Ira & Carol Serkes
RE/MAX Executive
1758 Solano Avenue
Berkeley, CA 94707
510 – 526 – 6668
www.berkeleyhomes.com
Here’s How To Transfer
Your Low Property Taxes
To Your Next Home!
Ira & Carol Serkes
Executive
510-526-6668
[email protected]
www.berkeleyhomes.com Web Site
www.berkeleyblogcast.com Blog & Podcasts
We’re Ira & Carol Serkes...
Full service RE/MAX Executive Realtors who specialize in helping nice folks
sell and buy wonderful homes in the East Bay’s most livable neighborhoods.
We welcome and value referrals of friends and family.
The National Association of Realtors reports that over 77% of buyers search
for homes online... and that multiple photographs and detailed property
information are the two most valuable features home buyers want. That’s
why we create custom web sites for our home sellers, with extensive photo
portfolios, detailed home information, comprehensive neighborhood links,
QuickTime Video interviews and superb web site placement on both
Google and Google Blog Search.
Want to know what your home is worth?
comparative–market–analysis.com will send a report directly to your inbox. Need immediate service? Call us 510-526-6668 or Ira’s cell phone 510684-3334.
Interested in selling or buying a ﬁne home?
berkeleyﬁnehomes.com is where to go. Ira Serkes is a founding member
of The Institute for Luxury Home Marketing, and co-author of Get the
Best Deal When Selling Your Home: San Francisco Bay Area Edition and
Nolo Press’ best selling book How to Buy a House in California!
Want to see what’s for sale right now?
berkeley-real-estate.com has up-to-date listings!
Curious about hot real estate topics and local neighborhood
information via web, blog and podcasts?
Visit berkeleyhomes.com and berkeleyblogcast.com
Property Tax Relief: Are You A Qualified Seller?
A special program lets qualiﬁed California sellers transfer their Proposition 13 assessed
value to a replacement home.
This program can save you thousands of dollars in taxes every single year!
You’ll be able to move closer to family, friends, transportation, or shopping, and retain
the same low property tax base of your current home!
Did You Recently Purchase Your Replacement Home?
You still might be able to take advantage of this program! Act quickly, though .....
there are strict deadlines involved.
Important Factors In Determining Eligibility:
Your Age And Disability Status
County In Which You Purchased Your Replacement Home
Price Of Original Home And Replacement Home
Time Period In Which You Bought And Sold
Ira & Carol Serkes
Executive
Toll Free 800.887.6668 or 510.526.6668
BerkeleyHomes.com & BerkeleyBlogCast.com
[email protected]
Here’s A Quick Qualification Summary
Your county’s tax assessor is responsible for the transfer of property tax base program
and you should contact that oﬃce to be sure of the details. To aid you in learning
more about current terms and conditions we’ve included a report from the Alameda
County Assessor’s Oﬃce. Note that:
1:
At least one seller of the original home must be at least age 55, or severely
and permanently disabled;
2:
Generally, this is a one-time beneﬁt. Sellers of an original home must not
have been granted program beneﬁts prior, unless they became eligible based
on attaining the age of 55 and then subsequently became disabled. In that
case, a seller may qualify for a second claim based on their disability status;
3:
Your replacement home must be purchased or newly constructed within
two years, either before or after the sale of your original home;
Wow! If you bought your replacement home within the last two
years, you may still qualify! Be sure to contact your assessor’s oﬃce
immediately: you must submit your claim within three years of your
sale.
4:
Your replacement home must be of “equal or lesser value” than your
original home:
Watch out: “equal or lesser value” requires careful determination:
more about that in the following pages.
5:
Your replacement home must either be within the same county as
the original home you sell, or in one of the following seven counties;
throughout this report, we’ll refer to them as the “Magniﬁcent Seven”!
In Northern California:
In Southern California:
Alameda, San Mateo & Santa Clara
Los Angeles, Orange, San Diego & Ventura
County Eligibility Requirements
Every California county allows you to retain your tax base if you move within the same
county and meet all other criteria!
You CAN:
Transfer Your Assessed Value When You:
Sell your large home in the Berkeley Hills (Alameda County) and move to a less
expensive, smaller home within walking distance of the Cheese Board Pizza (the world’s
best!) in North Berkeley (Alameda County);
Move from Kensington (Contra Costa County) to Rossmoor’s retirement community
in Walnut Creek (Contra Costa County) to be closer to friends living there, and near
your three grandchildren living in Moraga (Contra Costa County);
Move from Kensington (Contra Costa County) to Berkeley (Alameda County), or
from Redwood City (San Mateo County) to Albany (Alameda County). This is because
Alameda is one of the Magniﬁcent Seven which allows replacement homeowners
coming from all California counties to retain their tax base.
You CANNOT:
Transfer Your Assessed Value When You:
Sell your Albany home (Alameda County) and buy a replacement home on Coventry
Road in Kensington (Contra Costa County) to be closer to the Kensington Circus
Pub at Colusa Circle (one of our favorite places!) You would not be eligible to transfer
your tax base because Contra Costa is not one of the Magniﬁcent Seven, and does not
accept tax transfers from other counties.
Price Eligibility Requirements
Your replacement home must be of “equal or lesser value” compared to the value of
your original home.
Caution! “equal or lesser value” can be confusing!
If you purchased your replacement home before you sold your original home, then in
order to qualify, the value of your replacement home must cost less than (or be equal
to) 100% of the value of your original home; or
If you purchased your replacement home within the ﬁrst year following the sale of
your original home, then in order to qualify, your replacement home must cost less
than (or be equal to) 105% of the value of your original home; or
If you purchased your replacement home within the second year following the sale
of your original home, then in order to qualify, your replacement home must cost less
than (or be equal to) 110% of the value of your original home.
You Can:
Sell for $975,000 and buy a replacement home for $600,000
Why? $600,000 is less than $975,000;
Sell for $660,000 and buy for $690,000 within the ﬁrst year.
Why? $690,000 is 104.5% of the selling price (you’re within the one year 105% rule);
Sell for $750,000 and buy for $815,000 within the second year.
Why? $815,000 is 108.7% of the selling price (you’re within the two year 110% rule).
Note: the above examples assume you meet all other age and county requirements.
But You Cannot:
Buy a replacement home for $815,000 and subsequently sell your original home for
$750,000. You bought your replacement home before you sold your original home,
and its cost was higher than the sale price of your original home!
Dear Carol and Ira:
We wanted to send our heartfelt appreciation for all your good work representing
us in the sale of our home. At all times we have found you to be professional,
caring, informative, and fun to work with! Additionally, my dad is 83 years
old, so you have been particularly helpful to both of us in helping my dad
through the transition of the sale of his home of 49 years.
