Protect and Transfer Your Home’s Property Tax Basis to a Replacement Home at Orange County CA
Annual property taxes according to Proposition 13 to be paid by owners are generally equal to one percent of assessed value of the home each year. (This assessed value can be increased by as much as two percent per year by the county assessor.)
Example: If you buy a home at Orange County CA at price of $700,000, the property value determined by county assessor/tax collector will be $700,000. So your annual ad valorem property tax during first year would be one percent of that – or the amount of $7,000.
If you want to sell your home and buy a replacement home in Orange County, and if you follow California law guidelines, you can sell first and then buy a different home – or you can buy a home in Orange County first and later sell the prior house – while taking advantage of transfer of Proposition 13 property tax basis.
Proposition 60 was a constitutional amendment approved by the voters of California in 1986 – codified in Section 69.5 of the California Revenue & Taxation Code – and allows the transfer of an existing Proposition 13 base year value from a former home to a replacement home, if certain conditions are met.
The following conditions must all be met for qualification and property tax relief to be granted under California Proposition 60:
a) Both the original property (former residence) and its replacement must be located in the same county. If the replacement property is located in a different county from the original, see possible transfer basis rules set for at California Proposition 90.
b) As of the date of transfer of the original property, the seller or a spouse living with the seller must be at least 55 years old.
c) The original property must have been eligible for the Homeowners’ Exemption or entitled to the Disabled Veterans’ Exemption.
d) The replacement dwelling must be of equal or lesser value than the original property.
e) The replacement dwelling must have been purchased or newly constructed on or after 11/06/86.
f) Without exception, the replacement dwelling must be purchased or newly constructed within two years (before or after) of the sale of the original property.
g) The original property must be subject to reappraisal at its current fair market value as the result of its transfer, in accordance with Sections 110.1 or 5803 of the Revenue and Taxation Code.
h) Without exception, a claim for relief must be filed within three years of the date a replacement dwelling is purchased or new construction of a replacement dwelling is completed.
By Harrison K. Long. This is for information only about California law and is not the providing of legal or tax services. For questions about your own situation, you should consult with an experienced real estate attorney and/or with the office of Orange County Assessor where your home is located.
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