Property tax implications in LA when real estate is transferred to family

In some cases, a property tax increase can be avoided after a transfer of real estate.

Getting a new piece of property is exciting and stressful. This process can signify the beginning of a new stage of life for the recipient, but it can also result in unforeseen tax implications. In some circumstances, an exception to these obligations may exist.

Who handles property transfer and tax implication decisions? Generally, property transfers are reviewed by the county assessor's office. This local office will determine if the property requires reappraisal and a reassessment of property tax requirements. In the event that the property has increased in value from the previous assessment, which is most likely, property taxes will increase.

In certain situations, a property owner can file a claim to avoid reassessment after a transfer is complete.

Is there an exclusion option to the reassessment requirement in Los Angeles County? The Los Angeles County Office of the Assessor notes that there are two different situations that can qualify for an exclusion of reassessment during real property transfers. These include the transfer of real property from parent to child and the transfer from grandparent to grandchild.

This exclusion is often available in a number of situations, including when a piece of property is inherited.

How can I qualify for the exclusion? There are a number of requirements that must be met for the exclusion to apply.

The exclusion is available for both primary residences and other pieces of property. Primary residents can qualify for an exception regardless of the assessed value of the property, while other pieces of property can receive a benefit for the value up to $1,000,000.

Various pieces of paperwork are required to receive approval for the exclusion. In situations when a parent transfers property to a child, a Claim for Reassessment Exclusion for Transfer between Parent and Child form is required. When the transfer involves grandparents, a Claim for Reassessment Exclusion for Transfer from Grandparent to Grandchild form is generally required.

Are there any time limits? It is important to act promptly to avoid any potential tax ramifications. In general, a person has three years from the date of the transfer to receive the benefits available through the exclusion.

If, for some reason, a reassessment is conducted before approval for the exclusion is granted a reversal may be available.

Is it necessary to seek legal counsel? It is a good idea to get an attorney to help provide guidance while navigating this issue. Real estate matters and tax issues are complicated. There are some situations that require filing of forms and others that result in an automatic exclusion of reassessment (such as a transfer to a spouse). Your attorney can help make sure that your interests are protected.