“Are you an original owner of your home”? This is a question posed frequently to our elderly Long Beach residents. In fact it has become somewhat of a neighborhood game to be able to identify our original owners. What is also amazing is the low property taxes these original owners pay. Due to Prop 13 it isn’t unheard of to have tax bills below $1,000 a year.
Did you know that the owner of these homes can pass the ownership to their children through either a sale, gift or inheritance and the child can retain that low tax base using Proposition 58.
I recently sold a house for a family after their mother passed away and it has brought up the topic of Prop 58 and how it works. I met with the family shortly after their mother’s passing in April to discuss the options of selling the house “as-is” or investing some time and money into improvements to increase the sales amount. They choose option two. They worked quickly and had the home ready for the market in June. It looked great with new flooring, fresh paint and staging. It sold quickly and the home changed ownership at the end of July.
We call this type of a sale a Trust Sale. Most often the children go back to the attorney who created the Trust for guidance. I assumed that the attorney would make them aware of necessary paperwork to complete, including those for the Parent-to-Child exclusion from re-assessment, but you know what they say about assuming.
Last week the family received a supplemental tax bill last week for $1,300 due to re-assessment between the date of death in April to the sale of the property in July. The good news they have 6 months after the sale to a third-party to submit the proper paperwork. Here are links to a Guide to Propositions 59 and 193 (transfer from grandparent to grandchild) and to the form you need to submit to avoid reassessment. I highly recommend you talk to your attorney or financial advisor as well.
Real Estate Expert, Neighborhood Enthusiast