California Home Buyers Over Age 55 Could Save Big on Property Taxes

Filed under: Mortgage News

Over the past few weeks, there have been a few conversations about Props 60 & 90. These new changes in the state of California are designed to help people who are 55+ save money on their retirement real estate purchases. If you are moving from one house to another, these props allow you to transfer the assessed value of your current home to the new home. This can save you thousands of dollars in annual tax costs!

Prop 13 requires that when you buy a new house, it is assessed at the purchase price – and that becomes your taxable rate. That rate can only increase by 1% per year, which is a nice program that has been in California for a long time.

Managing Property Taxes in Retirement

Are you nearing retirement and it’s time to downsize? There are situations where people’s current home original purchase price was only $100,000 because they lived there for 30 – 40 years. Now that it’s time to move to a single-story, you have more than enough cash to pay for the purchase.

The problem is that you are bringing a new $400,000 assessment on the new house. As a result, taxes are going from $1,000 or $1,200 per year, up to as much as $4,000 or $5,000 per year. Prop 60 allows you to transfer the assessed value within the same county, prop 90 allows you to transfer the value between counties. This isn’t for all counties in the state, but all of the Southern California counties are included.

Don’t Get Trapped with High Taxes

Baby boomers are moving into their retirement years. There’s going to be a lot of downsizing happening. Some people might get trapped in a situation where they are unable to afford the higher tax burden.

I wanted to get the word out so real estate agents know how to best help their clients. If you aren’t in the real estate business, this information might be valuable for you, a family member, or anyone you know who is ready to downsize for retirement.

Contact Bill Provost at Franklin Loan Center if you have questions or need additional information. (425) 241-1922 or