Parent Child Exclusion from Property Tax Re-Assessment

Parent Child Exclusion from Property Tax Re-Assessment

It is possible to save property taxes in San Diego County using the Parent-Child Exclusion which prevents an increase in property taxes when real property is transferred between parents and children. The Parent-Child Exclusion applies to any real property purchases or transfers between parents and children. The real estate transfer must have  occurred on or after November 6, 1986  according to the San Diego County Assessor to qualify for the Parent – Child Exclusion.

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Children benefit from property tax savings on property transfers from their parents

Natural children, children adopted before the age of 18, stepchildren (as long as the parents are still married), foster children, and even sons- and daughters-in law are considered children under this transfer property tax re-assessment exclusion program.

Grandparent – Grandchild Exclusion (when both parents of the eligible grandchildren are deceased)

In California, there is also a Grandparent – Grandchild Exclusion which allows for a home to be excluded from property tax re-appraisal when the California property is transferred between a grandparent and grandchild only when both parents of the eligible grandchildren are deceased. A form must be filed and approved by the Assessor’s office.

Background

Typically, when real estate is bought, sold, or transferred, a new property tax re-assessment occurs.  If the property value has significantly increased, it leads to higher property taxes especially if mom and/or dad have owned the home for a long time. With the Parent-Child Exclusion, it makes it beneficial  for a parent to transfer their principal residence and any other property (up to $1,000,000) to their children without property re-appraisal at the time of transfer. This is an incredible savings from a tax planning perspective.

Personal Experience

Jean has personally experienced the financial benefit of the parent-child exclusion tax savings. Jean purchased her recently retired mom’s home a few years ago. The home had a low assessed property tax value since it was bought so many years ago. Because of the parent-child exclusion in San Diego County, the low property tax basis has been transferred, allowing for huge property tax savings.

Action Required

You must submit a claim form to the San Diego County Assessor/Recorder County Clerk to take advantage of the Parent- Child Exclusion and get approval.

You may call the the San Diego County Assessor’s Office at 619-531-5848 for more information on how to save on property taxes with the Parent-Child Exclusion.

Or you may visit their website at www.sdarcc.com.

Parent – Child Exclusion Additional Reading

California State Board of Equalization 

California Revenue and Taxation Code Section 63.1

Revenue and Taxation Code: Property Taxation
PART 0.5. Implementation of Article XIII A of the California Constitution Chapter 2. Change in Ownership and Purchase SECTION 63.1

San Diego County Property Tax Information

Related Article: Property Tax Savings

Property Tax Savings For Seniors 55 and older under Prop 60 and Prop 90

San Diego County Home Value Estimator: Free Home Value Report