21 Sep 2008

Proposition 58 Tax Savings in California ~ Save on Property Taxes

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California Property Tax Savings  ~ Parent to Child Transfer of Real Property.

If you’re a parent transferring your CA home to a child it could be good news when it comes to property taxes Qualified transfers, (as defined in CA) may be exempt from reassessment and increased property taxes.

Yes, if  you’re a home seller or owner  who is transferring real estate as a parent-to-child,  they may have the ability of maintaining your existing property taxes.  As a  parent selling or transferring a home, your children may receive the benefit of your lower property taxes (based on your Proposition 13 Tax Rate) for those who qualify. 

For example, let’s say you’re a home seller and you’ve owned your home for 25 years. Your cost was $75,000 and today your taxes could be approximately $1,435 based on the 2% annual cap under proposition 13. (And yes this is based on quick math, not allowing for the compounding of the 2% annual increase). 

Today’s value could be $450,000; therefore a new buyer’s taxes would normally be closer to $5,625 annually.

  • Yet as a result of Proposition 58, a home seller may be able to pass along the lower property taxes (based on Proposition 13) in a range much lower qualified family member. This can be a cost savings of thousands a year.

In addition there are some circumstances when a grandparent to grandchild (Proposition 193) could also qualify.  It’s important to check with your tax professional for guidelines.

***It’s important to note, this exemption is not automatic, you must file for the exemption and specific guidelines do apply.  This exemption can also apply when settling an estate of an owner who is deceased. There is a provision for an estate to transfer to a qualified family member while maintaining the reduced property taxes.  Some restrictions do apply, check with your tax professional for advice.

About the Author

I maintains an active residential re-sale brokerage in Brea, CA, located in Orange County, about 20 minutes north of Disneyland. Contact Lynda directly at (714) 595-1494, or Lynda@PreferredHomeBrokers.com – CA License #00402040

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