2nd Public Service about Property Taxes…may even save you money!

[CA renter]

SDR,

I’m not a realtor nor a lawyer, but recently filed a PC Exclusion myself, so looking at the pamphlet…

You said they obtained the property from their parents but didn’t specify if it was an inheritance or transfer or sale or??

If the parents simply transferred it, and they (parents) also applied for a Reappraisal Exclusion for Seniors on their next residence (assuming they just moved from that house to another), it seems the children couldn’t apply for a Parent-Child Exclusion on the transferred house. The parents would have transferred the low tax basis to the next property.

Also, regarding corporate holdings or partnerships, they appear not to qualify for the Parent-Child Exclusion. But properties held in trusts do seem to qualify.

Again, not an attorney, so ask an attorney if seeking legal advice!

[4plexowner]

transfers between an individual and a legal entity (at least an LLC) do not result in a tax re-assessment

I held my rental properties in LLCs for liability protection – each property had its own LLC – any time I did a refi I had to Quit Claim the property back into my name and then when the refi completed Quit Claim back to the LLC

on the form to file/record the Quit Claim deed I’d write in this exact text:

“The grantors and grantees in this conveyance are comprised of the same parties who continue to hold the same proportionate interest in the property, R&T 11923(d).”

this text should keep the tax assessor from asking questions although they called me about one transfer long ago

~

I don’t know if corporations and LLCs are treated the same inre transferring real estate without tax consequences but I would assume that they are

~

there is no tax re-assessment when transferring real estate among ‘immediate’ family members – don’t know if ‘immediate’ includes grand-parents – if I understand correctly, I can give my real estate to my parents, siblings or children without the property being re-assessed

~

I have read that one of the drivers for creating urban sprawl is that the taxes on commercial property (almost) never get re-assessed after the property is built – the game is to put the property into an LLC and then sell the LLC instead of the property – the property is never ‘sold’ but the LLC (which holds 100% interest in the property) may change hands numerous times – since the city can’t increase the tax base via existing real estate they are motivated to build the next strip mall and the next housing development

~

the contents of a safe deposit box held as tenants in common (for example, a parent and a child) are not taxed upon the death of one of the tenants in common – there are lots of things that can go in safe deposit boxes: gold, diamonds, jewelry, cash, etc

~

I am not a lawyer – this advice may be out-of-date or just flat wrong – never do anything involving money, taxes or the law without appropriate professional advice

[4plexowner]

transfers between an individual and a legal entity (at least an LLC) do not result in a tax re-assessment

I held my rental properties in LLCs for liability protection – each property had its own LLC – any time I did a refi I had to Quit Claim the property back into my name and then when the refi completed Quit Claim back to the LLC

on the form to file/record the Quit Claim deed I’d write in this exact text:

“The grantors and grantees in this conveyance are comprised of the same parties who continue to hold the same proportionate interest in the property, R&T 11923(d).”

this text should keep the tax assessor from asking questions although they called me about one transfer long ago

~

I don’t know if corporations and LLCs are treated the same inre transferring real estate without tax consequences but I would assume that they are

~

there is no tax re-assessment when transferring real estate among ‘immediate’ family members – don’t know if ‘immediate’ includes grand-parents – if I understand correctly, I can give my real estate to my parents, siblings or children without the property being re-assessed

~

I have read that one of the drivers for creating urban sprawl is that the taxes on commercial property (almost) never get re-assessed after the property is built – the game is to put the property into an LLC and then sell the LLC instead of the property – the property is never ‘sold’ but the LLC (which holds 100% interest in the property) may change hands numerous times – since the city can’t increase the tax base via existing real estate they are motivated to build the next strip mall and the next housing development

~

the contents of a safe deposit box held as tenants in common (for example, a parent and a child) are not taxed upon the death of one of the tenants in common – there are lots of things that can go in safe deposit boxes: gold, diamonds, jewelry, cash, etc

~

I am not a lawyer – this advice may be out-of-date or just flat wrong – never do anything involving money, taxes or the law without appropriate professional advice

[4plexowner]

transfers between an individual and a legal entity (at least an LLC) do not result in a tax re-assessment