We each found you through diﬀerent channels: my dad had heard about you
through the neighbors in the area - you came highly recommended; I found you
because you represented a house up the street. I went to the web site where you
featured that property. I was amazed at how complete the information was on
that particular home and, working in the research area of the transformation of
the marketplace via the Internet, I recognized that you were ahead of the “pack”
so to speak.
Lastly, you return calls quickly and your experience levels are above average. On
top of it all, you are nice people! Thank you again for all your good work.
My best,
Cindy Sparhawk
Need Legal Or Tax Advice?
This report is meant to give you an overview of a special property tax program. Please
consult with your attorney and/or your tax advisor since they’re the ultimate experts!
We’ve enclosed information from the Alameda County Assessor’s Oﬃce, and also an
article written by the Los Angeles County Assessor’s Oﬃce, to help you in determining
your tax transfer eligibility. There may be important income tax considerations
when selling, so we’ve also included excerpts from IRS Instructions (Instructions for
Schedule D) and the cover sheet for IRS Publication 523 (Selling Your Home).
Need More Real Estate Information? Call Us!
Let’s get together! We’ll review all your options so you’ll be able to decide what’s best
for you. As real estate professionals with expertise in selling homes for the best possible
prices, with the fewest problems, in the shortest time, we specialize in helping nice
folks sell and buy wonderful homes in Berkeley and nearby communities.
Relocating? Call Us For A Referral To An Excellent
Realtor!
Thinking of moving outside of the area we serve? We’ve personally met many other
great real estate agents throughout the United States and Canada! Let us know where
you’ll be moving, and we’ll refer you to someone who will take wonderful care of you!
Which Of Your Friends Would Like This Report?
Ask them to call us and we’ll send them a copy too! We welcome and value your
referrals of friends and family.
Ira & Carol Serkes
Executive
Toll Free 800.887.6668 or 510.526.6668
BerkeleyHomes.com & BerkeleyBlogCast.com
[email protected]
Our custom moving van is free for our clients,
community, and charitable organizations
It’s also available to others in return for a contribution to Children’s Hospital
Foundation supporting Oakland’s Children Hospital!
Belong to an organization putting on a silent auction? Let us know and we’ll be happy
to donate the use of our van!
Ira & Carol Serkes, your neighborhood RE/MAX Realtors!
Ira & Carol Serkes
Executive
Toll Free 800.887.6668 or 510.526.6668
BerkeleyHomes.com & BerkeleyBlogCast.com
[email protected]
Credentials... And A Bit About Us
Ira is a Seniors Real Estate Specialist (SRES), trained in special needs and programs for
those 55 and better. He is one of the ﬁrst 500 Realtors in the United States to obtain
the ePro-500 (Electronic Real Estate Professional) designation, is an Accredited Buyer
Representative (ABR), and Graduate of the Realtors’ Institute (GRI).
Ira is co-author of Get the Best Deal When Selling Your Home – San Francisco Bay
Area Edition and Nolo Press’ best selling book, How To Buy A House In California,
now in its 10th edition after selling almost 100,000 copies. He and his wife Carol have
been working with wonderful sellers and buyers in Berkeley and nearby communities
since 1986.
Both Ira and Carol are Certiﬁed Residential Specialists (CRS) by the National
Association of Realtors, and are members of Allen Hainge’s CyberStars program, an
elite group of 200 Realtors in the United States, Canada, Mexico, Australia and The
Bahamas who use advanced technology to provide clients with extraordinary service.
Ira and Carol have been honored by RE/MAX of California & Hawaii for their
dedication to a referral based business. Ira and Carol have received the RE/MAX award
for “Most Number Of Completed Referrals” for eight consecutive years. Ira was
honored to be 2004 CyberStar of the Year.
In a previous life, Ira was a Chemical Engineer. He graduated from Cooper Union for
the Advancement of Science and Art in 1970, and received his Master’s Degree from
the University of Massachusetts, Amherst in 1974. He holds two patents for his work
at Chevron Research Company, and speaks ﬂuent Bronx.
Ira and Carol live with two kittens Poudini
& Puddy Maximus in Berkeley’s Thousand
Oaks neighborhood. Here’s a photo of their
beloved Lucy The Cat (LTC), sadly now
gone. There is no truth to the rumor that
Ira and Carol painted their moving van to
match Lucy’s colors!
Thank you for reading this all the way to
the end! It’s a wonderful life, isn’t it!
Property Tax Qualification Flow Chart
Are you at least 55
or permanently
disabled?
No
Yes
Moving within same
County or into
Magnificent 7?
Yes
No
Magnificent 7 Counties: Alameda,
San Mateo, Santa Clara, Los Angeles,
Orange, San Diego & Ventura
Will your sale and
purchase be within 2
years of each other?
No
Yes
Was your replacement home...
A: Bought before you sold AND less expensive (or
same price) as previous home, or;
B: Bought within 1 year after selling AND less than (or
equal to) 105% of selling price, or;
C: Bought within 2 years after selling AND less than
(or equal to) 110% of selling price?
Doesn't look like
you qualify - call
Assessor's Office
for details
Yes
Congratulations!
Looks like you qualify!
Flow chart by Ira Serkes, RE/MAX Executive 510-526-6668
Information deemed to be correct but not guaranteed
Be sure to consult your legal & tax advisor before proceeding
Property Tax Relief Report Copyright 2005 Ira & Carol Serkes
OFFICE OF ASSESSOR
COUNTY OF ALAMEDA
1221 Oak St., County Administration Building
Oakland, California 94612-4288
(510) 272-3787 / FAX (510) 272-3803
RON THOMSEN
AS S E SSO R
TRANSFER OF PROPERTY TAX BASE FOR PERSONS 55
AND OLDER OR SEVERELY AND PERMANENTLY DISABLED
(Revenue and Taxation Code 69.5)
(Proposition 60, 90, or 110)
PURPOSE
This pamphlet will acquaint you with Section 69.5 which allows any person age 55 or older or
severely and permanently disabled to transfer the base year value of their original property to a
replacement dwelling of "equal or lesser value" that is purchased or newly constructed within two years
of the sale of the original property. The full text of the law can be found in the State of California
Property Taxes Law Guide, Volume 1.
HISTORY
Proposition 60 allowed for base value transfers to qualified replacement dwellings of "equal or lesser
value" within the same county that were purchased or newly constructed on or after November 6, 1986.
Proposition 90 extended the Prop 60 benefits to qualified homeowners transferring their base year
values from other counties and was effective July 13, 1989 in Alameda county.
Proposition 110 extended the benefits to qualified
disabled homeowners of any age and was effective for replacement dwellings purchased or newly
constructed on or after June 6, 1990.
Senate Bill 1692 effective September 25, 1996 allowed qualified persons who had prior claims based on
age 55 to have a second claim based on disability.
