PROPOSITION 90 AIDS SOME SENIOR CITIZENS WITH PROPERTY TAX PORTABILITY
REAL ESTATE LEGISLATION, TIPS FOR SELLERS, TIPS FOR SENIORS
August 9th, 2008
Help for Seniors
In 1998, voters approved Prop. 90 which was designed to induce senior citizens (over 55) to sell their home and move from one county to another taking their existing property tax base with them. Proposition 13 dictates that the value of a home, for property tax purposes, must be re-assessed to current market value whenever a change of ownership takes place. This has discouraged long-term homeowners that have benefited from a low tax base for many years from moving and suddenly seeing their property tax burden double, triple or even quadruple.
For example, if a buyer bought a home in the 1970’s for $30,000, has lived there for 35 years, and now is assessed at $75,000, they would be paying approximately $750/year in property taxes. The seller was told by a real estate professional the home would bring $275,000 in today’s market. The home they wish to buy (near their daughter and grandchildren) is priced at $300,000, resulting in a property tax bill of $3,000/year. Since the sellers will need all the money (and then some) from selling their home to buy a new home of similar value, the extra $2,250 in property taxes could make the move financially infeasible. Prop 90 would allow them to take their $75,ooo assessed value and apply it to their new purchase avoiding the quadrupling of their tax bill.
But here’s the catch. Prop 90 was a “local-option” law; each county has to opt-in or they don’t have to participate. The following counties have adopted Prop 90 :
- Alameda
- Orange
- San Mateo
- Los Angeles
- San Diego
- Santa Clara
- Ventura
Seven other counties adopted the ordinance but later repealed it. Realtors have been working to encourage more counties to adopt the benefits Prop 90 provides senior citizens. The hesitation centers around the belief the county’s property tax revenues will decrease significantly if the measure is adopted by an affirmative vote of county supervisors. Realtors have studied the issue and believe over the long term the effects would even out. After all, the home the seniors are selling, with an assessment that represents a fraction of its current market value, will be brought up to current market value since the buyer is unlikely to be a senior also moving a property tax basis forward. Realtors believe if seniors could move anywhere in the state and retain their low property tax assessment, more affordable homes will be available for the next generation of home buyers.
A similar law, Prop 60, was passed by voters 2 years earlier than Prop 90. This law allows seniors to keep their property tax base when they move within the county. This was not a “local-option” law so it applies across the entire state.
If you have any questions regarding this or any real estate matter, don’t hesitate to contact me. I offer a free, no obligation market evaluation of your real estate holding. I return calls promptly so give me a ring:
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER
REAL ESTATE PROFESSIONALS GMAC
QUARTER CENTURY LOCAL REAL ESTATE EXPERIENCE
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Mr. Garbutt, I am in escrow to sell my home in San Diego County. I am 76 years of age and have owned and lived in my house for nearly 30 years. I understand the property tax I am now paying is portable if I purchase a replacement home of equal or lesser value in this county. My question is this, if I move to San Francisco County is my old property tax portable to a primary residence located there? Thank you. W.Black.
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