If you own a home and want to leave to a family member, you may be able to transfer it while you’re still alive. When properties are transferred, the taxes are usually reassessed to determine how much tax the new owners will pay. However, there are ways to avoid tax reassessments so that the party receiving the property isn’t responsible for higher taxes.
Tax Reassessments Exclusions
When property is transferred to certain family members or trusts, then the property’s tax value doesn’t need to be reassessed. Property taxes do not have to be reassessed if the transfer is between or to spouses or domestic partners, from parents to children, into revocable living trusts, or into irrevocable trusts.
To ensure that the transfers are done correctly, you should hire real estate lawyers in Santa Barbara, CA to legally complete them.
Transferring Property
When property transfers are between married spouses, ex-spouses, or domestic partners, the properties are excluded from tax reassessments. While additional documentation may need to be shown to complete the transfer, there are no forms to fill out. Santa Barbara real estate lawyers can tell you what documentation you may need to show.
If parents want to transfer real estate to children, its taxes don’t need to be reassessed but there are limitations. Each parent can transfer a primary residence and up to $1 million of the full cash value of a second property to a child. The full cash value of the second property is the assessed value, not the market value, so the property may be worth more than $1 million depending on when it was first assessed. Real estate lawyers can further explain these limitations to you and your spouse.
Property transfers can also be made to trusts without the taxes being reassessed but, since trusts are complicated, consult with real estate lawyers about this type of transfer.
