March 21st: Inheritance and Property Transfer with Jonathan Lee

On March 21st, we conducted an online seminar: Mr. Jonathan C. Lee, Attorney joined in and led a discussion about Property Transfer and Inheritance.

Mr. Lee briefed the background of Proposition 13 that prohibits reassessment of Real Property except when there was a change of ownership or completion of new construction. However, there are exclusions: Parent Child Exclusion, Grandparent Grandchild Exclusion of Principal Residence. When Non-principal residence is involved, the gift consideration may apply instead.
A change of ownership will result in a reassessment of Property Taxes to fair market value, unless an exclusion applies. The following exclusions were examined in our seminar.

Proposition 60 allows transfers of real property for individuals aged 55 and up with Property Tax Basis transfer with certain qualifications: One time lifetime use, Claimant or spouse must be over Age 55, Replacement home must be equal or lesser value, within the Same County.

Proposition 90 is for inter-county transfer and has the same requirements as with Prop 60 if the replacement property’s county adopts Prop 90 by Ordinance. Currently it is applicable to the following counties: Alameda, Los Angeles, Orange, Riverside, San Bernardino, San Diego, San Mateo, Santa Clara, Tuolumne, Ventura.

Mr. Lee discussed the Mechanics of Applying for Exclusion: form of transfer and documentation and forms needed.

Mr. Lee also responded to the popular request from our audience about ADU’s.
Accessory Dwelling Units (ADU) is a small dwelling unit that may be established in addition to single family or multifamily dwellings in residential, mixed use, or agricultural zones.
Property Tax Reassessment for ADU’s only applies to the cost of the new addition.

As part of the permitting process, counties will likely require you to record a restrictive sale deed with the property. Most counties have restrictions on the sale of ADU apart from the original main home.

Mr. Lee went on to go through a number of scenarios in which property (primary or investment) is transferred from Owner to their children or grandchildren. How and when the exclusions apply and how capital gains tax becomes applicable in each scenario.

For real estate matters, please contact us at monica.justglobal@gmail.com

For legal advice, please contact
Mr. Jonathan C. Lee, Attorney
at
Law Offices of Jonathan Lee
One Market Street Suite 3600
San Francisco, CA 94105 USA
T: (415) 685 0813
E: jon@jleelaw.com