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UCGal
Participant[quote=bearishgurl]Thank you for this clarification, UCGal, but HOW did you fill out the Assessor COO form (used to be yellow, don’t know about now). Did you claim on it that the transaction was a intra-family transfer?
Did your parents sign a form of a familial transfer deed or quitclaim deed when you signed your trust deed? And even though you took out a mortgage loan, did you indicate tax stamps on your deed in excess of the property’s current assessed value at the time??
If these questions are too personal, I understand.[/quote]
As I mentioned before we had a regular sale. I signed what seemed like thousands of pages of documents at the escrow office. I presume most were for the mortgage. I assume the deed was one of them. We had a sales agreement drawn up before we opened escrow. We put our downpayment money in and financed the balance. My dad walked away with the market value of the house. It was NOT a quitclaim deed. I assume it was a transfer deed. Under the grant deed search it shows as a deed, not a quitclaim.The current version of the form we used to claim the tax exemption under prop 58 is available online for you to see. (The one I filled out is pretty much the same to the best of my recollection… but it was 8 years ago.) My dad filled out a portion, and my husband and I filled out a portion
http://arcc.co.san-diego.ca.us/docs/ParentChild.pdf
I hope this clarifies things.
Participant[quote=bearishgurl]Thank you for this clarification, UCGal, but HOW did you fill out the Assessor COO form (used to be yellow, don’t know about now). Did you claim on it that the transaction was a intra-family transfer?
Did your parents sign a form of a familial transfer deed or quitclaim deed when you signed your trust deed? And even though you took out a mortgage loan, did you indicate tax stamps on your deed in excess of the property’s current assessed value at the time??
If these questions are too personal, I understand.[/quote]
As I mentioned before we had a regular sale. I signed what seemed like thousands of pages of documents at the escrow office. I presume most were for the mortgage. I assume the deed was one of them. We had a sales agreement drawn up before we opened escrow. We put our downpayment money in and financed the balance. My dad walked away with the market value of the house. It was NOT a quitclaim deed. I assume it was a transfer deed. Under the grant deed search it shows as a deed, not a quitclaim.The current version of the form we used to claim the tax exemption under prop 58 is available online for you to see. (The one I filled out is pretty much the same to the best of my recollection… but it was 8 years ago.) My dad filled out a portion, and my husband and I filled out a portion
http://arcc.co.san-diego.ca.us/docs/ParentChild.pdf
I hope this clarifies things.
ParticipantI want to correct something since I know something about this.
[quote=bearishgurl]In addition, I believe the familial transfer deed should indicate -$0- in tax stamps (no money exchanged hands) or an amt in tax stamps <=to the current assessed value of the property. The Assessor Change of Ownership form should indicate that the transaction was a familial transfer. Disclaimer: I am not an attorney and this post should not be construed as legal advice.[/quote]
Wrong. Ours was a traditional purchase with escrow and title company, mortgage, etc. It did NOT affect the transfer of the tax rate. We submitted all paperwork required to the county tax assessor – and if I recall correctly it included our (large) purchase price.This is confirmed by the state website.
http://www.boe.ca.gov/proptaxes/faqs/propositions58.htm6.To qualify for the exclusion, must the transfer be only a result of a gift?
No. Transfers may be result of a sale, gift, or inheritance.It should be noted that you are not required to apply the family transfer rate. If your parents bought at peak, then you inherit and the property is worth less – you can claim the current rate. And you’d be foolish not to claim the current rate.
ParticipantI want to correct something since I know something about this.
[quote=bearishgurl]In addition, I believe the familial transfer deed should indicate -$0- in tax stamps (no money exchanged hands) or an amt in tax stamps <=to the current assessed value of the property. The Assessor Change of Ownership form should indicate that the transaction was a familial transfer. Disclaimer: I am not an attorney and this post should not be construed as legal advice.[/quote]
Wrong. Ours was a traditional purchase with escrow and title company, mortgage, etc. It did NOT affect the transfer of the tax rate. We submitted all paperwork required to the county tax assessor – and if I recall correctly it included our (large) purchase price.This is confirmed by the state website.
http://www.boe.ca.gov/proptaxes/faqs/propositions58.htm6.To qualify for the exclusion, must the transfer be only a result of a gift?
