YOUR QUESTIONS ANSWERED: IF SIBLINGS INHERIT A FAMILY HOME, WILL THE PROPERTY TAXES GO UP?

Under Proposition 13, property is reassessed to market value when a change of ownership occurs. This can result in a higher property tax bill for siblings who inherit a parent’s home if one wishes to buy out the other or others. Even if one of them moves into the home and qualifies for the limited exclusion from reassessment under Proposition 19, the sibling buyout will trigger partial reassessment.

Any change to the title of a property will cause reassessment of the percentage of the property that changes ownership, unless there’s a specific exclusion in the law to prevent it. While there is an exclusion from reassessment for transfers of ownership between spouses, there has never been an exclusion for transfers between brothers and sisters.

This year, the Howard Jarvis Taxpayers Association supported a bill to allow siblings who inherited a parent’s home to have a limited window of time to buy out each other’s interest in the property without any change to the property tax bill, as long as one sibling intended to move into the home and claim the partial exclusion from reassessment under Prop. 19. Senate Bill 284 by Sen. Kelly Seyarto passed the Senate but unfortunately did not advance in the Assembly.

As a general rule, it’s a good idea to check with a tax professional or an attorney before making any changes to the title of a property. In addition to the effect on property tax reassessment, changes to the title may trigger capital gains taxes.

Homeowners who disagree with the County Assessor’s valuation of their inherited property have the right to appeal. It’s useful to keep before-and-after documentation of any remodeling. A professional appraisal at the time of inheritance may also be helpful.

For more information about property tax assessment in California, visit the State Board of Equalization’s website at boe.ca.gov/proptaxes/proptax.htm, call the BOE’s property tax department at 916-274-3350 or email PTWebRequests@boe.ca.gov.