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The Answer [posted September 12, 2006]
The
statement
"When a parent’s residence
is transferred to the parent's child,
the child
will automatically avoid property tax reassessment
under Proposition 13"
is False
Discussion:
While avoiding a reassessment is quite
possible, it is NOT AUTOMATIC. "Proposition
58" must be complied with.
WHAT IS PROPOSITION 58?
California's current property tax laws
(including "Proposition 13") require in
general that real property be reassessed when there
is a change in ownership. Proposition 58, however,
allows parents to transfer property to their children
without triggering a reassessment if the proper
procedures are followed within the time limits.
WHEN DOES PROPOSITION
58 APPLY?
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Transfers: Real property transfers
from parents to children can avoid reassessment.
The definition of children includes: any child
born of the parents; certain adopted children;
certain step-children; and certain sons-in-law
and daughters-in-law. Proposition 58 can also
apply to transfers from children to parents.
Transfers from grandparents to grandchildren
can avoid reassessment under "Proposition
193."
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Methods: Transfers by sale, gift,
or inheritance can avoid reassessment.
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Principal Residence: A parent’s
principal residence can totally avoid reassessment
(without value limit) as long as a Homeowner’s
Exemption or Disabled Veteran’s Exemption
has been granted to the parent. There is no
requirement that the person(s) acquiring the
property maintain it as their principal residence.
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Other Property Worth Up to $1,000,000:
A parent’s real property, other than the
principal residence, up to a cumulative total
assessed value (not sales price or current market
value) of $1,000,000 can be excluded from reassessment.
The $1,000,000 exclusion is available to each
parent separately.
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WHAT IF A PARENT TRANSFERS PROPERTY TO MORE THAN ONE PERSON?
If a parent transfers a parcel of property
to more than one child (so the children share ownership),
each child should apply for the exemption for that
child’s share. Note: If a parent transfers
property to a child and an unrelated person (so they
share ownership), only the child’s share
of the property will have protection under Proposition
58.
WHAT ARE THE
PROCEDURES AND TIME LIMITS?
Generally, the person acquiring the
property must file a claim form with the County Assessor’s
Office before either of the following occurs:
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3 years pass after the date
of transfer (if gift or sale)
or
parent's death (if inheritance)
OR
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The property is transferred
to a third party.
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Note: A
claim form may be considered timely if filed within
6 months after the date of mailing of a notice of
supplemental assessment from the Assessor’s Office,
even if the three years have passed or the property
has been transferred to a third party.
Important:
A claim form may be filed even after the above time
limits, provided that the property has not been transferred
to a third party. But the exemption will apply to
future tax years only.
To obtain a claim form or more information
in L.A. County, call the Assessor’s Office at
(213) 893-1239.
More information can be found on this topic in our Your Home and Taxes Nuts & Bolts Guide.
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