No. Transfers may be result of a sale, gift, or inheritance.It should be noted that you are not required to apply the family transfer rate. If your parents bought at peak, then you inherit and the property is worth less – you can claim the current rate. And you’d be foolish not to claim the current rate.
ParticipantI want to correct something since I know something about this.
[quote=bearishgurl]In addition, I believe the familial transfer deed should indicate -$0- in tax stamps (no money exchanged hands) or an amt in tax stamps <=to the current assessed value of the property. The Assessor Change of Ownership form should indicate that the transaction was a familial transfer. Disclaimer: I am not an attorney and this post should not be construed as legal advice.[/quote]
Wrong. Ours was a traditional purchase with escrow and title company, mortgage, etc. It did NOT affect the transfer of the tax rate. We submitted all paperwork required to the county tax assessor – and if I recall correctly it included our (large) purchase price.This is confirmed by the state website.
http://www.boe.ca.gov/proptaxes/faqs/propositions58.htm6.To qualify for the exclusion, must the transfer be only a result of a gift?
No. Transfers may be result of a sale, gift, or inheritance.It should be noted that you are not required to apply the family transfer rate. If your parents bought at peak, then you inherit and the property is worth less – you can claim the current rate. And you’d be foolish not to claim the current rate.
ParticipantI want to correct something since I know something about this.
[quote=bearishgurl]In addition, I believe the familial transfer deed should indicate -$0- in tax stamps (no money exchanged hands) or an amt in tax stamps <=to the current assessed value of the property. The Assessor Change of Ownership form should indicate that the transaction was a familial transfer. Disclaimer: I am not an attorney and this post should not be construed as legal advice.[/quote]
Wrong. Ours was a traditional purchase with escrow and title company, mortgage, etc. It did NOT affect the transfer of the tax rate. We submitted all paperwork required to the county tax assessor – and if I recall correctly it included our (large) purchase price.This is confirmed by the state website.
http://www.boe.ca.gov/proptaxes/faqs/propositions58.htm6.To qualify for the exclusion, must the transfer be only a result of a gift?
No. Transfers may be result of a sale, gift, or inheritance.It should be noted that you are not required to apply the family transfer rate. If your parents bought at peak, then you inherit and the property is worth less – you can claim the current rate. And you’d be foolish not to claim the current rate.
ParticipantI want to correct something since I know something about this.
[quote=bearishgurl]In addition, I believe the familial transfer deed should indicate -$0- in tax stamps (no money exchanged hands) or an amt in tax stamps <=to the current assessed value of the property. The Assessor Change of Ownership form should indicate that the transaction was a familial transfer. Disclaimer: I am not an attorney and this post should not be construed as legal advice.[/quote]
Wrong. Ours was a traditional purchase with escrow and title company, mortgage, etc. It did NOT affect the transfer of the tax rate. We submitted all paperwork required to the county tax assessor – and if I recall correctly it included our (large) purchase price.This is confirmed by the state website.
http://www.boe.ca.gov/proptaxes/faqs/propositions58.htm6.To qualify for the exclusion, must the transfer be only a result of a gift?
No. Transfers may be result of a sale, gift, or inheritance.It should be noted that you are not required to apply the family transfer rate. If your parents bought at peak, then you inherit and the property is worth less – you can claim the current rate. And you’d be foolish not to claim the current rate.
Participant[quote=bearishgurl]I stated that their families took advantage of a valuable tax loophole because they CAN! [/quote]
I would argue that it’s not a loophole if it was it’s own proposition. Not just that – it was a constitutional amendment. In other words it wasn’t an accident.From the state website:
http://www.boe.ca.gov/proptaxes/faqs/propositions58.htm#11.What is Proposition 58?
Proposition 58, effective November 6, 1986, is a constitutional amendment approved by the voters of California which excludes from reassessment transfers of real property between parents and children. Proposition 58 is codified by section 63.1 of the Revenue and Taxation Code.2.What is Proposition 193?
