If a child inherits a home under prop 13 without the taxes going up,
can the child then add a spouse, other relative, etc. to the title without the taxes going up?
Proposition 13
In 1978, California voters passed Proposition 13, which substantially reduced property tax rates. As a result, the maximum levy cannot exceed 1% of a property’s assessed value (plus bonded indebtedness and direct assessment taxes). Increases in assessed value are limited to 2% annually.
Only four events can cause a reappraisal:
1. A change in ownership;
2. Completed new construction;
3. New construction partially completed on the lien date (January 1); or
4. A decline-in-value (see Decline-in-Value Review).
Change in Ownership Appraisals
When a publicly recorded transfer occurs, the Assessor receives a copy of the deed and determines whether a reappraisal is required under State law. If required, an appraisal is made to determine the new market value of the property.
Upon notification of the new assessment, the property owner has the right to appeal the value if he/she does not agree with it.
The transfer of property between husband and wife, and registered domestic partners does not cause a reappraisal for property tax purposes. This includes transfers resulting from divorce, termination of domestic partnership, or death. Also, the addition of joint tenants, whether related or not, does not result in a reappraisal. In most cases, transfers by irrevocable trusts are reappraisal. Exclusions are discussed in this brochure.
If I add a friend or sibling on as a joint tenant to my property, would this cause a reappraisal at today’s market value?
What if I add them as tenants-in-common?
No. Adding joint tenants does not result in reappraisal so long as you, as the original joint tenant, remain as one of the joint tenants. As a result of this exclusion, you become an “original transferor.” Once you no longer have an interest in the property, at that time, the entire property would be reappraised. However, adding someone to title as tenants-in-common is a change in ownership, unless an exclusion applies. State Board of Equalization FAQ’s Change in Ownership
Parent/Child Exclusion–Proposition 58 Grandparent/Grandchild
Exclusion – Proposition 193
The transfer of real property between parent(s) and child(ren) or from grandparent(s) to grandchild(ren) may be excluded from reappraisal. The Claim for Reassessment Exclusion for Transfer Between Parent and Child, form OWN-88, and Claim for Reassessment Exclusion for Transfer from Grandparent to Grandchild, form OWN-143, should be in the links section below.
Guide to Propositions 58 & 193
Exclusion for Seniors and Disabled– Proposition 60, 90, and 110
Disabled property owners or seniors aged 55 or over who buy or construct a residence of equal or lesser value than their original home may transfer the old assessed value to the new home. Call 213.974.3441 for additional information. The Disabled Persons Claim for Transfer of Base-Year Value to Replacement Dwelling, form OWN-112, and Claim of Person(s) at Least 55 Years of Age for Transfer of Base Year Value to Replacement Dwelling, form OWN-89, are available online.
On November 3, 2020, California Residents passed Proposition 19 (2020) The Home Protection for Seniors, Severely Disabled, Families, and Victims of Wildfire or Natural Disasters Act. Proposition 19 allows homeowners who are over 55, disabled or victims of natural disasters to transfer their property tax base with them when they sell their home and purchase a new one.
This constitutional amendment would also prevent people who inherit family properties from keeping the low property tax base unless they use the home as their primary residence and the market value is less than $1 million.
The Los Angeles County Office of the Assessor is working with the California Board of Equalization on guidance once election results are final and upon completion of our analysis of Proposition 19.
Sign up to receive updated information – and continue to visit the Los Angeles County Office of the Assessor Website for updates.
State Board of Equalization
FAQ’s Change in Ownership
Changes in ownership that are automatically excluded from reassessment include the following:
- Transfers of real property between spouses, which include transfers in and out of a trust for the benefit of a spouse, the addition of a spouse on a deed, transfers upon the death of a spouse, and transfers pursuant to a divorce settlement or court order (section 63 of the Revenue and Taxation Code; Rule 462.220).
- Transfers that result in the creation of a joint tenancy in which the transferor remains as one of the joint tenants.
- Transfers of joint tenancy property to return the property to the person who created a joint tenancy (i.e., the original transferor).
Publication 559 #Estate & Gift Taxes
Smartphone? Try turning phone sideways to read pdf's
IRS Website on Estate & Gift Taxes
Introduction to Estate & Gift Taxes Publication 950
IRS Form 706 Estate Tax Return
Our Webpages:
Links & Resources
https://en.wikipedia.org/wiki/California_Proposition_13_(1978)
- Los Angeles County Assessor – Property Taxes
Our webpages on Rental Properties & Home Ownership
Covered CA MAGI Rental Income? Line 17
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1. If the home is transferred to an irrevocable trust with children as beneficiaries, is the home exempt form reassessment under prop 13?
2. If the home is re-deeded as co owned, partially by the parent’s living trust and partially by an irrevocable trust with children being beneficiaries, is that exempt from reassessment under prop 13?
You are asking VERY complex questions, probably better answered by the Attorney who help you create your trusts. We will not be able to interpret law or give you advice. https://individuals.healthreformquotes.com/appeal-grievances/plain-meaning-rule/unlawful-practise-of-law/
We will only show you what’s in the law or the County Assessor’s Website.
If your trust is irrevocable (cannot amend/cancel it), then it is considered a change in ownership and the property will be reassessed.
However, other savings programs that protect from reassessment may apply, including those that protect transfers between spouses, and parents and children Quick Guide to Trusts
In general, Proposition 58 states that real property transfers, from parent to child or child to parent, may be excluded from reassessment. Guide to Proposition 58
However, Proposition 19 states the children must use the home as their principal residence! Not a vacation home or rental. Venable.com *
Question # 2
When property is taken out of a trust, reassessment will depend on who or what is receiving that property. Transferring property from your trust back into your name, or into another revocable trust created by you, will not cause reassessment.
Transferring it to a third party or third party’s trust, generally will cause reassessment. Again, other savings programs, such as those for spouses or parents and children may apply. assessor’s paper on trusts
My sister passed away and she left me a rental property in CA.
How can I avoid a reassessment of the property?
While I find exclusions if it was your parents or grandparents, spouse, joint tenant, I don’t find one for siblings.
See the materials and links above.
Thanks for your question, as I completely updated this page to do the research and put it in a logical format.