Two exceptions to reassessment of real property

 In Blog, Estate Administration, Real Estate

When real property is transferred or sold in California, it is subject to reassessment at the current market value. The result is often an increase in the property taxes owed by the new owner; sometimes this is a significant increase.

However, there are several transfer situations that are excluded from reassessment. Two common examples are the transfer between parent and child exclusion and the grandparent to grandchild exclusion. If a transfer occurs between a parent and a child, or from a grandparent to a grandchild, the first $1 million of real property can be excluded from reassessment. There is no value limit if the property is the transferor’s principal residence.

Between parents and children

This exclusion works if a property is transferred from parent to child or from child to parent. Depending on the situation, it may apply to children born of the parents, stepchildren (while this relationship still exists), adopted children (if adopted prior to age 18), or children-in-law.

Grandparent to grandchild

This exclusion only works from grandparent to grandchild (not the other way around). Additionally, it is only available if the grandchild’s parents are deceased. (A disclaimer does not work for this purpose. If your grandparent wants to transfer a property to you, even if your parent disclaims all right to the property, you cannot claim the exclusion.)

What types of transfer qualify?

The transfer can be a sale, gift, inheritance, or transfer through a trust.

If you qualify for the exclusion, in addition to the deed and preliminary change of ownership report, you’ll need to file an exclusion form with the county assessor. It is best to hire an experienced real estate attorney to make sure all paperwork is completed and filed correctly.

Helix Law Firm can help with real estate transfers

If you need to transfer a property, we can help. This includes the following:

  • Review deeds to determine current ownership status
  • Draft new deed and record with county recorder
  • Complete Preliminary Change of Ownership Report and file with tax assessor
  • Identifying possible exclusions from reassessment
  • Complete reassessment exclusion form and file with tax assessor

If you’re interested in learning more about how Helix can help, please call us at (619) 567-4447 to schedule a free consultation.

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