Proposition 193, effective March 27, 1996, is a constitutional amendment approved by the voters of California which excludes from reassessment transfers of real property from grandparents to grandchildren, providing that all the parents of the grandchildren who qualify as children of the grandparents are deceased as of the date of transfer. Proposition 193 is also codified by section 63.1 of the Revenue and Taxation Code.[quote=sdrealtor]Stupid Prop 13 question as I dont completely understand the details. Does the ability to pass a tax basis to heirs only exist for pre-1978 purchases or does it apply to all homes?[/quote]
It applies to all homes that are a primary residence. There are restrictions based on value – something about $1M. So many of your clients, sdr, may not get the full transfer value. There are details on the link above.
In general..
There are 4 propositions that were passed POST Prop 13 that tend to be lumped in with prop 13. Props 58 and 193 above. And props 60 and 90. Prop 60 allows a homeowner who’s over age 55 to transfer their tax basis within their county to a lesser valued home. In other words, downsizing when you become an empty nester won’t increase your tax rate. Prop 90 made it so that you could do this intra county if both counties were participating.
When I bought from my father we had to decide if we were going to use the prop 58 or the prop 60 tax treatment. It is a logical OR function, not a logical AND function. Since the house I was buying was of greater value by $200k, than the house he was buying, it made sense to use the prop 58 “loophole”.
Participant[quote=bearishgurl]I stated that their families took advantage of a valuable tax loophole because they CAN! [/quote]
I would argue that it’s not a loophole if it was it’s own proposition. Not just that – it was a constitutional amendment. In other words it wasn’t an accident.From the state website:
http://www.boe.ca.gov/proptaxes/faqs/propositions58.htm#11.What is Proposition 58?
Proposition 58, effective November 6, 1986, is a constitutional amendment approved by the voters of California which excludes from reassessment transfers of real property between parents and children. Proposition 58 is codified by section 63.1 of the Revenue and Taxation Code.2.What is Proposition 193?
Proposition 193, effective March 27, 1996, is a constitutional amendment approved by the voters of California which excludes from reassessment transfers of real property from grandparents to grandchildren, providing that all the parents of the grandchildren who qualify as children of the grandparents are deceased as of the date of transfer. Proposition 193 is also codified by section 63.1 of the Revenue and Taxation Code.[quote=sdrealtor]Stupid Prop 13 question as I dont completely understand the details. Does the ability to pass a tax basis to heirs only exist for pre-1978 purchases or does it apply to all homes?[/quote]
It applies to all homes that are a primary residence. There are restrictions based on value – something about $1M. So many of your clients, sdr, may not get the full transfer value. There are details on the link above.
In general..
There are 4 propositions that were passed POST Prop 13 that tend to be lumped in with prop 13. Props 58 and 193 above. And props 60 and 90. Prop 60 allows a homeowner who’s over age 55 to transfer their tax basis within their county to a lesser valued home. In other words, downsizing when you become an empty nester won’t increase your tax rate. Prop 90 made it so that you could do this intra county if both counties were participating.
When I bought from my father we had to decide if we were going to use the prop 58 or the prop 60 tax treatment. It is a logical OR function, not a logical AND function. Since the house I was buying was of greater value by $200k, than the house he was buying, it made sense to use the prop 58 “loophole”.
Participant[quote=bearishgurl]I stated that their families took advantage of a valuable tax loophole because they CAN! [/quote]
I would argue that it’s not a loophole if it was it’s own proposition. Not just that – it was a constitutional amendment. In other words it wasn’t an accident.From the state website:
http://www.boe.ca.gov/proptaxes/faqs/propositions58.htm#11.What is Proposition 58?
Proposition 58, effective November 6, 1986, is a constitutional amendment approved by the voters of California which excludes from reassessment transfers of real property between parents and children. Proposition 58 is codified by section 63.1 of the Revenue and Taxation Code.2.What is Proposition 193?
Proposition 193, effective March 27, 1996, is a constitutional amendment approved by the voters of California which excludes from reassessment transfers of real property from grandparents to grandchildren, providing that all the parents of the grandchildren who qualify as children of the grandparents are deceased as of the date of transfer. Proposition 193 is also codified by section 63.1 of the Revenue and Taxation Code.[quote=sdrealtor]Stupid Prop 13 question as I dont completely understand the details. Does the ability to pass a tax basis to heirs only exist for pre-1978 purchases or does it apply to all homes?[/quote]
It applies to all homes that are a primary residence. There are restrictions based on value – something about $1M. So many of your clients, sdr, may not get the full transfer value. There are details on the link above.
