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Property owners of at least 55 years of age may transfer the Proposition 13, factored base year value of their principal residence to a replacement principal residence. Here are some Q&A about property transfer taxation - http://www.boe.ca.gov/proptaxes/pdf/lta06010.pdf
The estate value will be $480,000-$160,000=$320,000. Inherited property will have step-in basis that is fair market value at the time of death - so in case the property sold shortly after - there will not be any capital gain and therefore no tax.
Change in Ownership Reassessment Exclusions Refinancing - http://www.assessor.saccounty.net/general-information/change-in-ownership/change-in-ownership-reassessment-exclusions.html
Parent-Child Change in Ownership Exclusions - http://www.assessor.saccounty.net/general-information/change-in-ownership/cioexclu.html, - Transfers by sale, gift, or inheritance can avoid reassessment under Proposition 58. If a parent transfers a property to more than one child (shared ownership), each child should apply for the exemption for his/her share. Generally, the person acquiring the property must file a claim within 3 years after the date of transfer (if gift or sale) or parent's death (if inheritance), or the property is transferred to a third party.