Getting Older, Getting Wiser, Getting Happier and Getting Tax Breaks!

Getting older is certain, getting wiser is likely, getting happier is what you do with your attitude and getting Tax Breaks is what this article explains.

One of the biggest fears for seniors (and others), is running out of money in retirement and the threat of ever increasing taxes.  People who have built up equity in their homes & thus having lower tax rates, can thank California’s Prop 13 (the law that limits property tax increases - with details here).

http://www.chicagotitlesd.com/march06/CalifProp13.pdf

Challenges for seniors wishing to sell their home are, the Capital Gains Tax, the thought of higher property taxes for a replacement home and possibly the additional 3.8% tax on unearned income via Obamacare.  Help is at hand!

Do you already have a low property tax base?  California Proposition 60 (one owner over 55), along with the IRS capital gains exclusion for owner occupied properties, can make the potential tax bites from selling your existing home and buying a replacement one, much, much less!  You can take the existing low property tax base with you to a replacement home of equal or lesser value, within plus or minus two years.  You also, could have no capital gains tax liability, on the profit of your home sale, for either $250,000 (single) or $500,000 (married), as long as you have lived in the property for two of the last five years. 

Can you see the possibilities? Sell your current home that has appreciated, use some of that money to buy a more convenient smaller home or condo (taking your low property tax base with you); and use the rest of the sale proceeds, to make your life a little easier or more enjoyable.

And now, tax your brain cells for the fine print, on getting the most from Proposition 60 and the Capital Gains Exclusion!  Prop 60 tax transfer is available in all California counties and is a one time use only.  Proposition 90, allows a property tax transfer between any California county and certain certain other counties.  There are 10 counties as of 2014, with San Diego accepting transfer of tax base from any other county.  You can take the transfer, within a plus or minus, two year window, from the sale of your existing home and the replacement home must also be, owner occupied and of equal or lesser value.  A 5% inflation factor is available for buying the new property, if done with in one year and a 10% one can be used if buying after one year, though, the new purchase can not go past the the total two year window!  You can also construct a new home using Prop 60 and the details can be found at http://www.boe.ca.gov/proptaxes/faqs/propositions60_90.htm  along with numerous detailed answers to other consumer questions regarding these propositions!