Transfer of Base Year Value for Persons Age 55 and Over
TRANSFER OF BASE YEAR VALUE FOR PERSONS AGE 55 AND OVER
Base Year Transfers?
California law allows a homeowner 55 years or older a one-time option to transfer the Base Year Value of the original property to a replacement property of “equal or lesser” value.
What are Propositions 60 and 90?
Propositions 60 and 90 only apply to a “primary residence.” You cannot transfer Base Year Value to any other class of real property including, but not limited to, vacation homes, rental homes or commercial properties.
Proposition 60 allows a person 55 years or older to transfer the Base Year Value “within the same county.” This is referred to as an “Intracounty Transfer” because the buy and sell occur in the same county.
Proposition 90 allows a person 55 years or older to transfer the Base Year Value from “one county to another county.” This is referred to as an “Intercounty Transfer” because the buy and sell occur in different counties.
Unfortunately, only 11 counties in California accept an “Intercounty Transfer” from another county. Those participant counties are:
By example, if you sell your home in San Bernardino County and purchase a replacement in Orange County, then you should be able to transfer your Base Year and keep the lower property tax rate so long as the replacement property is “equal to or lower” in value.
However, if you sell your property in San Bernardino and purchase a replacement property in, say, San Francisco County, you would not be able to transfer your Base Year and would pay property taxes based upon the full price of the replacement property.
If either you or your spouse is 55 years or older at the “time of sale,” then you can transfer your Base Year value under Propositions 60 and 90. “Time of sale” for purposes of age qualification means that you must be 55 years when you sign the purchase agreement.
Two Year Limit to Purchase Replacement Property.
You only have two years from the “date of sale” of your original property to either (1) purchase a replacement property or (3) complete new construction. “Date of sale” means the date that the Deed is recorded at the County Recorder.
This means that if you closed escrow to sell your property on January 1, 2018, you would need to purchase a replacement by December 31, 2019.
If you fail to either purchase a replacement or complete new construction within two years, then you lose the exemption. If you lose the exemption, then you will pay property taxes on the full value of the replacement property
Valuation of Replacement Property.
The replacement property value can be 105% of the original property sale price if the replacement property is purchased within one year.
The replacement property value can be 110% of the original property sale price if the replacement property is purchased within the second year.
When To File for the Base Year Transfer?
You have up to three years after acquisition of the replacement property to apply for the transfer of the Base Year Value.
This means that if your replacement is on January 1, 2018, then you have until December 31, 2020, to apply for the transfer of the Base Year Value.
You apply for the Base Year transfer by completing the following form and filing it with the County Assessor’s Office where the replacement property is located:
Claim of Persons at Least 55 Years of Age for Transfer of Base Year Value to Replacement Dwelling (form DOE-60-AH)
You can obtain the form either on-line or directly from the Assessor’s Office.
One Time Benefit.
Although Base Year transfers are a “one time” benefit, there is one exemption. If a person becomes disabled after using the “one time” benefit, then the same person may transfer the Base Year value a second time because of the disability. This is the only exception to the “one time” benefit rule.
Destruction of Original Property
If the original property is destroyed, then you can still transfer your Base Year Value. The Base Year Value will then be based upon “appraised” value of the original property immediately prior to its destruction. In other words, if your home was destroyed by the recent fires, you can still transfer the Base Year Value and transfer your Base to a new property.
Improvements to the Replacement Property
It is also possible to exempt improvements to the replacement property so long as the total amount of the purchase price and improvements does not exceed the value of the original property at the time of sale.
This means that if the original property sold for $1,000,000, and the replacement property was purchased for $750,000, then you could exempt up to $250,000 in improvements from reassessment under Propositions 60 and 90. This benefit it often overlooked.