<\/p>\n
Age 55 marks a financial milestone for many Californians, bringing eligibility for a valuable Proposition 19 property tax benefit, as well as other perks and discounts.<\/p>\n
Steven Boyle\/S.F. Chronicle from Getty Images elements<\/p>\n
Every birthday is worth celebrating. But in California, you might celebrate a little more when you turn 55\u00a0\u2014 especially if you own a home.<\/p>\n
What\u2019s all the excitement about? It\u2019s the age you become eligible to sell your home and buy a new one while retaining your property tax basis, thanks to Proposition 19.<\/p>\n
In 2020, voters approved an overhaul of California\u2019s property tax rules to address an unintended consequence of the state\u2019s landmark Prop 13. That measure, passed in 1978, limited property tax rates to 1% of a home\u2019s assessed value and capped increases to no more than 2% annually, no matter how much the property was worth.\u00a0\u00a0<\/p>\n
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That tax break, while popular<\/a>, resulted in a \u201clock-in\u201d effect for many longtime homeowners: They were reluctant to move to new homes, because they\u2019d pay so much more in reset property taxes. Before Prop 19, seniors could move their tax basis to another property only once, with restrictions. Prop 19 expanded the benefit and increased the number of allowed transfers to three\u00a0\u2014\u00a0giving seniors more enticement to downsize, freeing up larger homes for families.<\/p>\n Now, once you or your spouse turns 55, you can sell your home and move within the state of California up to three times while transferring the property tax basis for up to 110% of the current assessed value of your previous home.<\/p>\n San Francisco Chronicle Logo<\/p>\n Make us a Preferred Source to get more of our news when you search.<\/p>\n <\/p>\n Add Preferred Source<\/p>\n <\/a><\/p>\n \u2022 Got money questions? Here\u2019s how to send them to our California budgeting advice columnist<\/a>\u00a0<\/p>\n \u2022\u00a0Read: Bay Area housing prices aren\u2019t going to crash. This is what will happen instead<\/a><\/p>\n Article continues below this ad<\/p>\n James Cunningham, an estate planning, trust and probate law attorney and founder of Bay Area-based CunninghamLegal, sketched out a theoretical example of what that could look like in practice: Let\u2019s say you own a condo near Daly City that you bought for $500,000. You sell it for $1 million, and if you\u2019re a joint filer, you get the $500,000 capital gains exclusion\u00a0\u2014 not related to Prop 19, but part of the federal tax code<\/a>\u00a0\u2014 on that growth.\u00a0<\/p>\n Within two years of the sale, you buy a home on the golf course in Lincoln for $1 million. By transferring the property tax basis, you\u2019ll pay roughly the same property taxes on that home as you did on your condo.\u00a0<\/p>\n There\u2019s some paperwork involved\u00a0\u2014 Cunningham says he\u2019s had people call his office to ask for help with it, though he says most people can do it all themselves\u00a0\u2014 and you have to make sure the sale of the previous home and the purchase or construction of the new home happen within two years of each other. If the new home is worth more than the old one, the difference is added to your transferred assessed value, increasing your property taxes\u00a0\u2014\u00a0though by far less than a full reassessment would trigger.\u00a0<\/p>\n 55-year-olds might not think of themselves as \u201cseniors,\u201d particularly in the Bay Area, where tech workers and academics might feel like they\u2019re hitting their career stride around that stage of life. And as the age of first-time homebuyers<\/a> and first-time parents<\/a> creeps higher, particularly in the Bay, people with decades left on their mortgages and middle schoolers at home might not realize they\u2019re a few short years from being teed up for a big tax break.<\/p>\n \u2022 Read: Should I get a reverse mortgage or a home equity investment?<\/a><\/p>\n Article continues below this ad<\/p>\n \u2022\u00a0Read: Can leaving the workforce early lead to cognitive decline? Here\u2019s what experts say<\/a><\/p>\n Other benefits of turning 55<\/p>\n Fifty-five is also the age when you become eligible for 55-and-older communities. In 1995, the U.S. Congress passed the Housing for Older Persons Act, which legalized a sort of reverse age discrimination in housing laws: It allowed housing communities that restrict residency based on age. In 55+ communities, 80% of homes must have at least one resident that age or older. Often, families with children under 18 aren\u2019t allowed to move in at all.