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PROPOSITION 60 QUESTIONS AND ANSWERS

BASE YEAR TRANSFERS FOR PERSONS AGED 55 OR SEVERELY DISABLED (As of 9/1/2007)

What is Proposition 60?
Prop 60 was a constitutional amendment approved by the voters of California in 1986. It is codified in Section 69.5 of the Revenue & Taxation Codes, and allows the transfer of an existing Proposition 13 base year value from a former residence to a replacement residence, if certain conditions are met. This benefit is open to homeowners who are at least 55 years of age (or are severely disabled as specified in the law), and who meet the requirements outlined in Question 2.

How do I qualify for this property tax benefit?
The following conditions must be met for tax relief to be granted under Prop 60:

  • Both the original property (former residence) and its replacement must be located in the same county. See question 15.
  • 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 of age.
  • The original property must have been eligible for the Homeowners' Exemption or entitled to the Disabled Veterans' Exemption.
  • The replacement dwelling must be of equal or lesser value than the original property. This is explained in greater detail in question 6.
  • Without exception, the replacement dwelling must be purchased or newly constructed within two years (before or after) of the sale of the original property.
  • The original property must be subject to reappraisal at its current fair market value as the result of its transfer; (Change in ownership is outlined in Sections 60 and 61 of the Revenue and Taxation Code).
  • If a mobile home is part of the original property and serves as the primary residence of the claimant, it must currently be taxed on the County tax roll.

Is it true that only one claimant, out of several co-owners of a replacement dwelling, need to be at least 55 years of age as of the date of the sale of an original property?
Yes, but the claimant must be an owner of record. Either the claimant or their spouse must also have been an occupant of the original property and at least 55 years of age on the date of sale.

Can a taxpayer apply for and receive the benefit of Prop 60 more than once?
No. you are not eligible if you have been previously granted this benefit.

What is meant by "equal or lesser value" than the original dwelling?
In general, "equal or lesser value" means:

  • 100 percent of the market value of an original property if a replacement dwelling is purchased before the original property is sold.
  • 105 percent of the market value of an original property if a replacement dwelling is purchased within one year after the sale of the original property.
  • 110 percent of the market value of an original property if a replacement dwelling is purchased within the second year after the sale of the original property.

Is the "equal or lesser value" test a simple comparison of the sales price of the original property and the purchase price or cost of new construction of the replacement dwelling?
No. The comparison must be made using the full market value of the original property and the full market value of the replacement dwelling as of its date of purchase or completion of new construction. This is important because sales prices are not always the same as market value. The assessor must determine the market value for each property, which may differ from the sales price.

If the current full cash value of my replacement dwelling slightly exceeds the full market value of my original property, can I still receive a partial benefit?
No. Unless the replacement dwelling satisfies the "equal or lesser value" test, no benefit is available. (See question above.)

May I give my original property to my child and still receive the Prop 60 benefit when I purchase a replacement property?
No. The law provides that an original property must be sold for consideration and subject to reappraisal at full market value at the time of sale. An original property transferred to a child or disposed of by gift does not qualify.

Is the assessor prevented from issuing supplemental assessments when the factored base-year value is transferred from an original property to a replacement dwelling under Prop 60?
No. When the replacement dwelling is purchased or newly constructed, the assessor may issue a supplemental assessment (positive or negative) depending on base year value differences and the date of sale (original) or purchase (replacement) of dwellings, even when you qualify under Prop 60.

Can I qualify for the benefits of Prop 60 when I sell my original property (owned by me alone) and purchase a replacement dwelling with several co-owners? What if I own only a 10 percent interest in the replacement dwelling?
Yes. The base year value of your original property can be transferred to your replacement dwelling, as long as you are otherwise qualified, you may receive the benefits of Prop 60 regardless of how many co-owners of record there are on the replacement dwelling. However you and your spouse must file for the exemption. In this situation, the total market value of the original property is compared to the total market value of the replacement dwelling property regardless of the fact that the qualified principal claimant may only own 10 percent of both original and replacement dwelling properties.

Can two otherwise qualified taxpayers who have recently sold their separately owned original properties combine their claim for Prop 60 benefit when they buy a single replacement dwelling together?
No. They can only receive the benefit if one or the other, not both together, qualifies by comparing his or her original property to the jointly purchased replacement dwelling. The implementing legislation specifically disallows combining a claim in this manner, regardless of whether the co-owners of the replacement dwelling are married or not.

May I, as a former co-owner of an original property, receive partial benefit on my replacement dwelling along with the other co-owners on their separate replacement dwellings too?
No. The law provides that only one co-owner of an original property that is or was qualified for the Homeowners' Exemption may receive the benefit in a situation like this where all co-owners purchase separate replacement dwellings. The co-owners must determine, between themselves, which on should receive the benefit. There is one exception: Only in the case of a multiple-residential original property where several co-owners qualify for a separate Homeowners' Exemption may portions of the factored base-year value of that property be transferred to several qualified replacement dwellings. The value test would then apply to each individual dwelling.

Can I qualify for the Prop 60 benefit if I do not have a Homeowners' Exemption on my original property?
Yes. The law indicates the original property must be eligible for the Homeowner's Exemption by the claimant owning and occupying the property as his or her principle residence, either at the time of its sale or within two years of the purchase or new construction of the replacement dwelling. Proof of residency will be required and may include vehicle registration, voter registration, bank accounts, or income tax records.

Can I receive Prop 60 benefits if my original property is outside Butte County but my replacement dwelling is inside Butte County?
No. Both properties must be within Butte County.

Can I receive Prop 60 benefits if my original property is inside Butte County but my replacement dwelling is in another county in California?
You may, under Prop 90. There are currently (as of 2006) 7 counties participating in Prop 90. Contact the Assessor's Office of the county the replacement dwelling is, and ask if that county allows transfers of base year values between counties.

What if my original property contains more than just my principal residence and the land necessary for that residence?
You will receive Prop 60 benefits only if the replacement dwelling is of equal or lesser value than the portion of the original property that is your principal residence and the land that is necessary for that residence. The market value of the rest of the original property is not included in the comparison of the original property with the replacement dwelling.

What if my new property contains more than just my replacement dwelling and the land necessary for that dwelling?
The base year value of the original property will be transferred to the portion of the new property that is the replacement dwelling and the land necessary for that dwelling. The rest of the new property will be assessed according to its full market value.

If the transfer of my base year values to the replacement dwelling result in a Supplemental Assessment that is a refund, do I still have to pay the existing, current tax roll bill on the replacement property or will that bill be adjusted to reflect the new, lower value?
Unfortunately, you must pay the existing tax roll bill on your replacement property. That bill cannot be adjusted or canceled to reflect the Proposition 60 benefit. Additionally, you must pay that bill before any refund resulting from the Proposition 60 benefit will be sent to you.

However, after the existing bill has been paid, you will later receive a refund that will reflect the Proposition 60 benefit. In other words, when the entire process is complete, you will not have overpaid any taxes. This unfortunate and inconvenient aspect of the law is set forth in the Revenue & Taxation Code Section 75.43.c.

For more information, call the Butte County Assessor's Office at: (530) 538-7721
Office Hours Mon. thru Fri. 9:00 a.m. to 5:00 p.m.