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Proposition 110 is a constitutional initiative passed by California voters that provides property tax relief for severely and permanently disabled claimants when they sell an existing home and buy or build another. Implemented by section 69.5 of the Revenue and Taxation Code it allows the transfer of the base-year value of an existing home to a newly purchased or constructed home.
Transfers are allowed within the same county (intracounty) and in select counties, transfers are allowed from one county to another county (intercounty). In addition, the initiative provides relief for modifications that make a home more accessible for a severely disabled person (section 74.3).
If you or your spouse that lives with you is severely and permanently disabled, you can buy a home of equal or lesser value than your existing home and transfer the factored base year value of your existing home to your new property.
Also, you can modify your current home as long as the modifications directly satisfy disability requirements without the modifications being assessed as new construction. Once you have filed and received this tax relief, neither you nor your spouse who resides with you will qualify to receive this benefit again.
You or a spouse residing with you must be severely and permanently disabled when the original property was either sold or modifications were completed. Both your original and replacement property must be eligible for the homeowners’ or disabled veterans’ exemption and the replacement property must be your principal residence.
The replacement property must be of equal or lesser value than the original property. The “equal or lesser” test is applied to the entire replacement property, even though the owner of the original property may acquire only a partial interest in the replacement property. Owners of two qualifying original residences may not combine the values of those properties in order to qualify for a Proposition 110 base-year transfer to a replacement property of greater value than the more valuable of the two original residences.
The replacement property must be purchased or built within two years (before or after) of the sale of the original property. To receive retroactive relief from the date of transfer, you must file your claim within three years following the purchase or completion of new construction of the replacement property. The disabled person, spouse or legal guardian must submit a Physician’s Certificate of Disability (Form BOE-62A) with the claim.
The original property must be subject to reappraisal at its current fair market value unless the buyer(s) also qualify the property as a replacement property for a base year value transfer due to intracounty/ intercounty disaster relief or a base year value transfer for persons aged 55 or over. Therefore, most transfers between parents and children will not qualify.
Yes, as of January 1, 2007, a claim that is filed after the three-year filing period may receive the benefits commencing with the lien date of the assessment year in which the claim is filed. The full cash value of the replacement property in that assessment year shall be the base year value from the year in which the property was transferred, factored to the assessment year in which the claim is filed. The factored base year value of any new construction which occurred between the date of sale and the date the prospective relief is being applied should also be added.
For property tax purposes, a severely and permanently disabled person is defined as “any person who has a physical disability or impairment, whether from birth or by reason of accident or disease, that results in a functional limitation as to employment or substantially limits one or more major life activities of that person, and that has been diagnosed as permanently affecting the person’s ability to function, including, but not limited to, any disability or impairment that affects sight, speech, hearing, or the use of any limbs.”
You must provide proof of severe and permanent disability and file a claim with the assessor who will then determine if you qualify. Appropriate proof of disability is a certificate signed by a licensed physician or surgeon attesting to the claimant’s severe and permanent disability. If you are filing a request for property tax exclusion for modifications made to improve accessibility, in addition to the claim and proof of disability, a statement must be provided that identifies the construction, installation, or modification that was necessary to make the structure more accessible.
The meaning of “equal or lesser value” depends on when you purchase the replacement property. In general, equal or lesser value means: 100% or less of the market value of the original property if a replacement property were purchased or newly constructed before the sale of the original property, or 105% or less of the market value of the original property if a replacement property were purchased or newly constructed within the first year after the sale of the original property, or 110% or less of the market value of the original property if a replacement property were purchased or newly constructed within the second year after the sale of the original property In determining whether the “equal or lesser value” test is met, it is important to understand that the market value of a property is not necessarily the same as the sale or purchase price. The assessor will determine the market value of each property. If the market value of your replacement dwelling exceeds the “equal or lesser value” test, no relief is available. It is “all or nothing”, with no partial benefits granted.
No, the full cash value of the original property as of the date of its sale must be compared with the full cash value of the replacement property as of its date of purchase or completion of new construction. However, property tax laws presume that the purchase price paid in a transaction is the full cash value unless evidence shows that the real property would not have transferred for that price in an open market transaction. Unless the entire replacement dwelling satisfies the “equal or lesser value” test, no benefit is available. It is “all or nothing.” Partial benefits are not granted.
Mental disabilities do not meet the definition of “severely and permanently disabled” for property tax purposes, which specifies physical disability or impairment. A person with a mental disability may qualify on the basis of age (under Proposition 60/90), but not disability.
