In 1987, your mother purchased her home for $85,000. It’s now 2018 and the home is worth over $500,000. Better yet, it’s about to become yours. The caveat: the transfer of this property will immediately trigger reassessment of the property tax, which means you could end up paying a great deal more than what your mother currently pays.
The good news is, there’s a simple way to avoid this reassessment of property tax. Proposition 13, combined with propositions 58 (and 193 for grandparents transferring property to grandchildren with deceased parents), allows for the filing of a simple two-page “Claim for Reassessment for Transfer Between Parent and Child” form with the county assessor’s office in order to waive this reassessment and continue to pay the current tax in accordance with Prop 13 guidelines.
In other words, instead of paying property tax based on the current market value of the home (in this example, $500,000), you will continue paying no more than a 2% increase on the original base value of the home (or the original price for which the home was purchased; in this case, $85,000).
For this exemption to take effect, you must file the correct form within three years from the date of transfer, or prior to the sale of the home to a third party. If you fail to fill out the form, or you do so after the three-year period, you will be subject to paying the property tax at the current market value for however many years you’ve owned the home prior to filing the paperwork or selling the property.
It’s also important to understand that there is no exemption for sibling-to-sibling transfers, which means if you were to decide to sell your mother’s home to your sister, she would not be able to take the exemption. The same goes for a home that was willed to multiple siblings equally, and one wishes to sell their share to another sibling. In this case, the exemption would only apply to your portion of the inheritance, not to the portion you end up purchasing.
For more information or to download the correct forms, check out the following links:
You may also contact the following branches of the county assessor for more information:
Temecula: 41002 County Center Drive, #230, Temecula, CA 92591-6027; (951) 600- 6200
Hemet: 880 N. State Street, Suite B6, Hemet, CA 92543-1496; (951) 766- 2500
Palm Desert: 38686 El Cerrito Road, Palm Desert, CA 92211; (760) 863-7800
Blythe: 270 N. Broadway, Blythe, CA 92225-1608; (760) 921-5050