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Property Tax Relief for Seniors

A little known provision of the property tax law is of enormous benefit to San Franciscans age 55 or older. Since its passage decades ago, California’s Proposition 13 has greatly limited property tax increases until property ownership is changed. Two additional provisions, Prop 60 and Prop 90, were added to make it much easier — from a property tax perspective — to downsize later in life.

If a single or married person is age 55 or older when the current home is sold, Prop 60 allows replacement of a primary residence with a new residence of generally equal or lesser value within the same county and transfer of the Prop 13 assessed valuation from the current home to the new residence. This is allowed once in your lifetime; Prop 60 is then no longer available in the future to a spouse.

In addition, 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 residence. If you are age 55 or older and move into a county that accepts Prop 90, you may take your old, lower Prop 13 taxable property value with you, regardless of the county you leave.

For example, Using Prop 60, if you sell your long-term San Francisco home for $4,500,000 — with an assessed value $800,000 — and move to a new $4,000,000 residence in the City; the new San Francisco assessed property value will still be only $800,000. The same will be true if you buy down and move to a participating county. At the current property tax rates of 1.1743%, this difference in assessed value of ($4,000,000 - $800,000 = $3,200,000) at 1.1743% is equal to an annual savings of $37,578 in property taxes for every year you remain in the new residence!

Please be certain to contact your accountant to determine how this program can work for you.

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