I held my rental properties in LLCs for liability protection – each property had its own LLC – any time I did a refi I had to Quit Claim the property back into my name and then when the refi completed Quit Claim back to the LLC

on the form to file/record the Quit Claim deed I’d write in this exact text:

“The grantors and grantees in this conveyance are comprised of the same parties who continue to hold the same proportionate interest in the property, R&T 11923(d).”

this text should keep the tax assessor from asking questions although they called me about one transfer long ago

~

I don’t know if corporations and LLCs are treated the same inre transferring real estate without tax consequences but I would assume that they are

~

there is no tax re-assessment when transferring real estate among ‘immediate’ family members – don’t know if ‘immediate’ includes grand-parents – if I understand correctly, I can give my real estate to my parents, siblings or children without the property being re-assessed

~

I have read that one of the drivers for creating urban sprawl is that the taxes on commercial property (almost) never get re-assessed after the property is built – the game is to put the property into an LLC and then sell the LLC instead of the property – the property is never ‘sold’ but the LLC (which holds 100% interest in the property) may change hands numerous times – since the city can’t increase the tax base via existing real estate they are motivated to build the next strip mall and the next housing development

~

the contents of a safe deposit box held as tenants in common (for example, a parent and a child) are not taxed upon the death of one of the tenants in common – there are lots of things that can go in safe deposit boxes: gold, diamonds, jewelry, cash, etc

~

I am not a lawyer – this advice may be out-of-date or just flat wrong – never do anything involving money, taxes or the law without appropriate professional advice

[4plexowner]

transfers between an individual and a legal entity (at least an LLC) do not result in a tax re-assessment

I held my rental properties in LLCs for liability protection – each property had its own LLC – any time I did a refi I had to Quit Claim the property back into my name and then when the refi completed Quit Claim back to the LLC

on the form to file/record the Quit Claim deed I’d write in this exact text:

“The grantors and grantees in this conveyance are comprised of the same parties who continue to hold the same proportionate interest in the property, R&T 11923(d).”

this text should keep the tax assessor from asking questions although they called me about one transfer long ago

~

I don’t know if corporations and LLCs are treated the same inre transferring real estate without tax consequences but I would assume that they are

~

there is no tax re-assessment when transferring real estate among ‘immediate’ family members – don’t know if ‘immediate’ includes grand-parents – if I understand correctly, I can give my real estate to my parents, siblings or children without the property being re-assessed

~

I have read that one of the drivers for creating urban sprawl is that the taxes on commercial property (almost) never get re-assessed after the property is built – the game is to put the property into an LLC and then sell the LLC instead of the property – the property is never ‘sold’ but the LLC (which holds 100% interest in the property) may change hands numerous times – since the city can’t increase the tax base via existing real estate they are motivated to build the next strip mall and the next housing development

~

the contents of a safe deposit box held as tenants in common (for example, a parent and a child) are not taxed upon the death of one of the tenants in common – there are lots of things that can go in safe deposit boxes: gold, diamonds, jewelry, cash, etc

~

I am not a lawyer – this advice may be out-of-date or just flat wrong – never do anything involving money, taxes or the law without appropriate professional advice

[4plexowner]

transfers between an individual and a legal entity (at least an LLC) do not result in a tax re-assessment

I held my rental properties in LLCs for liability protection – each property had its own LLC – any time I did a refi I had to Quit Claim the property back into my name and then when the refi completed Quit Claim back to the LLC

on the form to file/record the Quit Claim deed I’d write in this exact text:

“The grantors and grantees in this conveyance are comprised of the same parties who continue to hold the same proportionate interest in the property, R&T 11923(d).”

this text should keep the tax assessor from asking questions although they called me about one transfer long ago

~

I don’t know if corporations and LLCs are treated the same inre transferring real estate without tax consequences but I would assume that they are

~

there is no tax re-assessment when transferring real estate among ‘immediate’ family members – don’t know if ‘immediate’ includes grand-parents – if I understand correctly, I can give my real estate to my parents, siblings or children without the property being re-assessed

~

I have read that one of the drivers for creating urban sprawl is that the taxes on commercial property (almost) never get re-assessed after the property is built – the game is to put the property into an LLC and then sell the LLC instead of the property – the property is never ‘sold’ but the LLC (which holds 100% interest in the property) may change hands numerous times – since the city can’t increase the tax base via existing real estate they are motivated to build the next strip mall and the next housing development

~

the contents of a safe deposit box held as tenants in common (for example, a parent and a child) are not taxed upon the death of one of the tenants in common – there are lots of things that can go in safe deposit boxes: gold, diamonds, jewelry, cash, etc

~

I am not a lawyer – this advice may be out-of-date or just flat wrong – never do anything involving money, taxes or the law without appropriate professional advice

[(former)FormerSanDiegan]

Sorry, I am stumped on this one.