REQUIREMENTS
1. At the time of the sale of the original property, the claimant or the claimant's spouse who resides
with the claimant is at least 55 years of age, or severely and permanently disabled. The claimant's
spouse need not be an owner of record of the original property. If co-owners, only the co-owner who is
the claimant must be age 55 or disabled.
2. The claimant has not previously been granted, as a claimant, the property tax relief provided by this
section. (See definition of "claimant")
The sole exception is where the claimant was first granted relief based on age 55 and subsequently
became severely and permanently disabled. The claimant may then qualify for a second claim based on
the disability.
3. The replacement property must be purchased or newly constructed within two years either before or
after of the sale of the original property.
South County Toll Free (800) 660-7725
www.acgov.org/assessor
4. The sale of the original property must be a change in ownership that subjects the property to
reappraisal at its current market value or results in a base year value transfer as a replacement dwelling
for someone qualifying under Section 69.5 or the disaster relief provisions of Section 69.
5. At the time the claim is filed, the claimant is an owner of the replacement dwelling and occupies it as
his or her principal place of residence and, as a result thereof, the property is eligible for the
homeowner's exemption.
6. Either at the time of its sale or at the time it was substantially damaged by calamity or within two
years of the purchase or new construction of the replacement dwelling, the claimant was an owner of the
original property and occupied it as his or her principal place of residence and, as a result thereof, the
property was eligible for the homeowner's exemption.
7. The replacement dwelling must be of "equal or lesser value" than the original residence. "Equal or
lesser value" means that the market value of a replacement dwelling may not exceed:
100% of the market value of the original property if the replacement dwelling is purchased or newly
constructed prior to the date of sale of the original property,
105% of the market value of the original property if the replacement dwelling is purchased or newly
constructed within the first year following the date of sale of the original property, or
110% of the market value of the original property if the replacement dwelling is purchased or newly
constructed within the second year following the date of sale of the original property. The market value
of the original property may include indexing adjustments.
Unless the replacement dwelling satisfies the "equal or lesser value" test, no benefit is available, not
even a partial benefit.
TO APPLY
To apply for relief the completed claim form and required documents must be filed with the assessor
within three years of the date the replacement dwelling is purchased or newly constructed. This claim is
not open to public inspection.
TO RESCIND
To rescind a claim a written notice of rescission must be delivered to the assessor within certain time
limits. A fee may be required.
DEFINITIONS
"Claimant" means any person claiming relief provided by this law and their spouse if the spouse is also
a record owner of the replacement dwelling.
"Person" means any individual, but does not include any firm, partnership, association, corporation,
company, or other legal entity or organization of any kind except that the claimant(s) may hold their
residence in trust for themselves.
"Severely and permanently disabled person" is 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.
"Original property" and "Replacement dwelling" means place of abode that is owned and occupied by
the claimant as his or her principal place of residence. Each unit of a multi-unit dwelling is considered a
separate dwelling for claim purposes.
"Sale and Purchase" mean "a change in ownership for consideration".
"Market value of the original property" means its market value at the time of its sale or immediately
prior to its damage by calamity if it was sold in its damaged state.
QUESTIONS & ANSWERS
Q: When making the "equal or lesser value" test, is a simple comparison of the sales price of the
original residence and the purchase price or cost of new construction of the replacement dwelling all that
is needed?
A: Generally, when a property is sold on the open market its sales price is considered market value.
However, because sale/purchase prices or costs of new construction are not always the same as market
value, the assessor may have to determine the market value, which may differ from the sale/purchase
price or cost of new construction.
Note: Only the market value of the primary residence and its related improvements are used for the
"equal or lesser value" test. For single unit properties this represents the total value of the property.
For residential properties with commercial uses or extra living units the appraiser must deduct the
market value of those portions for the "equal or lesser value" tests. (See example below)
Q: The claimant sold his original two-unit property that consisted of his primary residence and a second
unit and purchased a replacement dwelling. What portion of his sold property will qualify as the
"original property" for the "equal of lesser value" test?
A: For the "equal or lesser value" test, the "original property" consists of the claimant's primary
residence (land and improvements). The market value of the second unit (land and improvements)
would be deducted from the market value of the total property. Only the amount of the indexed base
value allocated to the original residence would be transferred.
Q: If otherwise qualified, will I meet the "equal or lesser value" test if I sold my original residence July
20,1999 for $350,000 and purchased my replacement dwelling May 3, 2000 for $365,000? Both
properties were bought and sold for market value.
A: Yes. The replacement dwelling was purchased within the first year following the sale of the original
and its purchase price did not exceed 105% of the market value of the original residence ($350,000 X
1.05 = $367,500). (See requirement No. 7)
Q: Can an otherwise qualified owner buy a vacant lot and then build a new replacement dwelling and
qualify?
A: Yes. As long as the completion of the new dwelling took place within two years, either before or
after, the sale of the original property. The purchase of the lot can take place at any time before the
completion of new construction. For the "equal or lesser value" test the total market value of the
replacement property (land and improvements) is determined as of the date of the completion of the new
construction.
Q: Can I, a qualified claimant, sell my original home and buy a replacement dwelling with co-owners
not of age 55 and transfer my base value?
A: Yes, co-owners of any age are allowed. However, the total full market value of your original home
will be compared with the total full market value of the replacement dwelling for the "equal or lesser
value" test regardless of the fact that you are only a part owner of the replacement dwelling.
Q: Can two owners sell their separately owned and occupied properties, combine their base year
values, and purchase one replacement dwelling together?
A: No. There is no provision for combining base year values. The base year value of only one original
property can be transferred to the replacement dwelling.
Q: Can two co-owners sell their original residence they shared and each still qualify for the claim when
each acquires a separate replacement dwelling?
A: No. Only one can receive the benefit. The qualified co-owners must decide between themselves who
will get the benefit. Only in the case of a multiple unit original property where several co-owners
qualify for separate homeowner's exemptions may portions of the factored base year value of that
property be transferred to several qualified replacement dwellings.
Q: Can I sell my original property and purchase a 50% interest in a replacement dwelling and still
qualify?
A: No. A partial or fractional interest purchase is not eligible. The entire interests in both the
replacement dwelling and the original property must be purchased and sold.
Q: Will the transfer of an original property or acquisition of a replacement dwelling by gift or devise
qualify under Section 69.5?
A: A property that is given away or acquired by gift or devise will not qualify because nothing of value
was exchanged. Section 69.5 requires a "sale" of the original property and a "purchase" of a
replacement dwelling.
Q: May I sell my original property to my child and give my child the benefit of the parent-child
exclusion and still transfer my base value when I purchase a replacement property?
