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How to Keep Your Old Property Tax Rate for a New House if You Are Over 55

money signI was recently at a friend’s house, and, accidentally made someone’s day. This is not a usual occurrence for me, but I did enjoy it.  Here’s what happened: a woman that I didn’t know told me that she had inherited her parents’ house in Berkeley. Because she had inherited it from her parents, she also was able to keep their very low property tax rate. Her problem was that she thought that she’d like to sell that house and buy a new one, but was worried that her property tax rate would skyrocket as a result.

Here’s what she didn’t know: if she waits until next year, when she turns 55, and purchases a new home that’s worth the same or less than the residence that she is selling, and buys the new house within two years of selling the old one, she can keep her old property tax base for the new house. She has to sell her old house to a new owner so that the new home can be reassessed for property tax purposes and she has to file a claim for exclusion from reassessment on the new property within three years of the purchase. In tax language, this is called “transfer of base year value,” which is the value that the county assessors use to calculate the property tax owed each year.

This is a one-time exclusion from reassessment for those over 55. So, the next time she sells her home and buys a new one, her property taxes will go up. Proposition 60, passed in 1986, established this exception for intra-county transfers–that’s Latin for WITHIN a county. So, if my new acquaintance stays in Alameda county, and otherwise follows these rules, she won’t be reassessed.

What is she wants to move to a new county? Well, in 1988, Proposition 90 was passed, and this gives county supervisors the option of accepting transfers of property tax for inter-county transfers–that’s Latin for BETWEEN counties. Currently only 11 of California’s 58 counties recognize inter-county transfers, and all of the rules for Prop. 60 still apply (one-time, over 55, equal or less in value).

Here’s the list:

Alameda

El Dorado

Los Angeles

Orange

Riverside

San Bernadino

San Diego

San Mateo

Santa Clara

Toulomne

Ventura

 

To learn more about both Prop 60 and Prop 90, the State Board of Equalization has a nice website with FAQs here and Santa Clara County also provides helpful information on Prop 90 and helpful information on Prop 60.