Gray Divorce

Getting Divorced over 55
– Tax Break for Seniors



In the late 1980’s, California voters approved two propositions that give homeowners 55 and older a property tax break when they sell their primary residence and buy a replacement one that costs the same or less. It was intended to help empty nesters downsize without facing a property tax increase. Propositions 60 and 90 permit people over age 55 to sell one primary owner-occupied home and buy another primary owner-occupied of equal or lesser value within two years and take the lower Proposition 13 base value with them. Proposition is for transfers of you tax basis within Orange County, and Proposition 90 allows tax basis transfers between cooperating counties within California.

The Rules are Simple


One of the owners of the property must be 55 years of age or older at the time of the sale. The replacement property must be equal to or less than in value than the departing property. The replacement property must be purchased within 2 years (before or after) the sale of the original property. The claim for relief needs to be filed within 3 years from the date of purchase of the new property, or the completion of construction in the county in which it is purchased.

FOR EXAMPLE


Bob and Maria could sell their current house that they have owned for 20 years and buy another property and can still pay the same amount per year in property taxes that they are paying now. They bought at $260,000 and the property is asseSsed by the county at a value of $335,000.  They sell it for $845,000 and one of then buys a new property at $675,000.  Using proposition 60 or 90 will be able to keep the tax basis on the new property at half of the price.

IF YOU ARE GETTING A DIVORCE


…the law only allows ONE SPOUSE to take advantage of this tax break. The courts rarely decide who gets this tax break, it is which one of the spouses apply with the county for this tax break first. WOW!!!

There are many requirements to qualify it can be used only once. Please do not consider this as tax advice.  You should consult a tax professional who can review your specific situation.

COUNTIES THAT COOPERATE WITH PROP 90 (Subject to change):
Alameda, El Dorado, Los Angeles, Orange, Riverside, San Bernardino, San Diego, San Mateo, Santa Clara, Tuolumne and Ventura.