A client, and friend, recently came to me in distress over a hefty increase in his property tax fees, triggered by a transfer of title. I recognized he had been the victim of bad legal advice, so I immediately connected him with one of my trusted real estate law professionals. It’s important to note that this is not legal advice, but it highlights valuable insights worth sharing.
I’ll try to keep it short. Here’s the background… My friend and his father co-owned a house in Los Angeles, operating under what is known as joint tenancy. His father eventually moved to Houston, TX, while my friend continued to live in the house. Years later, the fathers health has started to decline, so they decided to transfer title to the my friend. They found an attorney, and filed a Quit Claim Deed, removing the father from title, and putting the house solely in my friends name. While this seemed like the right decision, it led to a tax reassessment and a $10,000 bill for my friend.
I wish my friend had called me first! I would have steered him in a different direction. If you ever have issues with ANYTHING real estate related, contact me. Also, here is some important information about title transfer:
Understand California Property Tax Laws: California has laws related to property tax reassessment, and specific transfers may trigger reassessment. While inheriting property from a parent is generally exempt under Proposition 13, transfers between other family members, even through a quitclaim deed, may not qualify for an exemption. More info here: https://www.boe.ca.gov/proptaxes/pdf/pub29.pdf
Explore Parent-to-Child Exclusion: If my friend’s father had transferred the property as part of an inheritance, he might have been eligible for the Parent-to-Child Exclusion. This exclusion facilitates the transfer of a primary residence between parents and children without triggering reassessment. It is crucial to ensure that all specific requirements of this exclusion are met.
Consider Prop 58 Exclusion: Proposition 58 provides exclusions for transfers between parents and children, including the transfer of a primary residence. If a transfer qualifies under Proposition 58, it may be excluded from reassessment. Seeking advice from a real estate attorney is recommended for accurate information.
Appeal the Property Tax Assessment: If the property has already been reassessed, there is an option to appeal the assessment. This involves gathering documentation, such as records of the quitclaim deed, and presenting a case demonstrating why the property should not have been reassessed or why an exclusion should apply.
So, how did my friend’s story conclude? I assisted him in connecting with a real estate law professional, and he will appeal the property tax assessment. His next step involves placing the property under a trust. In his case, separate trusts for him and his father are necessary due to his father residing in another state, making the case more complex.
While the outcome regarding the $10,000 tax bill remains uncertain, his experience underscores the importance of understanding the implications of transferring title and seeking professional advice. Despite the inevitable attorney’s fees and time invested, it is hoped that this experience serves as a valuable lesson and potentially helps others facing similar situations in the future.
If you ever have questions, call me! My Real Estate group has been active for more than 35 years. We have access to many trades and services, and have see thousands of transactions. Take a minute and run it by me. I don’t prepare taxes or practice law, however I do real estate, and I love to help.
