These constitutional initiatives provide property tax relief for real property transfers between parents and children, and from grandparents to grandchildren.
Collectively, they make it easier to keep property “in the family.” In general, Proposition 58 states that real property transfers, from parent to child or child to parent, may be excluded from reassessment. Proposition 193 expands this tax relief to include transfers from grandparents to grandchildren. In both cases, a claim must be filed within three years of the date of transfer to receive the full benefit of the exclusion.
Requirements and Guidelines for Propositions 58 and 193
- 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.
- No limit is placed on the assessed value of a principal residence that may be excluded from the reassessment.
- 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 $1,000,000.00
- The $1,000,000.00 exclusion applies separately to each eligible transferor. A $2,000,000.00 limit applies to community real property of an eligible married couple.
- Transfers by sale, gift or inheritance qualify for the exclusion.
- 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.
- Transfers of ownership interests in legal entities, aside from most trusts, do not qualify for the exclusion.
- 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 of the transfer for which 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.
- 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 proceed.
Information deemed reliable as of 4/11/19 but not guaranteed. We recommend talking with a title company, your tax attorney or CPA for more information. 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/property