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Barrister
Barrister, Attorney
Category: Estate Law
Satisfied Customers: 33802
Experience:  15 yrs estate law, real estate. Wills/Trusts/Probate
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When my kids inherit my house I understand the basis changes

Customer Question

When my kids inherit my house I understand the basis changes to current value, but what happens with Prop 13? Is it adjusted to reflect the new value?
Submitted: 1 year ago.
Category: Estate Law
Expert:  Barrister replied 1 year ago.
Hello and welcome! My name is ***** ***** I will try my level best to help with your situation or get you to someone who can.
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No, according to the CA Board of Equalization, under Prop 13 a transfer from a parent to a child is considered an exempt transfer and does not trigger a reassessment for taxation purposes.
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California excludes the first $1 million plus the principal residence of the parents in parent-child transfers. ‘Claim for Reassessment Exclusion for Transfer between Parent and Child’ Form BOE-58-AH must be filed within three years after the date of the transfer to obtain this exclusion.
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A transfer or inheritance due to death receives a ‘step-up’ in basis. The parent’s purchase price or basis disappears. The new basis is the market value of the real estate on the date of death of the parent. A sale in the future incurs capital tax on the difference between the market value on date of parent’s death and the sales price.
Another tax on land and real property transfers is the documentary tax. This tax currently is $1.10 per thousand dollars plus any local government additions. The California Revenue and Taxation Code Section 11930 exempts all grants, assigns, transfers or conveys that are gifts or transfers due to death. But the grant deed or quit claim deed must state under penalty of perjury on the face of the deed this exemption to avoid the documentary tax.
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thanks
Barrister