<\/p>\n Mary Clements Evans, a certified financial planner and founder and president of Evans Wealth Strategies, said her clients rave about them. \u201cI\u2019ve only had one not like it,\u201d she said.\u00a0<\/p>\n There are a lot of perks: Clements Evans said they have clubs for just about everything with lots of activities and community events. Being around other people your age makes it easier to make friends compared to a neighborhood filled with young families, she said. And some people consider it a perk that younger guests aren\u2019t allowed to visit for long: It gives you a great excuse for why your adult child can\u2019t move back in with you.<\/p>\n Article continues below this ad<\/p>\n If you have a jumbo mortgage, reverse mortgage eligibility may kick in at age 55 too. Real estate professionals and senior housing advocates will tell you reverse mortgages aren\u2019t for everyone<\/a>, which is true, but they are the right call in some circumstances.<\/p>\n Fifty-five is also the age when certain senior discounts start to kick in. If you get an AARP membership, you gain access to numerous member discounts, including quite a few chain restaurants.<\/p>\n National chains with a presence in the Bay Area that offer senior discounts for 55+ include Denny\u2019s, IHOP, Michaels, Goodwill and Ross Dress for Less. Senior discounts are sometimes only available on certain days or time of day, or give access to special menus with lower costs but also smaller portions.<\/p>\n Internet, cable and cellphone companies also sometimes offer discounted plans based on age. It\u2019s worth reaching out to your provider to ask.<\/p>\n Many other retailers and restaurants offer senior discounts, Clements Evans said, but don\u2019t always publicize them. If you go anywhere regularly, ask what senior discounts might be available.<\/p>\n Article continues below this ad<\/p>\n Age 62 is another savings milestone<\/p>\n It\u2019s probably not news to you that 62 is the earliest age you can start claiming Social Security benefits (though experts still say it\u2019s best to wait as long as possible<\/a> to do so, or claim strategically with your spouse<\/a>).\u00a0<\/p>\n Standard reverse mortgages also become available when you turn 62. And Clements Evans said many more senior discounts kick in at 62, including a lot of movie theater bargains. Even more discounts unlock at age 65.<\/p>\n \u2022 Read: A record number of people are claiming Social Security\u00a0\u2014 but what\u2019s really the best age to start?<\/a><\/p>\n \u2022\u00a0Read: This might be the smartest way to think about claiming Social Security<\/a><\/p>\n Some Californians have another option starting at age 62 to help offset their cost of living. California is one of a growing number of states that allow older low-income homeowners with a certain amount of equity to postpone paying property taxes<\/a> until a title transfer occurs\u00a0\u2014 for example, if the home is sold\u00a0\u2014 or when the current owner moves out or dies without a surviving spouse. The property taxes are converted to a lien on the property with 5% interest.<\/p>\n Californians who are blind or disabled may also qualify. Total household income must be $55,181 or less, and the property must be the principal place of residence for claimants, among other eligibility requirements.<\/p>\n To get more information on eligibility and the application process for the California Property Tax Postponement Program, the California Controller\u2019s Office says to call (800) 952-5661 or email\u00a0postponement@sco.ca.gov<\/a>, or visit www.sco.ca.gov\/ard_ptp_faq.html<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"Age 55 marks a financial milestone for many Californians, bringing eligibility for a valuable Proposition 19 property tax…\n","protected":false},"author":2,"featured_media":340151,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6],"tags":[7,9,8,15630,388],"class_list":["post-340150","post","type-post","status-publish","format-standard","has-post-thumbnail","category-california","tag-california","tag-california-headlines","tag-california-news","tag-personal-finance","tag-real-estate"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/posts\/340150","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/comments?post=340150"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/posts\/340150\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/media\/340151"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/media?parent=340150"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/categories?post=340150"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/tags?post=340150"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}