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Regarding prop13 real estate tax rates in California:It

Regarding prop13 real estate tax...
Regarding prop13 real estate tax rates in California:

It is my understanding that if a house passes from mother to her sole son, that the original prop 13 tax basis and tax rate will pass through to the sole son for his lifetime.

It is my understanding that if that same house were to pass from mother to her elderly boyfriend (when she passes) that the original prop 13 tax basis will not pass through but instead the property will be reassessed at current value.

If the elderly boyfriend is given a "life estate" then my understanding is that this would be enough to trigger a "change of ownership" and the property would be reassessed.

I want to confirm those three things.
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Answered in 16 hours by:
8/18/2013
Barbara
Barbara, Enrolled Agent
Category: Tax
Satisfied Customers: 4,038
Experience: 20+ years of experience in tax preparation; 30+ years of experience as a real estate/corporate paralegal.
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Welcome and thank you for giving me the opportunity to assist you with your tax question.

 

As to your first observation of transfer between mother and son, you are correct. However, a claim would have to be timely filed with the county assessor's office to claim the exclusion.

 

As to your second observation of transfer between mother and elderly boyfriend, you are correct and no exclusion applies.

 

As to your third observation involving a life estate, the creation of a life estate in real property is a change in ownership at the time of transfer unless the instrument creating the life estate reserves such estate in the transferor (mother) or the transferor's spouse. However, the subsequent transfer of such a life estate by the transferor (mother) or the transferor's spouse to a third party is a change in ownership. Upon termination of such a reserved life estate, the vesting of a right to possession or enjoyment of a remainderman (other than the transferor (mother) or the transferor's spouse) is a change in ownership.

 

My points of reference are the following and both contain excellent information:

 

http://www.boe.ca.gov/lawguides/property/current/ptlg/rule/462-060.html

 

http://www.boe.ca.gov/proptaxes/faqs/changeinownership.htm#1

 

Please let me know if you require further information or clarification.

 

Thank you and best regards,

Barb

Barbara
Barbara, Enrolled Agent
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Hi, Gary.

 

Thank you very much for the "excellent" rating. It is most appreciated. If you have any questions in the future, please feel free to put "for bkb1956 or Barb" in the subject line, and I will be happy to assist you. Recommendations to family and friends are also always appreciated.

 

Thanks again and have a great day!

Barb

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