How to Legally Transfer Ownership of Your Home Without Paying Higher Taxes

By Danae Aballi

Danae Aballi is a long-time real estate industry veteran. She has worked in various positions in the industry having grown from an independent real estate agent to running a team of 5 top producing agents.

If you plan to leave your home to your children, you might assume they’ll face higher property taxes. But in California, special rules allow you to transfer your home without a tax increase—as long as you follow the right process. Here’s what you need to know.

Proposition 58: parent-to-child transfers. Proposition 58 allows parents to transfer their home to their children without triggering a property tax reassessment. This means your children inherit your lower tax rate, even if the home has increased in value. To qualify:

• The property must be your principal residence.
• There is no value limit—your child can inherit a home of any worth while keeping your tax rate.
• For rental or vacation properties, only the first $1 million in assessed value is excluded from reassessment.

Proposition 193: grandparent-to-grandchild transfers. Proposition 193 offers the same benefits as Proposition 58 but applies to grandparents transferring property to grandchildren. However, this rule only applies if both parents of the grandchild are deceased. If eligible, your grandchild can inherit your property tax rate, preventing a costly reassessment.

What if you own a rental property? If you want to transfer a rental, vacation home, or other non-primary residence, different rules apply.

• The first $1 million in assessed value retains the lower tax rate.
• Anything above $1 million is reassessed at the current market rate.
• If your child wants to keep the lower tax rate on a transferred property, they must live in it as their primary residence.

Transferring property is a big financial decision, and one mistake can cost your family thousands in extra taxes. If you need guidance, I can connect you with a trusted escrow officer who specializes in these transfers. If you have any questions, feel free to call or text me at 949-216-8565 or email me at danae@danaeaballi.com.