California Proposition 60 and Proposition 90: Transfer of Base Property Tax
Over the past few decades California has passed several Propositions that affect home value. Starting in 2012 homeowners, 55 and older who sold their primary residence could transfer the base value of that primary property to their new residence.
Proposition 60 allows for the transfers of a base year value within the same county (intracounty). Proposition 90 allows for the transfers of a base year value from one county to another county in California (intercounty) if the county has authorized such a transfer by an ordinance.
These eleven counties have passed that ordinance: Alameda, El Dorado, Los Angeles, Orange, Riverside, San Bernardino, San Diego, San Mateo, Santa Clara, Tuolumne, and Ventura.
What is Base Value?
The base value is set when you buy or build a property and is usually the current market value of the property. Every year the base value is adjusted to account for inflation. You are allowed to increase your property’s base value by 2% in any given year.
Of course if the market is declining, in all likelihood, so is the value of your property. In that case you may be eligible for a decline-in-value reassessment which can reduce the (taxable) value of your home.
Since the passage of Proposition 13 in 1978, property is assessed at its fair market value as of the date it is acquired. Your purchase price generally becomes the taxable “base value” as of that date. Now Prop 60 allows you to transfer the base value of your old property to your new one and this could have benefits in home value and tax liability.
An example
In this example we look at a property that was purchased for $500,000. During the following three-years the market declined and recovered. The property owner filed for a decline-in-value reassessment. The table shows the trended base value of the property, the market value of the property, and the assessed value of the property. Assuming a 2% annual consumer price index (CPI):
| Year | Trended Base Value | Market Value | Assessed Value |
| Year 1 | $500,000 | $500,000 | $500,000 |
| Year 2 | $510,000 | $480,000 | $480,000 |
| Year 3 | $520,200 | $510,000 | $510,000 |
| Year 4 | $530,604 | $550,000 | $530,604 |
This is what happened
- In Year 1, the property’s purchase price reflected the market value and was assessed accordingly.
- In Year 2, the property was granted a temporary decline-in-value to reflect its current market value.
- In Year 3, the property was partially restored to reflect its rising market value.
- In Year 4, the property was fully restored to its trended base value (maximum taxable value) even if its market value was now actually higher.
Can I do this where I live?
California Proposition 90 was approved by voters in a referendum held on November 8, 1988.
The amendment allows homeowners over the age of 55 to transfer the assessed value of their present home to a replacement home if the replacement home is located in another county, is of equal or lesser value than the original property, if the county of the replacement dwelling adopts an ordinance participating in the program.
The following counties allow for Proposition 90 transfers into the county: Alameda, El Dorado, Los Angeles, Orange, Riverside, San Bernardino, San Diego, San Mateo, Santa Clara, Tuolumne, and Ventura. The county of El Dorado will stop taking property tax transfers through Proposition 90 on December 12th, 2018 (Counties subject to change)
