Christina T. Allen
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Los Gatos Weekly-Times

    September 8, 2004  Los Gatos, California Since 1881

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Prop. 60 gives tax breaks to seniors

By Jean Newton


There are some exemptions available to homeowners age 55 and over when it comes to property taxes that can be advantageous when selling a principal residence and purchasing another home as a principal residence.

According to information supplied by Realtor Christina Allen of Signature Realty, this exemption—Proposition 60—allows certain homeowners ages 55 and over to transfer the assessed value of their old principal residence to a new principal residence as long as their new residence is located in the same county as the old residence and certain other criteria are met. There is also another similar exemption that allows homeowners ages 55 and over to buy a new residence in another county and avoid a property tax reassessment called Proposition 90.

To take advantage of Proposition 60, both the seller and the residence must meet certain requirements. On the date of the sale of the old principal residence, the seller, or at least one spouse if the house is being sold by a married couple, has to be 55 years of age or older and residing in the house.

If a principal residence is co-owned by non-married individuals and one of the co-owners is over 55 and residing in the residence, then the exception may apply to the individual who is over 55. This exemption can generally be claimed only once. If an individual has already claimed this exemption and then gets married or divorced, the rules are more complex. It's a good idea to consult a tax advisor for specific details, Allen said.

In determining if an owner is eligible for this exemption, Allen said assessors will usually look to see that the original property was eligible for the homeowner's exemption at the time the old residence is sold and that the new residence is eligible for the homeowner's exemption at the time the benefit is claimed. This helps prove that the residence was in fact the taxpayer's principal residence. An example of some types of property that can qualify as principal residences are single-family houses, stock co-ops, condominiums, and certain owner-occupied units that are part of a multi-unit building.

The new residence is required to be purchased or built within two years before or after the sale of the old residence. The purchase price of the new principal residence generally has to be equal to or less than the sales price of the old principal residence. In most situations, the sales prices of both the old and new residences are the only two values that need to be compared. There are some other rules regarding inflation percentages that might apply, so it's important to check with the local assessor's office before taking any action.

To further the ability of California homeowners age 55 and over to transfer their assessed values to their new residences, voters also passed Proposition 90. This proposition allows homeowners ages 55 and over to transfer the assessed value of the old principal residence to the new residence located in a different county if that county has elected to participate in the Proposition 90 program.

Under this law, a county's board of supervisors can elect to have its county be a qualified participating county. Homeowners can then purchase their replacement residence in any participating county.

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