The law that allows for transfers of base year value between counties merely allows each county board of supervisors to adopt an ordinance accepting transfers from other counties. It is the discretion of each county to allow such transfers. The county in which your replacement property is located must have an ordinance that accepts intercounty transfers.
As of September 19, 2013, the following nine counties in California have an ordinance enabling the intercounty base year value transfer:
| Alameda |
Orange |
San Mateo |
| El Dorado |
Riverside |
Santa Clara |
| Los Angeles |
San Diego |
Ventura |
Since the counties indicated above are subject to change, we recommend contacting the county to which you wish to move to verify Proposition 110 eligibility.
An application must be filed with the county assessor where the replacement property is located. If you are filing for the base year value transfer, the claim form is BOE-62, The Disabled Persons Claim for Transfer of Base-Year Value to Replacement Dwelling. If you are filing for the new construction exclusion on a home that is eligible for the homeowners’ exemption, the claim form is BOE-63, Disabled Persons Claim for Exclusion of New Construction. If you are filing for the new construction exclusion on a structure that is not eligible for the homeowners’ exemption, the form is BOE-63-A, Claim for Disabled Accessibility Construction Exclusion from Assessment. These forms may be obtained from your assessor’s office or some counties offer a downloadable form from their internet website which can be accessed via the board website: /proptaxes/assessors.htm
No. The original property must be eligible for the homeowners’ exemption because you own it and because it was your principal place of residence, either:
1) at the time of its sale or
2) within two years of the purchase or new construction of the replacement
dwelling.
If you did not have the homeowners’ exemption on your property, you may need to provide documents to the assessor that prove it was your principal place of residence. Proof of residency may include voter or vehicle registration, bank accounts, or income tax records.
Yes. If you qualify for either of these exemptions, you will need to file separately.
No. This is a one-time only program.Claims must be filed within threeyears of the purchase or completion of construction of the replacement dwelling toreceive retroactive relief. Eligible claims filed more than three years after thepurchase or completion of construction will receive prospective relief.
Yes. Generally, the value of the replacement property must be equal to or less than the market value of the original property.
Specifically, the following percentages apply:
“¢ 100% of the market value of an original property if a replacement home is purchased before the original property is sold.
“¢ 105% of the market value of an original property if a replacement home is
purchased within one year after the sale of the original property.
“¢ 110% of the market value of an original property if a replacement home is purchased within the second year after
the sale of the original property.
Yes. New construction does qualify for this program, although there are specific requirements that must be followed.
The value can often besubstantially higher than the actual cost of construction especially if the work iscompleted by the homeowners and not by an outside general contractor.
No. The comparison must be made using the full market value of the original property and the full market value of the replacement home as of its date of purchase. This is important because the sales price is not always the same as market value. The assessor must determine the market value for each property, which may differ from the actual sales price.
No. Partial exclusions are not allowed under this program.
No. The law provides that an original property must be sold for consideration and subject to reappraisal at full market value at the time of sale. Original property transferred to a child or disposed of by gift or inheritance does not qualify.
No. They can only receive the benefit if one or the other, not both together, qualifies by comparing his or her original property to the jointly purchased replacement home. The implementing legislation specifically disallows combining a claim in this manner, regardless of whether the co-owners of the replacement home are married or not.
Yes. The law provides that if new construction is performed upon the replacement home after the base year value has been transferred, the newly constructed portion be excluded from assessment if three specific conditions are met:
“¢ The new construction is completed within two years of the date of sale of the original property;
“¢ The owner notifies the assessor of the new construction in writing no later than
30 days after its completion; and
“¢ The market value of the new construction plus the market value of the replacement home is not greater than the market value of the original property.
You will receive Prop. 60/90/110 benefits for a residence that includes all land within the parcel provided that any nonresidential uses of the property are merely incidental to the residential use of the property.
Example: You sell your original residence on a 5-acre parcel and purchase a .25 – acre residence. As long as the 5-acre parcel was used only for purposes incidental to the use as a residential site, the base year value of the original property could be transferred assuming all the other qualifications are met.
Yes. You must pay the current year tax bill on your replacement property. That bill cannot be adjusted or cancelled to reflect the Prop. 60/90/110 benefit. Any correction resulting from the original value transfer will be made on the supplemental assessment. When the entire process is complete, you will have the same assessed value as your original property.
There is one application for filing either a Prop.60 or Prop. 90 claim. A different application is required for filing a Prop 110 claim.
