If you own property in California or are planning to buy a home, you’ve probably heard of Prop 13, Prop 60, and Prop 90. These propositions help homeowners manage property taxes, whether they want to keep rates low, move within the state, or transfer tax benefits to a new residence.
Understanding how these laws work can help you make informed decisions about your homeownership decisions. Whether you're a long-time homeowner or considering a move, knowing the ins and outs of these propositions can save you thousands of dollars over time.
What Is Prop 13?
Prop 13 is one of the most well-known property tax laws in California. Passed in 1978, it dramatically changed the way that property taxes are calculated. Before Prop 13, property taxes were based on market value, which meant that homeowners could see significant tax increases as property values rose over time. This made it difficult for many people, especially retirees, to afford their homes.
With Prop 13, property tax rates were capped at 1% of a property’s assessed value. The assessed value is based on the purchase price of the home rather than the current market value. Additionally, property taxes can only increase by a maximum of 2% per year, regardless of how much the market value rises.
This law provides stability for homeowners in California, ensuring that their property tax bills remain predictable and manageable. However, it also means that long-time homeowners pay considerably less in property taxes than new buyers purchasing similar properties at today’s prices.
With Prop 13, property tax rates were capped at 1% of a property’s assessed value. The assessed value is based on the purchase price of the home rather than the current market value. Additionally, property taxes can only increase by a maximum of 2% per year, regardless of how much the market value rises.
This law provides stability for homeowners in California, ensuring that their property tax bills remain predictable and manageable. However, it also means that long-time homeowners pay considerably less in property taxes than new buyers purchasing similar properties at today’s prices.
What Is Prop 60?
Prop 60 is designed to help homeowners who want to downsize or move without losing their Prop 13 tax benefits. Under normal circumstances, when a homeowner sells their property and buys a new one, the new home’s tax assessment is based on its purchase price. This often results in a notably higher property tax bill.
Prop 60, however, allows homeowners who are 55 or older to transfer their existing property tax base to a new home — as long as the new property is of equal or lesser value. This means that even if you move, you can keep your lower property tax rate instead of starting over with a higher one.
Prop 60, however, allows homeowners who are 55 or older to transfer their existing property tax base to a new home — as long as the new property is of equal or lesser value. This means that even if you move, you can keep your lower property tax rate instead of starting over with a higher one.
Requirements for Prop 60
To qualify for Prop 60, homeowners must meet specific requirements:
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The homeowner must be 55 or older at the time of the sale.
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The new property must be of equal or lesser value than the home being sold.
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The new property must be purchased or newly constructed within two years of the sale of the original property.
If all conditions are met, the homeowner can apply for the tax transfer, ensuring their property taxes remain affordable even after moving.
What Is Prop 90?
Prop 90 is an extension of Prop 60, allowing homeowners to transfer their property tax base to a new county within California. While Prop 60 limits tax transfers to those within the same county, Prop 90 enables homeowners to move to another participating county while still keeping their tax benefits.
This is especially useful for retirees looking to relocate to a qualifying county without facing a significant property tax increase. However, not all counties participate in Prop 90, so it’s important to determine whether your desired county allows tax transfers before making a move.
This is especially useful for retirees looking to relocate to a qualifying county without facing a significant property tax increase. However, not all counties participate in Prop 90, so it’s important to determine whether your desired county allows tax transfers before making a move.
The Impact of These Propositions on California’s Housing Market
Propositions 13, 60, and 90 play a major role in shaping California’s real estate market. For one, they encourage homeowners to stay in their properties long-term, which can limit available housing inventory. Since many long-time homeowners pay much lower property taxes, they are often reluctant to sell, reducing available housing for new buyers.
On the other hand, Prop 60 and Prop 90 provide incentives for older homeowners to move, making it easier for them to downsize without facing higher taxes. This can free up housing inventory, especially in high-demand areas.
If you own a home in California, knowing how these propositions work can help you make smart financial decisions. Whether you’re staying in your property, downsizing, or moving to a new county, these tax benefits can impact your long-term housing costs. By planning ahead and understanding your options, you can take advantage of these property tax laws to reduce expenses and maintain financial stability.
Connect with the experts at Consumer’s Title Company for trusted guidance through your real estate endeavors in California, and check out these informational flyers for more information.
Disclaimer: Please note that this content is for general informational purposes only and does not constitute legal advice.
On the other hand, Prop 60 and Prop 90 provide incentives for older homeowners to move, making it easier for them to downsize without facing higher taxes. This can free up housing inventory, especially in high-demand areas.
If you own a home in California, knowing how these propositions work can help you make smart financial decisions. Whether you’re staying in your property, downsizing, or moving to a new county, these tax benefits can impact your long-term housing costs. By planning ahead and understanding your options, you can take advantage of these property tax laws to reduce expenses and maintain financial stability.
Connect with the experts at Consumer’s Title Company for trusted guidance through your real estate endeavors in California, and check out these informational flyers for more information.
Disclaimer: Please note that this content is for general informational purposes only and does not constitute legal advice.
