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Parent-Child Change in Ownership Exclusions - http://www.boe.ca.gov/proptaxes/faqs/propositions58.htm,
- 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.
See question #24
I recently inherited the family home, but I don't really want to live there. Do I have to make it my principal residence to qualify for the exclusion?No. The property need not be the new principal residence of the person that acquired the property. It is only the transferor who must have been granted a homeowners' exemption or disabled veterans' exemption on the property before the transfer.
Let me make sure that I understand you correctly. I can use the house as a rental property and keep the exemption?
That is correct - see above the reference to the CA BOA site that addresses this and some other questions related to your situation. Proposition 58 is for parent-child transfer.