Propositions 90 and 60 – Understand Your Property Taxes

As part of our role as the Voice of Real Estate locally, The Nevada County Association of REALTORS® provides informative information about issues that affect local property sales prices and the overall health of our county’s housing economy.
Voters in the State of California approved Proposition 90 in November, 1988. The primary goal of Prop 90 is to allow senior citizens to sell their homes in high demand areas while retaining their low property tax base for the next purchase. The financial benefit of Proposition 90 is only for 55 year and older homeowners as this measure allows qualifying members of the Baby Boomer generation to move from one county to another, staying in California, without an increase in the homeowner’s property tax base. This allows saving annual property taxes of several hundred dollars per month or more for qualified participants. However, younger, career driven buyers also benefit from more available resale homes when seniors move from high demand areas making room for the next generation.

Currently, the Proposition 90 ordinance must be adopted by each county in order for homeowners to utilize it. Thus the county you are planning to move to must have opted-in to Prop 90 in order for you to transfer your property’s lower tax base. When a county adopts Prop 90 it means they will accept the tax transfer and it does not matter if the county you are moving out of has adopted the program or not.
Nevada County is currently opted-in to Proposition 60 but not prop 90, which means seniors in Nevada County can keep their lower property tax base when they move within Nevada County, but seniors from other counties have to pay property taxes based on the purchase price of their new home no matter what their previous home’s tax base was. Prop 60 was approved by local voters in 1986.
The following California counties have adopted in to the Prop 90 ordinance: Alameda, Santa Clara, San Diego, San Mateo, Los Angeles, Venture, San Bernardino, Riverside, Orange, Tuolumne and El Dorado counties.
Recent research done in El Dorado County concludes that most homebuyers coming from the Bay Area or Southern California are incentivized by Prop 90 tax benefits, in fact it was the number one reason they purchased a home in El Dorado County rather than Nevada County.
Naysayers state that if Nevada County opted-in, there would be an initial loss to Nevada County of potential property tax revenue under Prop 90 because of the tax base transfer. However, the upside of opting-in is the rest of the story:
1) Research shows a huge increase in construction spending, material spending and sales tax revenue from these Boomers who purchase a home under Prop 90.
2) Better yet, research shows 92% of the Prop 90 homebuyers made their purchases locally and 25% of them contributed more than $40,000 each in purchasing power.
3) Finally, when asked the question “Since moving to El Dorado County, have members of your family or your friends purchased a home in El Dorado County?” Over 32% of the respondents said “YES”.
The El Dorado County study clearly points to the economic benefits of Prop 90 and why it was adopted by the voters of California in 1988. Its adoption gives participating counties an economic competitive edge – It is an important tool in the Economic Development toolbox. Prop 90 is good for the local economy as homebuyers buy at higher price points; they tend to have higher spendable income; they volunteer for non-profits and regularly contribute to the community in many ways; they help make a demand for higher quality medical care…and they rarely appear on the police blotter.
The Nevada County Association of REALTORS® supports the adoption of Proposition 90 in Nevada County and we are asking for your support as well. Please let your local county Supervisor know that you support opting-in to Prop 90!

By | 2016-07-15T05:02:19+00:00 July 15th, 2016|Nevada County Real Estate|0 Comments