In general..
There are 4 propositions that were passed POST Prop 13 that tend to be lumped in with prop 13. Props 58 and 193 above. And props 60 and 90. Prop 60 allows a homeowner who’s over age 55 to transfer their tax basis within their county to a lesser valued home. In other words, downsizing when you become an empty nester won’t increase your tax rate. Prop 90 made it so that you could do this intra county if both counties were participating.
When I bought from my father we had to decide if we were going to use the prop 58 or the prop 60 tax treatment. It is a logical OR function, not a logical AND function. Since the house I was buying was of greater value by $200k, than the house he was buying, it made sense to use the prop 58 “loophole”.
Participant[quote=bearishgurl]I stated that their families took advantage of a valuable tax loophole because they CAN! [/quote]
I would argue that it’s not a loophole if it was it’s own proposition. Not just that – it was a constitutional amendment. In other words it wasn’t an accident.From the state website:
http://www.boe.ca.gov/proptaxes/faqs/propositions58.htm#11.What is Proposition 58?
Proposition 58, effective November 6, 1986, is a constitutional amendment approved by the voters of California which excludes from reassessment transfers of real property between parents and children. Proposition 58 is codified by section 63.1 of the Revenue and Taxation Code.2.What is Proposition 193?
Proposition 193, effective March 27, 1996, is a constitutional amendment approved by the voters of California which excludes from reassessment transfers of real property from grandparents to grandchildren, providing that all the parents of the grandchildren who qualify as children of the grandparents are deceased as of the date of transfer. Proposition 193 is also codified by section 63.1 of the Revenue and Taxation Code.[quote=sdrealtor]Stupid Prop 13 question as I dont completely understand the details. Does the ability to pass a tax basis to heirs only exist for pre-1978 purchases or does it apply to all homes?[/quote]
It applies to all homes that are a primary residence. There are restrictions based on value – something about $1M. So many of your clients, sdr, may not get the full transfer value. There are details on the link above.
In general..
There are 4 propositions that were passed POST Prop 13 that tend to be lumped in with prop 13. Props 58 and 193 above. And props 60 and 90. Prop 60 allows a homeowner who’s over age 55 to transfer their tax basis within their county to a lesser valued home. In other words, downsizing when you become an empty nester won’t increase your tax rate. Prop 90 made it so that you could do this intra county if both counties were participating.
When I bought from my father we had to decide if we were going to use the prop 58 or the prop 60 tax treatment. It is a logical OR function, not a logical AND function. Since the house I was buying was of greater value by $200k, than the house he was buying, it made sense to use the prop 58 “loophole”.
Participant[quote=bearishgurl]I stated that their families took advantage of a valuable tax loophole because they CAN! [/quote]
I would argue that it’s not a loophole if it was it’s own proposition. Not just that – it was a constitutional amendment. In other words it wasn’t an accident.From the state website:
http://www.boe.ca.gov/proptaxes/faqs/propositions58.htm#11.What is Proposition 58?
Proposition 58, effective November 6, 1986, is a constitutional amendment approved by the voters of California which excludes from reassessment transfers of real property between parents and children. Proposition 58 is codified by section 63.1 of the Revenue and Taxation Code.2.What is Proposition 193?
Proposition 193, effective March 27, 1996, is a constitutional amendment approved by the voters of California which excludes from reassessment transfers of real property from grandparents to grandchildren, providing that all the parents of the grandchildren who qualify as children of the grandparents are deceased as of the date of transfer. Proposition 193 is also codified by section 63.1 of the Revenue and Taxation Code.[quote=sdrealtor]Stupid Prop 13 question as I dont completely understand the details. Does the ability to pass a tax basis to heirs only exist for pre-1978 purchases or does it apply to all homes?[/quote]
It applies to all homes that are a primary residence. There are restrictions based on value – something about $1M. So many of your clients, sdr, may not get the full transfer value. There are details on the link above.
In general..
There are 4 propositions that were passed POST Prop 13 that tend to be lumped in with prop 13. Props 58 and 193 above. And props 60 and 90. Prop 60 allows a homeowner who’s over age 55 to transfer their tax basis within their county to a lesser valued home. In other words, downsizing when you become an empty nester won’t increase your tax rate. Prop 90 made it so that you could do this intra county if both counties were participating.
