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Property Tax Basis Transfer for Seniors

Interested in moving your property tax basis when you sell your current home and buy the next one? For those over 55 in California, this is a great one time option.

There are actually two propositions involved.  Prop 60 applies to moves within your own county, and Prop 90 relates to moves between counties which are participating in the transfer arrangement. Unfortunately, of California’s 58 counties, only 10 have the cooperative agreement to accept a property tax basis transfer from other participating counties.

Cooperating Property Tax Basis Transfer Counties (Prop 90)

The counties cooperating in the property tax basis transfer are only these, as of the date of this posting: Alameda, Los Angeles, Orange, Riverside, San Bernardino, San Diego, San Mateo, Santa Clara, Tuolumne, and Ventura.

Some of the basics for the property tax basis transfer:

  • Homeowners must be 55 and older at the time of sale of the original property.
  • Homeowner must be on record both for the home that’s sold and the replacement property.
  • The replacement residence must be equal to or lesser in value than the original residence.
  • There are special rules for multi-family (duplex, triplex, fourplex) properties and for mobile homes.

In the most typical scenario, a senior homeowner would sell a house (or townhome or condo) and “downsize” to another, less expensive, smaller house or condo.  If the homeowner had been in the first property for a very long time, then the low tax rate would be hard to give up, but Props 60 and 90 enable that homeowner to go to another, less expensive home and carry the old tax rate along – one time, and either in the home county or in one of the participating counties.

I have known seniors to sell a house in Los Gatos, Saratoga or San Jose and move to The Villages or to gated senior communities out of the area but closer to their grown kids and make use of these two propositions.

It should be noted that while the price of the replacement home must be less than the home being sold, that doesn’t mean that the new home must be smaller. I’ve known people to move out of area and get a larger, newer, nicer home – at a lower price tag. So it’s really an economic downsizing (or “right sizing” as some like to say now).

For more information and to get all the details, please click on the California state page for these two propositions.

When A Parent Has To Sell The House

Typical Saratoga Oaks townhouse, Saratoga CA (Silicon Valley) - living space over garageOne of the hardest things that adult children must sometimes do is to assist their parents in downsizing.  Most of the time, this means also getting the parent(s) to agree to sell the home, perhaps also to move into a seniors facility (independent living, assisted living, skilled nursing, memory care) or perhaps to move in with one of the adult kids. Very often, leaving the house also means leaving a good deal of memories and perhaps independence.  It can be terribly difficult for everyone involved.

Sometimes our older family members can live at their own home until they die, which is what they want and what makes everyone happy.  It may also be the most economical thing to do.   As they age, there are services which can come to them (gardening, cleaning, meals being prepared or dropped off, errands being run, driving services provided when reflexes slow or eyes fail). One company has invented a medicine dispenser which is timed and will alert family members if the meds aren’t taken!   It may be good to utilize some sort of safety device in case there’s a fall.  If you can get all the bases covered, it can be close to worry free for everyone.  In those cases, perhaps worrying about real estate can wait.

For others, though, either medical needs or social needs drive the change to a place with many other seniors. For some, this infusion of new friends can be an emotional lifeline that greatly improves the quality of life.  Particularly for those who lose the ability to drive and move about independently, a transition to a seniors facility can mean a reconnecting with others which was lost due to lack of independence.  I have seen that with some of my own relatives.   Or when a beloved spouse dies, sometimes the loneliness is compounded by remaining in the same home and being mostly alone.  A move can be a big help, and the companionship of others is no small part of it. (more…)

Homebuyer Tax Credit Good for “Move Down” Buyers Too

Recently I read an article on Realty Times about the tax credit for non-first time homebuyers. Did you know that it may be used for “move down” buyers as well as “move up” buyers?

There are some caveats – the home cannot cost more than $800,000 and a couple cannot earn more than $255,000 per year.  Owners must have been in the home for five consecutive years of the last eight.  This may be the ideal help for Silicon Valley seniors wanting to downsize.

To read the article on Realty Times, click here.