As you will read on page 2 of the document at the end of this post (generated by the CA State Board of Equalization and sent to all County Assessors in 2006):
â€œThe replacement dwelling must be of equal or lesser value as compared to the original propertyâ€.
You may just be mulling over a move at the present time; however, as you become more serious about moving I would highly advise consulting a tax/financial/estate planner before making your final decision!
There are actually THREE CA Propositions that allow transfer of tax base. In fact, there are special circumstances that not only allow some to transfer tax base TWICE, the replacement property may be 110% of the sale price (see page 2 of the linked document below).
PROP 60 provides for the transfer of a base year value from a principal residence to a replacement dwelling within the SAME County by a homeowner age 55 and over.
PROP 90 authorizes County boards of supervisors to adopt ordinances allowing base year value transfers between DIFFERENT counties. As of 2/15/10 (confirm current status before taking any action) only the following eight counties in California have an ordinance enabling intercounty base year value transfers:
Alameda, Los Angeles, San Diego, Santa Clara, El Dorado, Orange, San Mateo, Ventura
Now, generally, a person can use Prop 60 or 90 only once. However, PROP 110 provides the sole exception where a person first received relief for age and then subsequently the claimant or claimant's spouse became severely and permanently disabled and has to move because of the disability.
Prop 110's Section 74.3(b) extends Prop 60 & 90 to "... 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."
In addition, you can purchase up to 110% of the of the full cash value of the original property; BUT, there are timeline hurdles, as follows:
1) 100% of the full cash value of the original property as of the date of sale, if the replacement dwelling is purchased or newly constructed prior to the date of sale of the original property,
2) 105% of the full cash value of the original property as of the date of sale, if the replacement dwelling is purchased or newly constructed within the first year following the date of the sale of the original property, or
3) 110% of the full cash value of the original property as of the date of sale, if the replacement dwelling is purchased or newly constructed within the second year following the date of the sale of the original property.
You can read much more about the three propositions here: http://docs.Steven-Anthony.com/Prop60-90-110.pdf