When I bought from my father we had to decide if we were going to use the prop 58 or the prop 60 tax treatment. It is a logical OR function, not a logical AND function. Since the house I was buying was of greater value by $200k, than the house he was buying, it made sense to use the prop 58 “loophole”.
ParticipantI’ve been hesitant to join in this discussion. I think some people who post here know… I’m one of those evil heirs who has my parents prop 13 rate on my home. I paid my father market value for the home (in 2003).
The tax savings are only partial. As many of you know we built a handicap accessible granny flat for my inlaws to live in. That new dwelling is taxed at the market value of the completion… well, not really since they deducted for the parts that were specifically addressing the wheelchair accessiblity – we got deductions for the bathroom and the grading/paving for the wheelchair ramps.
We pay more in property tax for the 700sf granny flat than for our home.
In our case my dad had a choice of transferring his prop 13 to his new home, or letting us have it. On the books we kept the rate with this home. Off the books we pooled the two property tax bills and split them with my dad. That was fair in our minds. Seniors who want to downsize have the option of transferring their rate to their new home as long as it is of lesser value and the new home is in a CA county that offers this. (not all do.)
Would we have bought this house without the prop 13 pass through… I’m not sure. The house is in a great neighborhood, great location… but it was expensive. To be fair to my siblings, we paid market rate. (The equity was part of their inheritance also). The lot was also attractive because it was large enough to qualify for building a companion unit… Something new construction didn’t offer. But the tax rate was the deciding factor. We’re extremely conservative, financially and are concerned about fixed costs going forward. We might have relocated back out of this expensive area if the numbers hadn’t worked out.
I live in a neighborhood, heck even my block that has several prop13 heirs. In all but one case – the parent didn’t die – the surviving parent sold the home to the child when downsizing. I’ve talked to 2 of my neighbors who indicate this was a deciding factor for buying from their parents since they already had an established prop13 rate and to start over at new market rate would have broken their budget.
Whether this is fair or not… I can see where people would find it unfair. Would I turn it down? Obviously no.
The fact is – the Prop 13, 60, and 90 all applied when I purchased. The tax rate was a significant factor in deciding to purchase. Any additions impact the tax rate at current value at time of occupancy/inspection sign off.
ParticipantI’ve been hesitant to join in this discussion. I think some people who post here know… I’m one of those evil heirs who has my parents prop 13 rate on my home. I paid my father market value for the home (in 2003).
The tax savings are only partial. As many of you know we built a handicap accessible granny flat for my inlaws to live in. That new dwelling is taxed at the market value of the completion… well, not really since they deducted for the parts that were specifically addressing the wheelchair accessiblity – we got deductions for the bathroom and the grading/paving for the wheelchair ramps.
We pay more in property tax for the 700sf granny flat than for our home.
In our case my dad had a choice of transferring his prop 13 to his new home, or letting us have it. On the books we kept the rate with this home. Off the books we pooled the two property tax bills and split them with my dad. That was fair in our minds. Seniors who want to downsize have the option of transferring their rate to their new home as long as it is of lesser value and the new home is in a CA county that offers this. (not all do.)
Would we have bought this house without the prop 13 pass through… I’m not sure. The house is in a great neighborhood, great location… but it was expensive. To be fair to my siblings, we paid market rate. (The equity was part of their inheritance also). The lot was also attractive because it was large enough to qualify for building a companion unit… Something new construction didn’t offer. But the tax rate was the deciding factor. We’re extremely conservative, financially and are concerned about fixed costs going forward. We might have relocated back out of this expensive area if the numbers hadn’t worked out.
I live in a neighborhood, heck even my block that has several prop13 heirs. In all but one case – the parent didn’t die – the surviving parent sold the home to the child when downsizing. I’ve talked to 2 of my neighbors who indicate this was a deciding factor for buying from their parents since they already had an established prop13 rate and to start over at new market rate would have broken their budget.
Whether this is fair or not… I can see where people would find it unfair. Would I turn it down? Obviously no.
The fact is – the Prop 13, 60, and 90 all applied when I purchased. The tax rate was a significant factor in deciding to purchase. Any additions impact the tax rate at current value at time of occupancy/inspection sign off.
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