A: No. The parents need to choose to which exclusion they wish to apply their base year value. If the
parents sell to their children and choose to transfer their base year value to them using the parent-child
exclusion, then the base year value is no longer theirs to transfer to a replacement residence.
Q: Can a mobile home qualify as either an original or a replacement dwelling for the base year value
transfer?
A: Yes, but only if the mobile home is subject to local property taxation (LPT). Mobile homes that pay
vehicle license fees annually (VLF) would not qualify because they have no base year values.
Q: Can a supplemental tax assessment be issued when the base year value is transferred from an
original property to a replacement dwelling?
A: Yes. The law requires that supplemental assessments, both positive and negative, be calculated for
all transactions that result in base-year value changes. This is accomplished by comparing the base
value transferred from the original property to the assessment on the replacement dwelling.
Q: After receiving the notice that my application has been approved, do I still need to pay the existing
tax bills?
A: Yes. All outstanding tax bills on your replacement property must be paid. They will not be
cancelled or corrected. Any overpayments you make will be refunded when the claim is processed.
Q: Can new construction completed on a replacement dwelling after the transfer of the base value also
qualify for relief under this section?
A: Yes, provided that the new construction was completed within two years of the sale of the original
property, the assessor is notified within 30 days of the completion, and the market value of the new
construction plus the market value of the replacement dwelling when acquired does not exceed the
market value of the original property as determined for the original claim.
TELEPHONE NUMBERS
ASSESSOR'S DEPARTMENT
General Information
Assessee Services ................................... 510 / 272-3787
Base Value Transfers ........................... 510 / 272-3787
(Age 55 / Disabled / Disaster Relief / Eminent Domain)
Exclusions .............................................. 510 / 272-3800
(Parent-Child / Grandparent-Grandchild)
Change in Ownership Information ......... 510 / 272-3800
Homeowner's Exemption ....................... 510 / 272-3770
Business Personal Property
General Information ............................... 510 / 272-3836
Boats and Aircraft .................................. 510 / 272-3838
South County Toll Free ....................... 800 / 660-7725
Web Site: www.acgov.org/assessor
RELATED COUNTY OFFICES
Clerk, Assessment Appeals Board
Assessment Appeals Information ........ 510 / 272-6352
Tax Collector
Tax payment information including
24 Hour Automated System ................. 510 / 272-6800
Auditor
Property Tax Rates ............................... 510 / 272-6564
Recorder
Deed Recording Information ............... 510 / 272-6363
Rev 7/02
BOE-60-AH (FRONT) REV. 6 (8-03)
RON THOMSEN, ASSESSOR
CLAIM OF PERSON(S) AT LEAST 55 YEARS OF
1221 Oak Street, Room 145
AGE FOR TRANSFER OF BASE YEAR VALUE TO
Oakland, CA 94612-4288
REPLACEMENT DWELLING (Intracounty and Intercounty, When Applicable) (510) 208-4807 / FAX (510) 272-3803
(Section 69.5 of the Revenue and Taxation Code)
A.
REPLACEMENT DWELLING
ASSESSOR’S PARCEL NUMBER
RECORDER’S DOCUMENT NUMBER
DATE OF PURCHASE
PURCHASE PRICE
DATE OF COMPLETION OF NEW CONSTRUCTION
$
COST OF NEW CONSTRUCTION
$
PROPERTY ADDRESS (street, city, county)
Was the new construction described performed on a replacement dwelling which has already been granted the benefit under
section 69.5 within the past two years?
Yes
No
If yes, what was the date of your original claim?
B.
ORIGINAL (FORMER) PROPERTY
ASSESSOR’S PARCEL NUMBER
DATE OF SALE
SALE PRICE
$
PROPERTY ADDRESS (street, city, county)
Was this property your principal place of residence?
Yes
No
NOTE: When applicable, if the property is located in a different county from that of the replacement property, you must attach a
copy of the original property’s latest tax bill and any supplemental tax bill(s) issued before the date of sale. Also, was there any new
construction to this property since the last tax bill(s) and before the date of sale?
Yes
No If yes, please explain:
Was this property substantially damaged or destroyed by misfortune or calamity (not a Governor-declared disaster) and sold in its
damaged state?
Yes
No
If yes, what was the date of the misfortune or calamity?
C.
CLAIMANT INFORMATION (please print)
NAME OF CLAIMANT
SOCIAL SECURITY NUMBER
DATE OF BIRTH
AT LEAST AGE 55
NAME OF SPOUSE (provide if the spouse is a record owner of either the original property or the replacement dwelling)
SOCIAL SECURITY NUMBER
DATE OF BIRTH
AT LEAST AGE 55
Yes
No
Yes
No
Have either you or your spouse previously been granted relief under section 69.5 because of disability?
Yes
No
CERTIFICATION
I/We certify (or declare) under penalty of perjury under the laws of the State of California that: (1) neither of the claimant(s) above have previously been granted relief
under section 69.5; (2) as a claimant/occupant I/we occupy the replacement dwelling described as my/our principal place of residence; and (3) the foregoing, and all
information hereon, is true, correct, and complete to the best of my/our knowledge and belief.
CLAIMANT’S SIGNATURE
DATE
SPOUSE’S SIGNATURE
DATE
✍
✍
HOME PHONE NUMBER
DAYTIME PHONE NUMBER
(
(
)
)
MAILING ADDRESS
If there are not enough spaces above for additional claimant(s) information, please use the above format on a separate sheet of
paper and attach. If you have any questions about this form, please contact the Assessor’s Office. (Did you, as a claimant,
remember to include a copy of your birth certificate with this form? If not, please do so.)
All information provided on this form is subject to verification.
IF YOUR APPLICATION IS INCOMPLETE, YOUR CLAIM MAY NOT BE PROCESSED.
South County Toll Free (800) 660-7725
www.acgov.org/assessor
BOE-60-AH (BACK) REV. 6 (8-03)
GENERAL INFORMATION
California law allows any person who is at least 55 years of age (at the time of sale of original/former
property) who resides in a property eligible for the Homeowners’ Exemption (place of residence) or currently receiving the Disabled Veterans’ Exemption to transfer the base year value of the original property
to a replacement dwelling of equal or lesser value within the same county. For purposes of this exclusion,
original property and replacement dwelling mean a building, structure, or other shelter constituting a place
of abode which is owned and occupied by a claimant as his or her principal place of residence, and land
eligible for the homeowner’s exemption. If an original property is a multi-unit dwelling, each unit shall be
considered a separate original property.
