Transferring title to a child or grandchild

I am not an advocate of transferring title of your real estate to your children or grandchildren, prior to your passing. Too many negative scenarios can and do occur. The intention to help your child or grandchild obtain property by transfer is noble and well meaning, however the initial intent could be altered by circumstances which are beyond your control. A post about the good, the bad, and the ugly of transferring title is forthcoming.

Having stated the above, if the need and desire to transfer title still exists then the intent of this post it to give you the method and procedure to transfer title to your children and/or grandchildren in a way that allows them to take title and keep your tax base.

In the county of Los Angeles, there is a reassessment exclusion for real estate transfer, between parent and child and from grandparent to grandchild.

Those exclusion are defined by constitutional initiatives Propositions 58 & 193.
Prop 58 allows for transfer of real property between parent to child and from child to parent, without an automatic reassessment.

Prop 193 allows for transfer of real property between grandparent(s) to grandchild(ren).

If you adhere to the requirements and guidelines of Prop 58 and 193 a beneficial transfer is possible.
The following requirements and guidelines were obtained from the Los Angeles County Assessor's office.
1. The principal place of residence must have been granted a Homeowners' Exemption or Disabled Veterans' Exemption before the transfer. This residence need not be the new principal residence of the person that acquired the property.

2. No limit is placed on the assessed value of a principal residence that may be excluded from reassessment.

3. In addition to tax relief on the principal residence, you may claim an exclusion on transfers of other real property with an assessed value of up to $1,000,000.

4. The $1,000,000 exclusion applies separately to each eligible transferor. A $2,000,000 limit applies to community real property of an eligible married couple.

5. Transfers by sale, gift, or inheritance qualify for the exclusion.

6. Transfers between parents and children as individuals, from grandparents to grandchildren as individuals, between joint tenants, from trusts to individuals, or from individuals to trusts may qualify for the exclusion.

Transfers from grandchildren to grandparents are not eligible for this tax relief.

7. Transfers of ownership interests in legal entities, aside from most trusts, do not qualify for the exclusion.

8. A claim must be filed within 3 years after the date of purchase or transfer for which the claim is filed or prior to transfer to a third party, whichever is earlier, or within 6 months after the mailing of the notice of supplemental or escape assessment, issued as a result to the transfer for which the claim is filed. Untimely filed claims are subject to certain conditions, i.e., the property must not have transferred or resold to a third party and the claim will only apply to future tax years.

9. If reassessment of your property occurs before the approval and processing of your timely filed claim, the reassessment may be reversed. In these situations, a corrected tax bill and/or a refund will be processed.

Proposition 58 Transfer between Parent and Child Eligibility Requirements:

1. The real property must be owned by the eligible transferor who is either the parent or child.

2. You must be a parent or child. A child may be a son, daughter, son-in-law, daughter-in-law, stepchild, or child adopted before the age of 18.

Spouses of eligible children are also eligible until divorce or , if terminated by death, until the remarriage of the surviving spouse, stepparent, or parent-in-law.

3. You must complete a Claim for Reassessment Exclusion for Transfer between Parent and Child form for a gift or purchase of real property between parent and child.

Proposition 193 Transfer from Grandparent to Grandchild Eligibility Requirements:

1. The real property must be owned by the eligible transferor who is the grandparent.

2. You must be a grandchild whose parent(s) qualify as the deceased child(ren) of the grandparents as of the date of transfer, and you must be the decedent's child.

3. You must complete a Claim for Reassessment Exclusion for Transferor from Grandparent to Grandchild form for a gift or purchase of real property from grandparent to grandchild.


How do I file?

http://assessor.lacounty.gov

helpdesk@assessor.lacounty.gov

213-893-1239

What forms do I need?

Transfer between Parent and Child. (OWN-88)

Transfer between Grandparent and Grandchild (OWN-143)


For expanded definitions of Prop. 58 & 193, see Revenue and Taxation (R & T) Code Section 63.1. It is available online at www.boetaxes.ca.gov/propery