Proposition 13; Proposition 60; Proposition 90

Under Proposition 13, the real estate tax on a parcel of property is limited to 1% of its purchase price, forever, until the property is resold. The proposition was passed, in part, due to homeowner anger at ever-increasing tax rates; this led to situations where senior citizens on fixed incomes could no longer afford to pay the property taxes on their homes as population and land value soared together in California.

If either spouse is over age 55, PROP 60 allows replacement of a primary residence with a new home of equal or lesser value (but see below) within the same county and transfer of the Prop 13 assessed valuation from the old home to the new property.

PROP 90 allows counties to elect to accept transfers of Prop 13 values for moves from other counties when a primary residence is replaced with a less expensive (but see below) home. If you are over 55 and move into a county which accepts Prop 90, you may take your old, lower Prop 13 value, regardless of from which county you move. Using Prop 90, you can sell your $400,000 San Francisco home [assessed value $80,000] and move to a new $300,000 home in San Mateo; the new San Mateo assessed value will be $80,000!

COUNTIES WHICH ACCEPT PROP 90 (Current as of 11/5/2004) Alameda, Los Angeles, Orange, San Diego, San Mateo, Santa Clara, and Ventura.

Props 60 and 90 apply if you "trade down" (i.e. the new home costs less than the sales price of the old home). In some cases you may buy for 10% more than the sales price of the old home. If you buy New Home 1st; then sell the Old Home, you must go down in price. If you sell the Old Home1st; then buy the New Home:

In 1st 365 days after the sale of Old Home, you may go up 5% in the purchase price of New Home. If you buy New Home more than 1 year from the sale of Old Home, but less than 2 years, you may go up 10%.