Most of my advice comes from either personal experience or scenarios I have researched for myself.
Being a young whippersnapper and not having inherited CA property from my parents I haven’t dealt with or worried about this issue … yet.

[(former)FormerSanDiegan]

Sorry, I am stumped on this one.

Most of my advice comes from either personal experience or scenarios I have researched for myself.
Being a young whippersnapper and not having inherited CA property from my parents I haven’t dealt with or worried about this issue … yet.

[(former)FormerSanDiegan]

Sorry, I am stumped on this one.

Most of my advice comes from either personal experience or scenarios I have researched for myself.
Being a young whippersnapper and not having inherited CA property from my parents I haven’t dealt with or worried about this issue … yet.

[(former)FormerSanDiegan]

Sorry, I am stumped on this one.

Most of my advice comes from either personal experience or scenarios I have researched for myself.
Being a young whippersnapper and not having inherited CA property from my parents I haven’t dealt with or worried about this issue … yet.

[(former)FormerSanDiegan]

Sorry, I am stumped on this one.

Most of my advice comes from either personal experience or scenarios I have researched for myself.
Being a young whippersnapper and not having inherited CA property from my parents I haven’t dealt with or worried about this issue … yet.

[surveyor]

I haven’t come across this situation before and I only spoke of it very superficially with a lawyer related to me, so take what I say with a grain of salt.

Still, from the County’s website:

Q: Is there a filing deadline for this exclusion?

A: A claim must be filed within three years of the date of transfer or death, or prior to the sale or transfer to a third party. In addition, a claim may be filed within six months after the mailing date of the supplemental notice or escape assessment.

Q: Is there anything I can do after the deadline?

A: If a claim is filed after the legal deadline, the exclusion may be granted but no refunds will be issued for prior years. It will be granted for the year the claim is filed as long as the property has not been sold to a third party.

So if your client can get the paperwork done, they may at least get their future tax bills fixed.

Now, somewhere else in the page, this was an interesting find as well:

LIVING TRUSTS

– Real property is frequently placed into a trust for income tax or inheritance purposes. Generally, the creation of a trust does not cause a reassessment for property tax purposes. For more information concerning the possible property tax consequences of a trust, please call the Assessor’s Office at (858) 505-6262.

Q: What is a trust?

A: A trust is a legal arrangement whereby property is held by one party for the benefit of another (beneficiary) for a specific length of time.

Q: Does placing real property into a trust cause a reassessment for property tax purposes?

A: Generally, placing real property into a trust is not a change in ownership that causes a reassessment as long as you are the sole owners, the trust is revocable or the beneficial interest is not transferred.

So by the wording, it is possible for someone to transfer their tax basis to their child (using the parent/child exclusion) and then transfer the property into a trust for said child…

It definitely sounds like something worth pursuing… Talk to the County people, they are generally helpful about these things. They won’t hold your hand during the process, but they will tell you what to do.

[surveyor]

I haven’t come across this situation before and I only spoke of it very superficially with a lawyer related to me, so take what I say with a grain of salt.

Still, from the County’s website:

Q: Is there a filing deadline for this exclusion?

A: A claim must be filed within three years of the date of transfer or death, or prior to the sale or transfer to a third party. In addition, a claim may be filed within six months after the mailing date of the supplemental notice or escape assessment.

Q: Is there anything I can do after the deadline?

A: If a claim is filed after the legal deadline, the exclusion may be granted but no refunds will be issued for prior years. It will be granted for the year the claim is filed as long as the property has not been sold to a third party.

So if your client can get the paperwork done, they may at least get their future tax bills fixed.

