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Selling a Home with Proposition 13 Tax Relief - Propositions 60 & 90

Prepared By: Melissa C. Marsh, Los Angeles Real Estate Attorney
Written: December 2004 - Last Updated: February 2010

Proposition 60 allows seniors age 55 or older to sell their existing residence and to buy a replacement residence of equal or lesser value within two years in the same county without being subject to a property tax increase. In fact, the old proposition 13 assessed valuation from the initial home will transfer to the new replacement property. In most situations, this transfer is allowed only once in your lifetime and only one spouse must be age 55 or older. If the two spouses desire to split and each buy a replacement residence, only one spouse will have the advantage of using the Proposition 60 transfer. In other words, if one spouse uses the transfer the other will be thereafter prohibited.

Proposition 90 extends Proposition 60 by allowing California counties to elect to accept transfers of Proposition 13 valuations from other counties. Thus, if a senior wants to move from Los Angeles County to say Orange County, now the senior can take his or her old lower Proposition 13 assessed value to a new replacement residence of equal or lesser value to any of the following eight (8) California counties presently (as of February 15, 2010) accepting proposition 90:

1. Alameda;
2. El Dorado;
3. Los Angeles;
4. Orange;
5. San Clara;
6. Santa Diego;
7. San Mateo; and
8. Ventura

**Contra Costa, Inyo, Kern, Riverside, Modoc, Monterey, and Marin have dropped out of the Proposition 90 program.

Proposition 110 again extended Proposition 60 by creating an exception to the one-time-only transfer limitation applicable to seniors age 55 or older. Pursuant to proposition 110, if a person over the age of 55 years previously received a base year value transfer from an original property to a replacement dwelling and subsequently becomes severely and permanently disabled, then that senior may now transfer his or her original Proposition 13 base year value a second time. The base year value transfer, however, is not available in the reverse situation; if one receives the benefit due to disability, then they cannot subsequently claim the relief for age.

To qualify for the Proposition 60/90/110 tax benefits, the following criteria must be met:

1. At the time of sale, the original property must have been eligible for the Homeowners’ Exemption, or entitled to the Disabled Veterans’ Exemption;

2. Both properties must be located in the same county, unless the replacement residence is located in one of the 7 counties that accept Proposition 90;

3. On or before the date of transfer (closing of escrow) for the original Proposition 13 property, either the seller or the seller's spouse must be at least 55 years of age, or be severely or permanently disabled;

4. The replacement dwelling bought must be of equal or lesser value than the selling price of the original Proposition 13 property;

5. The replacement dwelling bought must have been acquired or newly constructed within two years of the sale of the original Proposition 13 property;

6. The senior or disabled owner must file an application (claim form with the county assessor's office) within three (3) years following the purchase date, or new construction completion date, of the replacement property; and

7. The original property must be subject to reappraisal at its current fair market value (e.g., most transfers between parents and children will not qualify.)

If you have any questions, or would like further assistance, please call 818-849-5206 to schedule a low cost $129 telephone consult, or your can do so online at Schedule a Telephone Consult.

© 2004 - 2010 Melissa C. Marsh. All Rights Reserved.

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Disclaimer: The information presented on this web site was prepared by Melissa C. Marsh for general informational purposes only and does not constitute legal advice. The information provided in my articles and alerts should not be relied upon, or used as a substitute for professional legal advice from an attorney you retain to advise or represent you. Your use of this Internet site does not create an attorney- client relationship. Transmission of this article is not intended to create, and receipt of it does not constitute, an attorney-client relationship. All uses of the contents of this site, other than personal uses, are prohibited. You may print or email a copy of any information posted on this web site for your own personal, non-commercial, use, but you may not publish any of the articles or posts on this web site without the Express Written Permission of Melissa C. Marsh.

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Located in Los Angeles, California, the Law Office of Melissa C. Marsh handles business law and corporation law matters as a lawyer for clients throughout Los Angeles including Burbank, Sherman Oaks, Studio City, Valley Village, North Hollywood, Woodland Hills, Hollywood, West LA as well as Riverside County, San Fernando, Ventura County, and Santa Clarita. Attorney Melissa C. Marsh has considerable experience handling business matters both nationally and internationally. We routinely assist our clients with incorporation, forming a California corporation, forming a California llc, partnership, annual minutes, shareholder meetings, director meetings, getting a taxpayer ID number (EIN), buying a business, selling a business, commercial lease review, employee disputes, independent contractors, construction, and personal matters such as preparing a will, living trust, power of attorney, health care directive, and more.