Senior Downsizing With Prop 60
Age is a funny thing. It creeps up on us and before we know it, we are over 55, our children are young adults living on their own, or trying to, and we are faced with empty rooms and stairs threatening our knees in our family homes.
For those of us who purchased our homes years ago, downsizing does not seem like a choice due to the high pricing in our current sellers’ market. We like our old tax base and the thought of adding to it frightens us all. Fear not…Prop 60 (or 90 – if you are going to another county) has come to our rescue!
In the course of our local legislature fewer propositions offer more power to our 55+ California community that this proposition. It allows us to transfer our old tax base to our new purchase. Like everything in life, there are some rules we must comply with.
- The property being sold must be your primary residences. No investors need apply.
- The property being sold must sell for at least what was paid for the replacement principal residence
- One of the property owners/buyers must be at least 55 years old
- All transfers must be completed within 2 years of new purchase
- Retroactive claims must be filed within 3 years after purchase date
What does that mean for us today? We can sell our bigger homes that no longer meet our needs for top dollar in today’s sellers’ market and buy a new home, maybe a smaller, 1 story home with less acreage, and keep our old tax bill (for the most part). Here is an easy example: Mr. and Mrs. Seller purchased their home in in 1997. Their tax bill was approx. $2800 a year. In Fall 2020 they decided to sell their house with a $450,000 gain. Once they sold, they bought a house for what they sold their house for and that $2800 tax bill traveled to their new home, along with their furniture and luggage. With a 1.25% tax rate they saved over $5600 a year. Nice deal. Thank you Prop 60!