Now, somewhere else in the page, this was an interesting find as well:

LIVING TRUSTS

– Real property is frequently placed into a trust for income tax or inheritance purposes. Generally, the creation of a trust does not cause a reassessment for property tax purposes. For more information concerning the possible property tax consequences of a trust, please call the Assessor’s Office at (858) 505-6262.

Q: What is a trust?

A: A trust is a legal arrangement whereby property is held by one party for the benefit of another (beneficiary) for a specific length of time.

Q: Does placing real property into a trust cause a reassessment for property tax purposes?

A: Generally, placing real property into a trust is not a change in ownership that causes a reassessment as long as you are the sole owners, the trust is revocable or the beneficial interest is not transferred.

So by the wording, it is possible for someone to transfer their tax basis to their child (using the parent/child exclusion) and then transfer the property into a trust for said child…

It definitely sounds like something worth pursuing… Talk to the County people, they are generally helpful about these things. They won’t hold your hand during the process, but they will tell you what to do.

[surveyor]

I haven’t come across this situation before and I only spoke of it very superficially with a lawyer related to me, so take what I say with a grain of salt.

Still, from the County’s website:

Q: Is there a filing deadline for this exclusion?

A: A claim must be filed within three years of the date of transfer or death, or prior to the sale or transfer to a third party. In addition, a claim may be filed within six months after the mailing date of the supplemental notice or escape assessment.

Q: Is there anything I can do after the deadline?

A: If a claim is filed after the legal deadline, the exclusion may be granted but no refunds will be issued for prior years. It will be granted for the year the claim is filed as long as the property has not been sold to a third party.

So if your client can get the paperwork done, they may at least get their future tax bills fixed.

Now, somewhere else in the page, this was an interesting find as well:

LIVING TRUSTS

– Real property is frequently placed into a trust for income tax or inheritance purposes. Generally, the creation of a trust does not cause a reassessment for property tax purposes. For more information concerning the possible property tax consequences of a trust, please call the Assessor’s Office at (858) 505-6262.

Q: What is a trust?

A: A trust is a legal arrangement whereby property is held by one party for the benefit of another (beneficiary) for a specific length of time.

Q: Does placing real property into a trust cause a reassessment for property tax purposes?

A: Generally, placing real property into a trust is not a change in ownership that causes a reassessment as long as you are the sole owners, the trust is revocable or the beneficial interest is not transferred.

So by the wording, it is possible for someone to transfer their tax basis to their child (using the parent/child exclusion) and then transfer the property into a trust for said child…

It definitely sounds like something worth pursuing… Talk to the County people, they are generally helpful about these things. They won’t hold your hand during the process, but they will tell you what to do.

[surveyor]

I haven’t come across this situation before and I only spoke of it very superficially with a lawyer related to me, so take what I say with a grain of salt.

Still, from the County’s website:

Q: Is there a filing deadline for this exclusion?

A: A claim must be filed within three years of the date of transfer or death, or prior to the sale or transfer to a third party. In addition, a claim may be filed within six months after the mailing date of the supplemental notice or escape assessment.

Q: Is there anything I can do after the deadline?

A: If a claim is filed after the legal deadline, the exclusion may be granted but no refunds will be issued for prior years. It will be granted for the year the claim is filed as long as the property has not been sold to a third party.

So if your client can get the paperwork done, they may at least get their future tax bills fixed.

Now, somewhere else in the page, this was an interesting find as well:

LIVING TRUSTS

– Real property is frequently placed into a trust for income tax or inheritance purposes. Generally, the creation of a trust does not cause a reassessment for property tax purposes. For more information concerning the possible property tax consequences of a trust, please call the Assessor’s Office at (858) 505-6262.

Q: What is a trust?

A: A trust is a legal arrangement whereby property is held by one party for the benefit of another (beneficiary) for a specific length of time.

Q: Does placing real property into a trust cause a reassessment for property tax purposes?

A: Generally, placing real property into a trust is not a change in ownership that causes a reassessment as long as you are the sole owners, the trust is revocable or the beneficial interest is not transferred.

So by the wording, it is possible for someone to transfer their tax basis to their child (using the parent/child exclusion) and then transfer the property into a trust for said child…

It definitely sounds like something worth pursuing… Talk to the County people, they are generally helpful about these things. They won’t hold your hand during the process, but they will tell you what to do.

[Author]

Posts