In addition, to qualify for transfer of a base year value to a replacement dwelling all the following requirements must be met: (1) It must have been acquired or newly constructed on or after November 5, 1986
(except transfers between counties — see below); (2) The replacement dwelling must be purchased or
newly constructed within two years of the sale of the original property; (3) The original property must be
subject to reappraisal at its current fair market value in accordance with section 110.1 or 5803 of the
Revenue and Taxation Code or must receive a transferred base year value as determined in accordance
with sections 69, 69.3 or 69.5 of the Revenue and Taxation Code, because the property qualifies as a
replacement residence; and (4) A claim for relief must be filed within 3 years of the date a replacement
dwelling is purchased or new construction of that replacement dwelling is completed.
If you are filing a claim for additional treatment under section 69.5 as the result of new construction
performed on a replacement dwelling which has already been granted the benefit, you must complete the
reverse side of this form. You may be eligible if the new construction is completed within two years of the
date of sale of the original property; you have notified the Assessor in writing of the completion of new
construction within 30 days after completion; and the fair market value of the new construction (as confirmed by the Assessor) on the date of completion, plus the full cash value of the replacement dwelling at
the time of its purchase/date of completion of new construction (as confirmed by the Assessor) does not
exceed the equal or lesser value test.
In general, equal or lesser value means that the fair market value of a replacement property on the date of
purchase or completion of construction does not exceed 100 percent of market value of original property
as of its date of sale if a replacement dwelling is purchased before an original property is sold; 105
percent of market value of original property as of its date of sale if a replacement dwelling is purchased
within one year after the sale of the original property; 110 percent of market value of the original property
as of its date of sale if a replacement dwelling is purchased within the second year after the sale of the
original property.
If the original property was substantially damaged or destroyed by misfortune or calamity (not a Governordeclared disaster) and sold in its damaged state, the fair market value of the property immediately preceding the damage or destruction is used for purposes of the equal or lesser value test. A property is
“substantially damaged or destroyed” if it sustains physical damage amounting to more than 50 percent of
its full cash value immediately prior to the misfortune or calamity.
The disclosure of social security numbers by all claimants of a replacement dwelling is mandatory as
required by Revenue and Taxation Code section 69.5. [See Title 42 United State Code, section
405(c)(2)(C)(i) which authorizes the use of social security numbers for identification purposes in the
administration of any tax.] The numbers are used by the Assessor to verify the eligibility of persons
claiming this exclusion and by the state to prevent multiple claims in different counties. This claim is not
subject to public inspection.
If you feel you qualify for this exclusion, you must provide evidence that you are at least 55 years old and/
or declare under penalty of perjury (see reverse) that you are least 55, and complete the reverse side of
this form. Generally, claimants will be granted property tax relief under section 69.5 of the Revenue and
Taxation Code only once. However, the Legislature created an exception to this one-time-only clause. If a
person becomes disabled after receiving the property tax relief for age, the person may transfer the base
year value a second time because of the disability. A separate form for disability must be filed. Contact the
Assessor.
PLEASE NOTE: Transfers between counties are allowed only if the county in which the replacement
dwelling is located has passed an authorizing ordinance. The acquisition of the replacement dwelling must
occur on or after the date specified in the county ordinance.
(Please complete applicable information on reverse side.)
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Person(s) At Least 55 Years of Age Transfer of Base-Year Value to a
Replacement Dwelling
What Are Propositions 60 & 90?
They are constitutional initiatives passed by California voters. They provide property tax
relief by preventing reassessment when a senior citizen sells his/her existing residence
and purchases or constructs a replacement residence worth the same or less than the
original.
Why Were They Enacted?
They encourage a person, age 55 or older to "move down" to a smaller residence. When a
senior citizen acquires a replacement property worth less than the original property,
he/she will continue to pay approximately the same amount of annual property taxes as
before.
How Do These Propositions Work?
When the senior citizen purchases or constructs a new residence, it is not reassessed, if
he/she qualifies. The Assessor transfers the factored base value of the original residence
to the replacement residence. Proposition 60 originally required that the replacement and
the original be located in the same county. Later, Proposition 90 enabled this to be
modified by local ordinance. Los Angeles County enacted an ordinance to provide that
when the replacement is located in Los Angeles County, the original property may be
located in any other California county.
Who Qualifies?
The seller of the original residence, or spouse who resides with the seller, must be at
least 55 years of age at the time of the sale.
When Are These Propositions Effective?
You are visitor:
5,339,526
Thu, Feb 3, 2005
The replacement residence must have been purchased or constructed on or after
November 5, 1986 if the original was located in Los Angeles County. The replacement
residence must have been purchased or constructed on or after November 9, 1988 if the
original was located in any other California county. Claims must be filed within three
years following the purchase of the replacement residence.
Where Are Claim Forms Available?
They are distributed at Assessor's public counters, in Room 225 of the Kenneth Hahn
Hall of Administration, and in district offices. If you need additional information, call
(213) 893-1239.
Propositions 60 and 90 Legal Reference:
Section 69.5 of the Revenue & Taxation Code.
Propositions 60 and 90 Eligibility Requirements:
1. The replacement property must be the owner's principal residence and eligible for
the Homeowners' Exemption. The original property, at the time of its sale, must
have been eligible for the Homeowners' Exemption, or entitled to the Disabled
Veterans' Exemption.
2. The seller of the original residence, or a spouse residing with the seller, must be at
least 55 years of age, as of the date that the original property is transferred.
3. The replacement property must be of equal or lesser "current market value" than
the original.
4. If the replacement is purchased in Los Angeles County, the original can be located
in Los Angeles County or any other California county. Several other counties have
passed similar Proposition 90 local option ordinances. If your original is in Los
Angeles County, and you want to relocate in another county, contact that county for
Proposition 90 eligibility.
5. The replacement property must be purchased or newly constructed within two years
(before or after) of the sale of the original property.
6. The owner must file an application within three years following the purchase date or
new construction completion date of the replacement property.
7. This is a one-time only filing. Proposition 60/90 relief cannot be granted if the
claimant, or spouse, was granted relief in the past.
8. Proposition 60/90 relief includes, but is not limited to: single family residences,
condominiums, units in planned unit developments, cooperative housing corporation
units or lots, community apartment units, mobile homes subject to local real
property tax, and owners' living premises which are a portion of a larger structure.
9. In most instances, if more than one owner of an original property is eligible for
Proposition 60/90, they must choose among themselves which one will use the
benefits.
For Public Service, call (213) 974-3211
Si necesita asistencia en Español, por favor llame gratis al (888)807-2111
y oprima "2" al escuchar el mensaje.
Commonly Asked Propositions 60/90 Questions & Answers:
Q. If I sell my current residence, can my replacement property be in any county of
California and still be eligible for Proposition 60/90 benefits?
A. No. In order to be eligible for Proposition 60/90 benefits your replacement property
must be in Los Angeles County (Proposition 60), or a county that has passed similar
Proposition 90 local option ordinances. A county's participation in Proposition 90 is not
mandatory and is subject to change. Therefore, you should always contact that county for
Proposition 90 eligibility before you purchase your replacement property.
