Further, this Proposition includes all types of real property owned by the transferor including all the value of his/her principal place of residence and on the first one million ($1 million) of the enrolled value of all other types of property. A mother or father can combine their exclusion for a limit of $2 million dollars.

Definitions And Terminology

Children: Children include the following: sons and daughters, sons-in-law and daughters-in-law, stepchildren, and children adopted under 18.

Gift-Purchase: Transfers as a gift or purchase between parents and children are excluded with a completed prop. 58 form.

Principal Residence: Proposition 58 does not require that the parent or child use the transferred property as his or her principal residence. In addition, the $1 million dollars does not apply to the transferor's principal residence.

$1 Million Dollar Exclusion: The $1 million exclusion for other property applies for each transferor. Therefore, a mother can transfer $1 million of other property and a father can transfer $1 million of other property for a total combined exclusion of $2million dollars.

Legal Entities: Generally, transfers directly between legal entities owned by parents and children are not entitled to the benefits of this measure. However, if the entity is solely owned or the owners are the sole beneficial owners of the property, the transfer may be excluded from the reassessment under certain circumstances.

Trusts: A transfer to or from a trust is treated just as a transfer to or from the trustor personally, provided the trust is revocable or the trustor retains the present beneficial use, possession, or enjoyment of the transferred property.

Date of Death or Decedent: The date of any transfer between parents and their children under a will or intestate succession is the date of the decedent's death, provided that the decedent died on or after November 6, 1986.

"Third Party" Defined: A third party is any person or entity that is not a transferee or transferor in the transfer between the parents and children.

"Transfer of the Real Property to a "Third Party": For filing purposes, a transfer of real property to a third party occurs when all the real property received is transferred to someone other than an original transferee or transferor. Therefore, a transfer may qualify for an exclusion when a partial interest in the property received is transferred to a third party prior to an application being filed.

Filing Requirements: Current law requires that the claim be filed within three (3) years after the date of the transfer of real property or prior to the transfer of real property or prior to the transfer of the real property to a third party, whichever is earlier. However, even if a claim is not made within this filing period, a claim is considered timely if it is filed within anytime prior to or within six (6) months after the mailing date of a Notice of Supplemental Assessment or Notice of Proposed Escape Assessment, whichever is later. For example if a taxpayer received a Notice of Supplemental Assessment for a parent-child transfer dated January 1, 2004 and then received a Notice of Proposed Escape Assessment dated April 1,2004, the taxpayer would have six months from April 1, 2004 to file a claim with the assessor.

Sally Martin REALTOR®, has provided this information as a service. Since every situation varies, it is strongly advised to seek counsel from independent tax advisors, tax attorneys, and /or CPA.

    Provided upon request is a complimentary no obligation market evaluation giving you the current value of your home. Whether or not you are considering selling, our comprehensive market update and property evaluation report is invaluable and will update your records.

    The information on this page is brought to you courtesy of the California Department of Real Estate.

    For more information or to discuss your requirements call me on 949-632-6363 (Cell). You may send me a fax on 949-675-2156 or email me at sally@sallymartinrealtor.com.