San Diego Estate Property Tax Reassessment

and How to Avoid it

San Diego Estate Representatives, i.e. administrators, executors and trustees should be aware of the rules when it comes to San Diego estate property taxes because it could literally mean saving thousands of dollars. The benefits granted under these propositions can only be obtained if the proper legal forms are completed and filed. There are time limits and deadlines that apply. There are two propositions that apply:

Proposition 58 – Transfer between Parent and Child

It is common that a deceased parent may have bought a home decades earlier for substantially less than the current value. When the parent passes away the beneficiaries will receive the decedents home with a current market value of 10X original purchase price.

Using the scenario that the San Diego estate home was originally purchased for $50,000 and today it is valued at $500,000:

• Do the beneficiaries pay the property tax based on the original $50,000 assessment or on the current value of $500,000? If the beneficiaries are the decedents children, Proposition 58 allows the child to retain the old property tax basis of $50,000! The requirements to qualify for San Diego property tax Proposition 58 are that the deceased person doing the transfer (the parent or the child, must have owned the home). Meaning either the parent passes away and the home is being given to the children or the child passes away and the home is being given to the parent(s). This will mean hundreds, if not thousands of dollars of savings in San Diego estate property taxes.
• The person receiving the home must be the parent or the child. Under Proposition 58, a “child” may be a son, daughter, son-in-law, daughter-in-law, stepchild, or child adopted before the age of 18.
• No dollar limitation is placed on the original owner’s principal residence. The parent’s home could be worth 5 million dollars at the date of transfer, but if it was originally purchased for $100,000 then the San Diego estates property tax basis is going to be approximately the same property tax amount that the decedent had been paying.

The exclusion is not automatic because a “Claim for Reassessment Exclusion for Transfer between Parent to Child” form must be filed within 3 years of the death.

Proposition 193 – Transfer between Grandparent and Grandchild

A home that is transferred from grandparent to their grandchild may also be excluded from reassessment. The parent of the grandchild MUST be deceased as of the date of the transfer.

Again…The exclusion is not automatic. A “Claim for Reassessment Exclusion for Transfer between Grandparent to Grandchild” form must be completed and submitted.

When helping to prepare, market and successfully sell a San Diego estate home experience shows 50% of the time, the administrator, executor or trustee are unaware that there may be an added expense for the San Diego estate in the form of increased San Diego property taxes.

The San Diego property tax rate is equal to approximately 1.25% of the property’s assessed value at the time of purchase. When a San Diego estate property changes ownership, the assessed value then becomes equal to the current market value of the property i.e. the date of death is a change in ownership. From date of purchase the San Diego property taxes are based on the purchase price along with Proposition 13 which mandates that the yearly increase in San Diego property taxes does not exceed 2% of the previous year’s value.

The key to avoiding the San Diego estate property tax increases is to avoid a change in ownership. But, because of the death, there will be a transfer ownership, so research to see if the transfer qualifies for one of the following exclusions allowed with Proposition 58 or Proposition 193. It is easy to take full advantage of retaining the current property taxes by simply completing and submitting the proper documentation.

Feel comfortable calling me, Kim Ward, at 619-741-0111 or reaching out by email to KimWard@ProbateAndTrustHelp.com for a complimentary copy and instructions for the documents necessary to file for the exclusion of San Diego estate property tax reassessment.