The following is a list of the counties currently participating in Proposition 90 as of
January 10, 2001:
1. Alameda
2. Kern
3. Los Angeles
4. Modoc
5. Orange
6. San Diego
7. Ventura
8. San Mateo
9. Santa Clara
Q. I think that the sale of my residence may qualify for this benefit. How may I apply?
A. You must file a claim with the Assessor who will then determine if the transaction
qualifies. Claim forms are available at the Assessor's public counter downtown and at
the District Offices.
Q. Can a taxpayer apply for and receive the benefit of Proposition 60 or 90 numerous
times during the course of his/her lifetime?
A. No. Only claimants who have not previously been granted this property benefit are
eligible. This is a one-time benefit.
Q. Is it true that only one claimant need be at least age 55 as of the date of the sale of
an original property in order to qualify?
A. Yes. The principal claimant/ occupant or his/her spouse/occupant must be age
55. Additional record owners need not identify themselves as a claimant; to do so is to
use the "once in a lifetime" benefit as a principal claimant.
Q. If I get Proposition 60/90 benefits will I still have to file for a Homeowners' Exemption
on the replacement property?
A. Yes. You must file for a Homeowners' Exemption on the replacement property. It is not
granted automatically.
Q. My wife and I are currently being divorced. May we split the value on our original
dwelling and each transfer one half of the value to our separate replacement dwellings?
A. No. The co-owners must determine between themselves, which one should receive the
benefit.
Q. What is the deadline for filing?
A. Within three years of purchasing or completing new construction of the replacement
property.
Q. Isn't the Assessor precluded, under Propositions 60 and 90, from issuing supplemental
assessments when the factored base year value is transferred from the original property
to the replacement property?
A. No. When the replacement property is purchased or newly constructed, the Assessor
must issue positive or negative supplemental assessments. The Assessor processes the
factored base value of the original property for the replacement property. If this value is
higher than the prior value of the replacement property, a positive supplemental
assessment is issued and a supplemental tax bill is mailed. If this value is lower than the
prior value of the replacement property, a negative supplemental assessment is issued,
and a refund is mailed.
Q. In order to qualify, is it true that a replacement property must be acquired after the
implementation date, and within two years (before or after) of the date of sale of the
original property?
A. Yes. If the original property was located in Los Angeles County (Proposition 60), the
replacement must have been purchased or constructed after the November 5, 1986
implementation date. If the original property was located in any other California county
(Proposition 90), the replacement must have been purchased or constructed on or after
the November 9, 1988 implementation date.
Q. Can a mobile home qualify as an original property when a replacement property is
acquired?
A. Yes, but only if the mobile home is enrolled as real property. If it is not, then the
mobile home is not eligible since there is no real property base-year value to be
transferred. In keeping with legislative intent, if a taxpayer were to convert his/her mobile
home from vehicle license fee status to real property taxation status, in anticipation of
applying for Proposition 60/90, a claim should be allowed assuming the claimant is
otherwise qualified.
Q. If I purchase a replacement dwelling and within two years make an addition to the
new property, can my new construction qualify also?
A. Yes, as long as the total amount of your purchase and the new construction do not
exceed the market value of the original property at the time of its sale.
Q. What is meant by "equal or lesser value" of a replacement property?
A. It depends upon when you purchase the replacement property. In general, "equal or
lesser value" means:
100 percent or less of the market value of the original property if a
replacement property is purchased before an original property is sold.
105 percent or less of the market value of the original property if a
replacement property is purchased within the first year after an original
property is sold.
110 percent or less of the market value of the original property if a
replacement property is purchased within the second year after an original
property is sold.
Q. If an original property is sold for $100,000, and a replacement property is purchased
for $106,000 less than a year later, does the replacement property qualify for Proposition
60/90 benefits?
A. Assuming that $100,000 was the market value of the original at the time of sale, and
that $106,000 was the market value of the replacement at the time of the purchase, the
answer is no. In this case, the replacement property is totally disqualified. The
replacement property's market value exceeds 105 percent of the original property's
market value. In this example, if the market value of the replacement property were
$105,000, the answer would be yes.
Q. If the market value of my replacement dwelling slightly exceeds the "equal or lesser
value" test compared to the full market value of my original property, can I still receive
partial benefit?
A. No. Unless the replacement dwelling completely satisfies the "equal or lesser value"
test, no benefit is available. It is "all or nothing."
Q. When making the "equal or lesser value" test comparison, is a simple comparison of
the sales price of the original property and the purchase price/cost of new construction of
the replacement dwelling all that is needed?
A. No. The comparison must be made using the full market value of the original
property as compared to the full market value of the replacement dwelling as of its
date of purchase/completion of new construction. This is important because the
sales/purchase price is not always the same as market value. The Assessor must
determine the market value of each property, which may differ from sales price.
Q. I owned an original property with several other owners. We recently sold it. Each of us
is now buying a new individual replacement dwelling. Can each of us claim Proposition
60/90 benefits?
A. No. Only one of you original owners can claim the benefit for your new replacement
dwelling. You must decide among yourselves which one will receive the benefit. That
person has to have been eligible for the Homeowners' Exemption.
Q. May I give my original property to my son/daughter and still receive the Proposition
60/90 benefit when I purchase a replacement property?
A. No. The law provides that an original property must be sold for consideration and
subject to reappraisal at full market value.
Q. Will the transfer of an original property or a replacement property by gift or devise
qualify for property tax relief under Proposition 60/90?
A. No. Proposition 60/90 requires a "sale" of the original property and a "purchase" of a
replacement property. "Sale" is defined as "any change in ownership of original property
for consideration" and "purchase" is defined as a "change in ownership for consideration".
Q. Can a claimant transfer the factored base year value from an original single family
residence to a replacement duplex or multi-unit residence (living in one unit and renting
the others)?
A. Yes. The owner could carry the factored base year value of the original property to
that portion of the replacement parcel that is his/her principal place of abode, and the
land that constitutes a reasonable size to embody a site for the residence. However, that
portion comprising the abode must be of equal or lesser value than the original property.
The rest of the parcel will be appraised at its market value.
Q. Has a claimant lost his/her Proposition 60/90 eligibility when he/she acquires a
replacement dwelling first, occupies it and receives a Homeowners' Exemption, then
almost two years later sells the original property which no longer has a Homeowners'
Exemption?
A. No. Obviously, in this situation, the taxpayer cannot qualify at the same time for a
Homeowners' Exemption on both properties.
Q. Can two people who separately owned original properties and sold them combine their
Proposition 60/90 benefits when they buy one replacement property together?
A. No. Only one of the new owners can claim the Proposition 60/90 benefits, whether
they are married or not.
