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Grandparent to Grandchild Exclusion

Yesterday’s focus was the parent to child exemption for re-assessment in California property taxes. This is a booming area of law as Counties are desperate for tax revenue and finding people who do not do all their tax forms right can be an easy way to make more money. The key with property taxes is it happens every year!  Thus it’s important to know your rights and make sure you file the right forms with the county assessor in the county where the property resides.

The parent to child exclusion applies to transfers from a parent to child.  The grandparent to grandchild exclusion is similar but applies to a transfer (at death or during life) from a grandparent to a grandchild WHERE THE GRANDCHILD’S PARENT IS DECEASED.  It’s very much like the IRS rule relating to the generation skipping transfer tax.  You look for a skip person to be deceased; i.e. the parent of the grandchild or child of the grandparent if you will.

This is very important to keep in mind when transfers are made from a grandparent to a grandchild of real property in California.  Make sure you file the proper form within 3 years of death OR BEFORE ANY TRANSFER!  If you sell to an outsider you lose the ability to preserve the property tax basis and can get hit with a wicked supplemental tax bill covering the time from the date of death through the date of sale.

Do not sleep on property taxes!

-John

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