If you or your spouse are over 55 years old, there might be some big tax concerns you have when it comes to moving. First, you’re worried about the large tax on capital gains. (But maybe you qualify for the $250K/$500K home sale exclusion). Second, you probably bought your home at a lower price and if you sell it now and buy a new home, you are worried that your property tax will go up significantly.
Fear not. The property tax may not go up and here’s why…..
Thanks to Proposition 60/90 (Prop 60 governs intra-county transfers and Prop 90 inter-county transfers), you are permitted to sell your home and buy/construct a new one and transfer the trended basis value from your current home to the new home. This effectively means that your property tax will stay the same even though the value of the new property may be significantly higher.
In order to be eligible for this, you must meet the following criteria:
- This is a one-time benefit in your lifetime, for the couple. Neither of you can do it again. If the original home is owned by more than one owner, only one of them can be eligible to use this benefit.
- You must buy/construct your new home within 2 years of the sale of your old home.
- The new home and old home must be your primary residence, and both must be eligible for the Homeowners’ Exemption or Disabled Veterans’ Exemption.
- The new home must be of equal or lesser “current market value” than the original home.
- You OR your spouse must be at least 55 years old at the time the original property was sold.
- You must file this claim within 3 years of purchasing/completing the construction of the replacement home.
- You can move from one county to another county as long as the County you’re moving to honors the program. (Orange and Los Angeles Counties do, as well as San Bernardino, Ventura, Riverside).
If you or anyone you know needs assistance on determining the right moves to make, please contact our office so you can speak to the right advisor for you and your family.
This article is a service of Kundani & Chang LLP. We are an award-winning law firm that specializes in business and estate planning for clients like you. The goal for every family is to stay educated on all topics like this, avoid probate, avoid estate taxes, and build a legacy for you and your loved ones. What sets our firm apart is that we build lasting, lifelong relationships with our clients. They rely on us to keep them updated, provide sound legal counsel, and be there for them immediately if any problems should ever arise. The best part is we don’t charge hourly fees to our families, so you never have to worry about speaking to us. If you’re ready to keep your family out of Court, contact us today to schedule an initial consultation or visit our website at www.CaliforniaEstateLawyers.com.