These voter-approved constitutional amendments provide for the transfer of a property’s base-year value from an existing residence to a replacement residence, under certain conditions, for qualified persons over the age of 55 or persons of any age who are severely and permanently disabled.
Among the qualifying conditions are:
- both properties must be in the same county, unless the county in which the replacement residence is located has an ordinance that allows intercounty base-year value transfers;
- as of the date of transfer or the original property, the transferor (seller) or a spouse residing with the seller must be at least 55 years of age, or be severely or permanently disabled;
- at the time of sale, the original property must have been eligible for the Homeowner’s Exemption, or entitled to the Disabled Veterans’ Exemption;
- generally, the replacement dwelling must be of equal or lesser value the original property.
- the replacement dwelling must have been acquired or newly constructed within two years of (before or after) the sale of the original property;
- the owner must file an application within three years following the purchase date or new construction completion date of the replacement property;
- and the original property must be subject to reappraisal at its current fair market value. Therefore, transfers of the original property that are excluded from reappraisal (e.g. most transfers between parents and children) will not qualify.
To apply for this benefit, you must file a claim with the assessor, who determines if the transaction qualifies.
Determining if the replacement property is of “equal or lesser value” than the original depends on the timing of the purchase of completion of construction of the replacement property. In general, “equal or lesser value” means the fair market value of the replacement property does not exceed one of the following:
- 100 percent of the market value of the original property, if the replacement property is purchased or newly constructed before the original property is sold;
- 105 percent of the market value of the original property, if the replacement property is purchase or newly constructed within the first year after the original property is sold;
- or 110 percent of the market value of the original property, if the replacement property is purchase or newly constructed within the second year after the original property is sold.
If the market value of the replacement dwelling slightly exceeds the “equal or lesser value” test compared to the market value of the original property, no benefit is available.
A taxpayer can apply for and receive the benefit of Props 60/90/100 only once, with one exception. Prop 110 created an exception from the one-time-only limitation for any claimant who becomes severely and permanently disabled after having previously received a base year value transfer as a claimant over the age of 55 years. Thus, if a person over the age of 55 years transferred the base year value from an original property to a replacement dwelling and subsequently becomes disabled, then that person may now transfer his or her base year value a second time.
If the replacement property is in a different county than the original property, only the replacement property (not the original property) must be located in one of these counties. If a county has an ordinance, it will accept a base year value from any other county in California, as long as all the requirements are met.
The deadline, in general, for filing a claim with the county assessor is within three years of the acquisition or completion of construction of the replacement property. (Thank you to Laura Langen of Lawyers Title for the above information. Langen has been a valued member of the SCV Home Team for many years.)
Ray “the Realtor” Kutylo is the team leader of the SCV Home Team at Keller Williams VIP Properties. The Team brings experienced and professional service, commitment and value to every transaction, whether you are a home buyer or seller. Ray can be reached at (661) 312-9461 or by email at [email protected]. The views expressed are his own and not necessarily those of The Signal. CA DRE 00918855