Passing a home from one generation to the next often involves more than estate planning. California property tax rules can have a lasting effect on the cost of owning inherited property, and understanding those rules before making a transfer can help your family members and loved ones avoid unexpected tax consequences.

Here at SWC, we closely monitor changes to federal tax law and California property tax rules. Our ongoing attention allows us to incorporate new tax planning opportunities into each client’s personalized tax-saving and wealth-building strategy while helping them make informed financial decisions.

Understanding California’s Parent-Child Property Tax Exclusion

California generally reassesses real property (aka, real estate) to its current market value when ownership changes hands. A higher assessed value often results in higher annual property taxes.

One important exception applies to certain transfers between parents and children. When all of the state’s statutory requirements have been met, the transfer may qualify for an exclusion from reassessment, allowing the child to retain some or all of the parents’ existing taxable value instead of receiving a full reassessment.

Proposition 19 substantially changed these rules for transfers occurring on or after Feb. 16, 2021. Today, the exclusion is more  narrowly applied than it was under prior law.

Who Qualifies as a “Child” for California’s Parent-Child Property Tax Exclusion?

For purposes of the parent-child exclusion, California law generally recognizes the following relationships: Continue reading… Continue reading… Continue reading…