90

  One of the great benefits of home ownership for homeowners over age 55 is the ability to transfer property taxes. In this post we hope to share with you a little bit about this fantastic opportunity. 

What are Prop 60 & Prop 90?

 Prop 60 & Prop 90 are constitutional amendments in California that provide property tax relief for persons 55 and over. They allow for the base property tax value of an existing home to be transferred to a new residence. In short, if a homeowner is looking to "downsize", they can do so while maintaining their existing tax rate, which should mean there will be significant tax savings. This will aid retirees in Costa Mesa real estate. Using Prop 60: You can sell your $600,000 Costa Mesa home (assessed value of $200,000) and move to a $550,000 Laguna Hills home, and the new assessed value will be $200,000. 

What Happens?

 This applies to homeowners who are qualified for Prop 60 or Prop 90. Prop 60 is for people who are "downsizing" in the same county; Prop 90 is for those "downsizing" in other counties in California. 

What California Counties Are Involved? (Prop 90)

 Participation is not mandatory so it is important to do your research about which counties are involved. As of 2012, the counties that are involved are:-Alameda-El Dorado-Los Angeles-Orange-San Diego-San Mateo-Santa Clara-Ventura 

Costa Mesa Real Estate Requirements for Prop 60 and Prop 90:

 1. You or your spouse must be at least 55 years of age when the property is sold2. The new home must be a principal residence3. The cost of the new home must be equal or less than the selling price of the first home4. The new home must have been bought or built within 2 years of the date of sale of the original property5. You can receive the benefit retroactively, so long as the claim is filed within 3 years following the purchase date of the new home6. The original property must have been eligible for the homeowners' or disabled veterans' exemption either at the time is was sold or within 2 years of the purchase (or construction) of the new property.7. This is traditionally a one time benefit for you and your spouse 

Trade Down Information (Timing):

 -If you buy a new home first, then sell your old home, you must go down in price-If you sell your old home first, then buy a new home:a) In the first 365 days after the sale of the old home, you may go up 5% in the purchase price of the new home.b) If you buy a new home more than 1 year from the sale of the old home, but less than 2 years, you may go up 10%. 

Key Takeaways:

 -Make sure the replacement property will be lower in value than the one you are selling. If you are looking for Costa Mesa real estate, we can help you identify qualifying properties-If you are relocating, look for homes in counties that offer Prop 90. Contact us for an update.-The tax rate on your current home stands to be much lower than the new property tax rate for a newly purchased home, since property taxes are usually based on the sale price of a home. Homeowners stand to save big if they can take advantage of Prop 60 or Prop 90.