Being a homeowner in California is no easy feat: while the Golden State hosts beautiful weather year-round for a majority of its residents, property taxes can be excruciatingly high.
But if you’re a senior citizen homeowner in California, you’re in luck — the state offers a variety of property tax exemptions for individuals 55 or older.
The problem, however, is that many elderly homeowners aren’t aware of property exemption rules in their areas. Since each county in California can levy its own special taxes and assessments, it’s easy for many homeowners get confused and frustrated when trying to figure out how to save money on their property taxes.
On the other hand, if you’re caring for a senior who’s suddenly incapable of filing their own taxes, possibly due to a debilitating disease or condition, you’ll want to know which deductions and credits can save you thousands on their tax bill.
This article will show you some of the most common property tax exemptions for seniors and how to determine whether you’re eligible for them.
California Propositions 60 and 90
Propositions 60 and 90 are pieces of legislation that allow homeowners 55 or older to move into a new home without substantially increasing their property tax obligation.
How does this work?
Thanks to Proposition 13, your home’s appraised value is determined at the time you purchase it, and increases on that value are limited to a maximum of 2% through that same proposition. Through Propositions 60 and 90, you can transfer that same level of tax obligation so long as your new property is of equal or lesser value than the original property sold.
So what would this look like?
Say you bought a home 10 years ago for $300,000, meaning its current assessed value is about $365,698 today. Assuming your tax rate is around 1.25%, you’re paying $4,571 in taxes each year. If you sell that home for $700,000 and move into a new place valued at $650,000, you would still only pay the tax obligation for a $365,698 house (and 2% more each year).
Without Propositions 60 and 90, you would be paying $8,125 each year in taxes instead of $4,571. This makes moving for seniors much cheaper and feasible, especially for those who rely on fixed income such as Social Security and nest egg returns.
What’s the difference between Propositions 60 and 90?
Proposition 60 allows you to transfer property value and the associated tax burden only within the same county. Proposition 90 allows you to do this between different counties, but only if those counties have opted into the program.
Counties where Proposition 90 is available:
Alameda, El Dorado, Los Angeles, Orange, San Diego, San Mateo, Santa Clara, and Ventura.
How do I file?
After you’ve finalized the sale of your old home and the purchase of your new one, fill out the claim form BOE-60-AH, Claim of Person(s) at Least 55 Years of Age for Transfer of Base Year Value to Replacement Dwelling, which you can obtain from your local County Assessor’s office.
An individual may only use Proposition 60 or 90 once in his or her lifetime, unless the individual is citing disability as the reason for the relocation. An individual may not use Proposition 60 or 90 a second time if disability was cited for the first use, and may never be used a third time.
Parcel tax exemptions
It’s common for California counties to levy parcel taxes on homeowners in order to pay for certain public services such as education and public utilities. In order to win over popular support for these taxes, counties usually allow homeowners 65 or older to file for exemptions.
The exemptions themselves and the procedure for filing for them vary depending on the county in which you live. Some require homeowners to file for the exemptions every year, while others automatically apply the exemptions after they apply for the first time.
How do I file?
Click here to check with your local tax collector’s office to find out how to apply for exemptions in your area.
The state of California offers a hefty tax exemption for veterans who were disabled through military service.
How does this work?
According to the California Board of Equalization, the basic exemption for disabled veterans starts at $100,000, while low-income disabled veterans can qualify for an exemption around $150,000 (the exact amounts change year to year according to the current cost-of-living index).
For example, if your home’s taxable value is $300,000, the exemption will reduce that to around $200,000 (or more, if you qualify for low-income status), saving you hundreds of dollars in taxes over the course of a year.
How to qualify:
The person filing must meet one of the following criteria:
• Blind in both eyes;
• Lost the use of two or more limbs;
• Is totally disabled according to the United States Department of Veteran Affairs.
If the individual dies due to service-related injuries, the unmarried surviving spouse is then available for the exemption, even if the veteran wasn’t eligible while he/she was alive.
Keep in mind that the homeowner can only apply one exemption to the property; if you have the option between the homeowner’s exemption or the disabled veteran exemption, you’d definitely want to go with the later since your benefit will be greater.
Living at home
Do you or a loved one need assistance from an experienced caregiver? Talk with a Family Directed Advisor today about your needs. We will immediately start working with you to find caregivers that fit your budget and meet your care requirements.
Note: The information in this article is for informational purposes only. If you have legal questions regarding taxes and their exemptions, consult a lawyer. Family Directed does not offer tax accounting services.