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Department of the Treasury
Internal Revenue Service
2006 Instructions for Schedule D
Use Schedule D (Form 1040) to report the following.
• The sale or exchange of a capital asset (defined on this page) not reported on another
Capital Gains
form or schedule.
• Gains from involuntary conversions (other than from casualty or theft) of capital assets
and Losses
not held for business or profit.
• Capital gain distributions not reported directly on Form 1040, line 13, or Form
1040NR, line 14.
• Nonbusiness bad debts.
Additional information. See Pub. 544 and Pub. 550 for more details. For a comprehensive
filled-in example of Schedule D, see Pub. 550.
General Instructions
Section references are to the Internal Revenue Code unless otherwise noted.
Other Forms You May Have
To File
Use Form 4797 to report the following.
1. The sale or exchange of:
a. Property used in a trade or business;
b. Depreciable and amortizable property;
c. Oil, gas, geothermal, or other mineral
property; and
d. Section 126 property.
2. The involuntary conversion (other
than from casualty or theft) of property
used in a trade or business and capital assets held for business or profit.
3. The disposition of noncapital assets
other than inventory or property held primarily for sale to customers in the ordinary
course of your trade or business.
4. Ordinary loss on the sale, exchange,
or worthlessness of small business investment company (section 1242) stock.
5. Ordinary loss on the sale, exchange,
or worthlessness of small business (section
1244) stock.
6. Ordinary gain or loss on securities
held in connection with your trading business, if you previously made a
mark-to-market election. See Traders in
Securities on page D-3.
Use Form 4684 to report involuntary
conversions of property due to casualty or
theft.
Use Form 6781 to report gains and
losses from section 1256 contracts and
straddles.
Use Form 8824 to report like-kind exchanges. A like-kind exchange occurs
when you exchange business or investment
property for property of a like kind.
Capital Asset
Most property you own and use for personal purposes, pleasure, or investment is a
capital asset. For example, your house, furniture, car, stocks, and bonds are capital assets. A capital asset is any property held by
you except the following.
• Stock in trade or other property included in inventory or held mainly for sale
to customers.
• Accounts or notes receivable for services performed in the ordinary course of
your trade or business or as an employee, or
from the sale of stock in trade or other
property held mainly for sale to customers.
• Depreciable property used in your
trade or business, even if it is fully depreciated.
• Real estate used in your trade or business.
• Copyrights, literary, musical, or artistic compositions, letters or memoranda, or
similar property: (a) created by your personal efforts; (b) prepared or produced for
you (in the case of letters, memoranda, or
similar property); or (c) that you received
from someone who created them or for
whom they were created, as mentioned in
(a) or (b), in a way (such as by gift) that
entitled you to the basis of the previous
owner.
• U.S. Government publications, including the Congressional Record, that you
received from the government, other than
by purchase at the normal sales price, or
that you got from someone who had received it in a similar way, if your basis is
determined by reference to the previous
owner’s basis.
• Certain commodities derivative financial instruments held by a dealer. See section 1221(a)(6).
D-1
Cat. No. 24331I
• Certain hedging transactions entered
into in the normal course of your trade or
business. See section 1221(a)(7).
• Supplies regularly used in your trade
or business.
Basis and Recordkeeping
Basis is the amount of your investment in
property for tax purposes. You need to
know your basis to figure any gain or loss
on the sale or other disposition of the property. You must keep accurate records that
show the basis and adjusted basis of your
property. Your records should show the
purchase price, including commissions; increases to basis, such as the cost of improvements; and decreases to basis, such as
depreciation, nondividend distributions on
stock, and stock splits.
For more information on basis, see page
D-7 and these publications.
• Pub. 551, Basis of Assets.
• Pub. 550, Investment Income and Expenses (Including Capital Gains and
Losses)
• Pub. 564, Mutual Fund Distributions.
If you lost or did not keep records to determine your basis in securities, contact
your broker for help.
The IRS partners with companies that offer Schedule D
TIP
software that can import trades
from many brokerage firms and
accounting software to help you keep track
of your adjusted basis in securities. To find
out more, go to www.irs.gov/efile.
Short Term or Long Term
Separate your capital gains and losses according to how long you held or owned the
property. The holding period for short-term
capital gains and losses is 1 year or less.
The holding period for long-term capital
gains and losses is more than 1 year. To
figure the holding period, begin counting
on the day after you received the property
and include the day you disposed of it.
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If you disposed of property that you acquired by inheritance, report the disposition
as a long-term gain or loss, regardless of
how long you held the property.
Test 2. You have not sold or exchanged
A nonbusiness bad debt must be treated
as a short-term capital loss. See Pub. 550
for what qualifies as a nonbusiness bad
debt and how to enter it on Schedule D.
Even if you do not meet one or both of
the above two tests, you still can claim an
exclusion if you sold or exchanged the
home because of a change in place of employment, health, or certain unforeseen circumstances. In this case, the maximum
amount of gain you can exclude is reduced.
Capital Gain Distributions
These distributions are paid by a mutual
fund (or other regulated investment company) or real estate investment trust from
its net realized long-term capital gains. Distributions of net realized short-term capital
gains are not treated as capital gains. Instead, they are included on Form 1099-DIV
as ordinary dividends.
Enter on line 13 the total capital gain
distributions paid to you during the year,
regardless of how long you held your investment. This amount is shown in box 2a
of Form 1099-DIV.
If there is an amount in box 2b, include
that amount on line 11 of the Unrecaptured
Section 1250 Gain Worksheet on page D-9
if you complete line 19 of Schedule D.
If there is an amount in box 2c, see Exclusion of Gain on Qualified Small Business (QSB) Stock on page D-4.
If there is an amount in box 2d, include
that amount on line 4 of the 28% Rate Gain
Worksheet on page D-8 if you complete
line 18 of Schedule D.
If you received capital gain distributions
as a nominee (that is, they were paid to you
but actually belong to someone else), report
on line 13 only the amount that belongs to
you. Attach a statement showing the full
amount you received and the amount you
received as a nominee. See the Instructions
for Schedule B for filing requirements for
Forms 1099-DIV and 1096.
Sale of Your Home
If you sold or exchanged your main home,
do not report it on your tax return unless
your gain is more than your exclusion
amount. Your exclusion amount is zero if:
• You acquired your home in a
like-kind exchange in which all or part of
the gain was not recognized, and
• You sold or exchanged the home during the 5-year period beginning on the date
you acquired it.
Generally, if you meet the two following
tests, you can exclude up to $250,000 of
gain. If both you and your spouse meet
these tests and you file a joint return, you
can exclude up to $500,000 of gain (but
only one spouse needs to meet the ownership requirement in Test 1).
