858.792.5988

Serving San Diego for over 35 Years

Clients, Colleagues, and Friends,

I retired on Dec. 31, 2019, and officially closed my office, after 42 years of practicing law. I thank you all for your confidence in me and your friendship over the years. My colleague David Dufek who has shared the suite with me for the past two years is taking over my practice and will have all client files. Not only will David be taking over the practice, he remains in the suite and is taking over my fax and phone lines. You are free to leave your files with David or pick them up. David's practice like mine includes will, trusts, and probate, as well as personal injury work. He also does landlord - tenant work and debtor - creditor matters including bankruptcy.

I wish you all the best.

Alex

Avoid 3 Common Real Estate Tax Pitfalls in Property Inherited by Your Child

Advice from a San Diego Estate Planning Attorney:

There are Huge Real Estate Tax Savings Available to Property Inherited by a Child if You Avoid 3 Common Pitfalls

Proposition 13 affords great real estate tax savings when a child inherits a home directly from her parents.  California law permits real estate to be passed from parent to child without the property being re-assessed for property taxes.  In other words, the child receives the same real estate tax basis held by the parent.

This offers significant savings because the value of real property for assessment purposes may only be raised by 1% each year, unless the property changes hands.  A parent to child transfer is not recognized as a “change of hands” if the proper forms are filed at the county tax assessor’s within three years of transfer.

However, without proper advice from our San Diego estate planning lawyer, this benefit is often lost.

Here are 3 common pitfalls:

  • Parents leave property to all children.  One child wants the house and buys out her siblings.  The exclusion from reassessment is lost as to the siblings’ percentage of the property.
  • The house is transferred to a life partner for life with the remainder interest going to a child.  The exclusion from reassessment is lost.
  • The house is transferred to a grandchild, not a child.  The exclusion is lost if either of the grandchild’s parents are still living.

Why it matters:  Take a look at the potential savings

Wanda buys a house for $300,000.  Some 30 years later the house is worth $1.2 million and property taxes are about $5,000 per year.  If the real estate is transferred without the parent/child exclusion, the taxes would be about $12,000 per year.  So, the real estate tax savings would be about $7,000 per year (and each and every year!)

Where to get help

To take advantage of the transferred tax basis savings of Proposition 13, be sure to call our San Diego estate planning lawyer for a consultation at 858-792-5988.