Under California law, when a family home is transferred from parent to child, so long as certain legal formalities are followed, existing tax rates will remain the same.

Many of us remember the impact of Proposition 13 that came into effect more than thirty years ago when homeowners were outraged by increasing taxes imposed on the principal residence or family home. Since the enactment of Proposition 13, so long as ownership does not change, property taxes on the principal residence are very limited.  Unless home ownership is transferred or significant home improvements are made, initial property tax rates cannot exceed 1 percent of the property’s assessed tax value, and cannot increase by more than 2 percent each year.

Proposition 58 extended the protections of Proposition 13 by allowing parents to transfer property to their children, and vice versa, without requiring a reassessment for tax purposes. Proposition 193 expanded this tax relief to transfers from a grandparent to grandchild when the grandchild’s parent – who was the grandparent’s child – had already died.

The tax protections of Propositions 58 and 193 apply to all home transfers, regardless of whether they were purchased, gifted, or received as an inheritance. In order to be transferred as the principal residence, where there are no limits on the property’s assessed value, the person transferring ownership must have already been granted, or have been eligible to receive, a homeowner’s or disabled veteran’s exemption.

In addition to the primary residence, up to $1 million of other property transfers may be excluded from tax reassessment. The assessed value of such property transfers may not exceed $1 million.  And, since the $1 million exclusion is available to the person making the transfer, a $2 million exclusion limit may apply when community real property is transferred from both parents to their selected child(ren).

When a property owner has transferred more than one parcel of property, multiple exclusions from reassessment may be claimed so long as the combined value of all transferred properties does not exceed $1 million. In order to obtain such relief, a Claim for Reassessment Exclusion for Transfer form must be signed by both the property owner or the deceased owner’s estate and the person to whom title is being transferred.

It may be important to note that should a home’s market value fall below its Proposition 13 base year rate, its new owner may choose to waive the protections of Propositions 58 and 193, and obtain a new reassessment. In such a scenario, as mandated by Proposition 13, the property’s tax rates will be reassessed at 1 percent of its present market value, and the 2 percent annual limit on future tax increases will still be maintained.

To obtain a claim form or more information on property tax relief, contact the Los Angeles County Assessor’s Office at (213) 893-1239, or at assessor.lacounty.gov.

Under California law, when a family home is transferred from parent to child, so long as certain legal formalities are followed, existing tax rates will remain the same.

Many of us remember the impact of Proposition 13 that came into effect more than thirty years ago when homeowners were outraged by increasing taxes imposed on the principal residence or family home. Since the enactment of Proposition 13, so long as ownership does not change, property taxes on the principal residence are very limited.  Unless home ownership is transferred or significant home improvements are made, initial property tax rates cannot exceed 1 percent of the property’s assessed tax value, and cannot increase by more than 2 percent each year.

Proposition 58 extended the protections of Proposition 13 by allowing parents to transfer property to their children, and vice versa, without requiring a reassessment for tax purposes. Proposition 193 expanded this tax relief to transfers from a grandparent to grandchild when the grandchild’s parent – who was the grandparent’s child – had already died.

The tax protections of Propositions 58 and 193 apply to all home transfers, regardless of whether they were purchased, gifted, or received as an inheritance. In order to be transferred as the principal residence, where there are no limits on the property’s assessed value, the person transferring ownership must have already been granted, or have been eligible to receive, a homeowner’s or disabled veteran’s exemption.

In addition to the primary residence, up to $1 million of other property transfers may be excluded from tax reassessment. The assessed value of such property transfers may not exceed $1 million.  And, since the $1 million exclusion is available to the person making the transfer, a $2 million exclusion limit may apply when community real property is transferred from both parents to their selected child(ren).

When a property owner has transferred more than one parcel of property, multiple exclusions from reassessment may be claimed so long as the combined value of all transferred properties does not exceed $1 million. In order to obtain such relief, a Claim for Reassessment Exclusion for Transfer form must be signed by both the property owner or the deceased owner’s estate and the person to whom title is being transferred.

It may be important to note that should a home’s market value fall below its Proposition 13 base year rate, its new owner may choose to waive the protections of Propositions 58 and 193, and obtain a new reassessment. In such a scenario, as mandated by Proposition 13, the property’s tax rates will be reassessed at 1 percent of its present market value, and the 2 percent annual limit on future tax increases will still be maintained.

To obtain a claim form or more information on property tax relief, contact the Los Angeles County Assessor’s Office at (213) 893-1239, or at assessor.lacounty.gov.