What is Proposition 90 and Why Should I be Happy Today?

California voters approved two propositions in the past, Proposition 60 and Proposition 90.  Why should I be happy today, especially if your nearing 55 or older.   This week, through the combined efforts of homeowners and your local realtors the County Board of Supervisors in Santa Clara County approved “the opting in of Proposition 90.

What are Propositions 60 and 90?

Proposition 60 allows counties to opt in or out on allowing their homeowners age 55 or older to keep their property tax base with them when they sell and buy a new place within the county.  This is great for our seniors because not only is selling the home they have lived in and raised their family in  a emotional experience but quite often the  property taxes they are currently paying could actually go up drastically when they buy a new house.

Example:  Home owner John Smith (who is 55) sells his home he has owned for over 20 years.  When he bought the home he might of payed $400,000 and property taxes may be currently $6,000 per year.  He sells the house for $1.5 million and buys a townhouse for $1 million within the same county.

Prior to Proposition 60, Smith’s  property tax would of gone up to about $12,000 per year, a 100% increase. Not to good if you are on a fixed income.  With Pro 60 (with certain restrictions) he can carry his tax base with him, allowing him to pay his previous property tax of  $6,000 per year,  not the $12,000 it should of been.  Great deal, huh.

Propostion 90 is similar to 60 except it refers to moving to another county and keeping your old tax base.

The challenge is it also allows the County to determine whether or not they want to opt-in (particpate) or opt-out of this program.  In these challeging finacial times counties are looking at ways to increase the taxes.  Santa Clara Board of Supervisors  seriously looked at opting out of this program.  That would not have been a good thing for real estate owners.  It would have put another nail in the coffin for real estate.  An overwhellming number of Realtors and homeowner contacted their Superviors and voiced their disapproval on Santa Clara opting out of Prop 90.  They heard us and agree to stay in the program.  This is great news for now.

If you have any questions about Props  60 or 90 and their tax implications I would suggest you speak with your tax consultant or CPA.  I would also be happy to talk to you about selling your home and utilizing Props 60 or 90.  Email me with any questions you might have.

Click here for a list of Counties that have Opted-in Proposition 90

mblaauw@marcblaauw.com

Realtor with Realty World-Frangadakis Corp.

DRE#01873996

(Please note, the above is a simplified view of the two propositions.  Please contact you tax advisor or CPA prior to selling and or buying a home especially if you are over 55 and want to utilize the proposition’s tax benefits.)

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