Test 1. You owned and used the home as
your main home for 2 years or more during
the 5-year period ending on the date you
sold or exchanged your home.
another main home during the 2-year period ending on the date of the sale or exchange of your home.
You can choose to have the 5-year test
period for ownership and use in Test 1
above suspended during any period you or
your spouse serve on qualified official extended duty as a member of the uniformed
services or Foreign Service of the United
States. This means you may be able to meet
Test 1 even if, because of your service, you
did not actually use the home as your main
home for at least the required 2 years during the 5-year period ending on the date of
sale.
See Pub. 523 for details, including how
to report any taxable gain if:
• You (or your spouse if married) used
any part of the home for business or rental
purposes after May 6, 1997, or
• Your gain is more than your exclusion
amount.
Partnership Interests
A sale or other disposition of an interest in
a partnership may result in ordinary income, collectibles gain (28% rate gain), or
unrecaptured section 1250 gain. For details
on 28% rate gain, see the instructions for
line 18 beginning on page D-7. For details
on unrecaptured section 1250 gain, see the
instructions for line 19 beginning on page
D-8.
Capital Assets Held for
Personal Use
Generally, gain from the sale or exchange
of a capital asset held for personal use is a
capital gain. Report it on Schedule D, Part I
or Part II. However, if you converted
depreciable property to personal use, all or
part of the gain on the sale or exchange of
that property may have to be recaptured as
ordinary income. Use Part III of Form 4797
to figure the amount of ordinary income recapture. The recapture amount is included
on line 31 (and line 13) of Form 4797. Do
not enter any gain for this property on line
32 of Form 4797. If you are not completing
Part III for any other properties, enter
“N/A” on line 32. If the total gain is more
than the recapture amount, enter “From
Form 4797” in column (a) of line 1 or line 8
of Schedule D, skip columns (b) through
(e), and in column (f) enter the excess of
the total gain over the recapture amount.
Loss from the sale or exchange of a capital asset held for personal use is not deductible. But if you had a loss from the sale
or exchange of real estate held for personal
use for which you received a Form 1099-S,
D-2
you must report the transaction on Schedule D even though the loss is not deductible. For example, you have a loss on the
sale of a vacation home that is not your
main home and you received a Form
1099-S for the transaction. Report the
transaction on line 1 or 8, depending on
how long you owned the home. Complete
columns (a) through (e). Because the loss is
not deductible, enter -0- in column (f).
Capital Losses
You may deduct capital losses up to the
amount of your capital gains plus $3,000
($1,500 if married filing separately). You
may be able to use capital losses that exceed this limit in future years. Be sure to
report all of your capital gains and losses
(except nondeductible losses) even if you
cannot use all of your losses in 2006. See
Pub. 550 to figure the amount of unused
capital losses you can carry forward to
2007.
Nondeductible Losses
Do not deduct a loss from the direct or indirect sale or exchange of property between
any of the following.
• Members of a family.
• A corporation and an individual owning more than 50% of the corporation’s
stock (unless the loss is from a distribution
in complete liquidation of a corporation).
• A grantor and a fiduciary of a trust.
• A fiduciary and a beneficiary of the
same trust.
• A fiduciary and a beneficiary of another trust created by the same grantor.
• An executor of an estate and a beneficiary of that estate, unless the sale or exchange was to satisfy a pecuniary bequest
(that is, a bequest of a sum of money).
• An individual and a tax-exempt organization controlled by the individual or
the individual’s family.
See Pub. 544 for more details on sales
and exchanges between related parties.
If you disposed of (a) an asset used in an
activity to which the at-risk rules apply or
(b) any part of your interest in an activity to
which the at-risk rules apply, and you have
amounts in the activity for which you are
not at risk, see the Instructions for Form
6198.
If the loss is allowable under the at-risk
rules, it then may be subject to the passive
activity rules. See Form 8582 and its instructions for details on reporting capital
gains and losses from a passive activity.
Items for Special Treatment
• Transactions by a securities dealer.
See section 1236.
• Bonds and other debt instruments.
See Pub. 550.
• Certain real estate subdivided for sale
that may be considered a capital asset. See
section 1237.
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Department of the Treasury
Internal Revenue Service
Publication 523
Cat. No. 15044W
Selling
Your Home
For use in preparing
2005 Returns
Contents
What’s New . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1
Reminders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2
Main Home . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3
Figuring Gain or Loss . . . . . . . . . . . . . . . . . . . . . . .
Selling Price . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amount Realized . . . . . . . . . . . . . . . . . . . . . . . .
Adjusted Basis . . . . . . . . . . . . . . . . . . . . . . . . . .
Amount of Gain or Loss . . . . . . . . . . . . . . . . . . .
Other Dispositions . . . . . . . . . . . . . . . . . . . . . . .
3
4
4
4
4
4
Determining Basis . . . . . . . . . . . . . . . . . . . . . . . . .
Cost As Basis . . . . . . . . . . . . . . . . . . . . . . . . . . .
Basis Other Than Cost . . . . . . . . . . . . . . . . . . . .
Adjusted Basis . . . . . . . . . . . . . . . . . . . . . . . . . .
5
5
7
8
Excluding the Gain . . . . . . . . . . . . . . . . . . . . . . . . . 9
Maximum Exclusion . . . . . . . . . . . . . . . . . . . . . . 9
Ownership and Use Tests . . . . . . . . . . . . . . . . . 9
Reduced Maximum Exclusion . . . . . . . . . . . . . . . 14
More Than One Home Sold During 2-Year
Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Business Use or Rental of Home . . . . . . . . . . . . . . 16
Property Used Partly for Business or Rental . . . . 17
Reporting the Sale . . . . . . . . . . . . . . . . . . . . . . . . . 19
Comprehensive Examples . . . . . . . . . . . . . . . . . 19
Special Situations . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Deducting Taxes in the Year of Sale . . . . . . . . . . . 26
Recapturing (Paying Back) a Federal
Mortgage Subsidy . . . . . . . . . . . . . . . . . . . . . . 27
How To Get Tax Help . . . . . . . . . . . . . . . . . . . . . . . 28
Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
What’s New
Katrina Emergency Tax Relief Act of 2005 (Act). This
Act provides tax relief for persons affected by Hurricane
Katrina. Under this Act, the rules for recapture of a federal
mortgage subsidy have changed for homes damaged or
destroyed by Hurricane Katrina. For more information, see
Recapturing (Paying Back) a Federal Mortgage Subsidy,
later.
Reminders
Get forms and other information
faster and easier by:
Internet • www.irs.gov
Change of address. If you change your mailing address,
be sure to notify the Internal Revenue Service (IRS) using
Form 8822, Change of Address. Mail it to the Internal
Revenue Service Center for your old address. (Addresses
for the Service Centers are on the back of the form.)