What Is Needed To Qualify For Proposition 58?

Qualifications for California Proposition 58 is set by the California Board of Equalization and administered by the County Tax Assessors office where the property is located. We recommend you contact a qualified Trust & Estate Attorney familiar with California Proposition 58 for any legal advice or assistance. Not every Assessors Office works the same, but generally speaking here are some of the items that may be required to receive an exclusion for property tax reassessment.

1. The principal place of residence must be eligible for a Homeowners’ Exemption or Disabled Veterans’ Exemption before the transfer. This residence need not be the new principal residence of the person that acquired the property.
2. No limit is placed on the assessed value of a principal residence that may be excluded from reassessment.
3. In addition to tax relief on the principal residence, you may claim an exclusion on transfers of other real property with an assessed value of up to $1,000,000.
4. The $1,000,000 exclusion applies separately to each eligible transferor. A $2,000,000 limit applies to community real property of an eligible married couple.
5. Transfers by sale, gift, or inheritance qualify for the exclusion.
6. Transfers between parents and children as individuals, from grandparents to grandchildren as individuals, between joint tenants, from trusts to individuals, or from individuals to trusts may qualify for the exclusion. Transfers from grandchildren to grandparents are not eligible for this tax relief.
7. Transfers of ownership interests in legal entities, aside from most trusts, do not qualify for the exclusion.
8. A claim must be filed within 3 years after the date of purchase or transfer for which the claim is filed or prior to transfer to a third party, whichever is earlier, or within 6 months after the mailing of the notice of supplemental or escape assessment, issued as a result of the transfer for which the claim is filed. Untimely filed claims are subject to certain conditions, i.e., the property must not have transferred or resold to a third party and the claim will only apply to future tax years.
9. If reassessment of your property occurs before the approval and processing of your timely filed claim, the reassessment may be reversed. In these situations, a corrected tax bill and/or a refund will be processed.
10. When a trustee or estate administrator has the power to distribute trust assets on a pro rata or non-pro rata basis, the distribution of real property to one child  qualifies for the parent-child exclusion if the value of the property does not exceed that child’s interest in the total trust estate. A trustee who elects to make a non-pro rata distribution may equalize the value of the other beneficiaries’ interests in the trust assets by encumbering the real property with a loan and distributing the loan proceeds to the other beneficiaries. However, a loan cannot be made by any of the beneficiaries of the real property to the trust in order to equalize the trust interests. Such loan would be considered payment for the other beneficiaries’ interests in the real property resulting in a transfer between beneficiaries rather than a transfer from parent to child, which would disqualify the transfer from the parent-child exclusion.
    Additional information located here on the California BOE website: https://www.boe.ca.gov/proptaxes/pdf/lta08018.pdf
11. California courts recognized that a taxpayer is required to provide any relevant information requested by the assessor for property tax assessment purposes. If a taxpayer fails to furnish complete information necessary to enable the assessor to make an exclusion eligibility determination, the assessor must still perform that statutory duty even if based upon incomplete evidence, which may result in a denial of the exclusion. A claimant is required to provide information sufficient to support the claim as a condition of receiving the exclusion. Evidence about the identity and interests of the trust beneficiaries, the powers of the trustee to distribute the trust property and assets, and other terms relevant to the disposition of the trust assets is necessary for the assessor to determine whether the parent-child or the grandparent-grandchild exclusion applies. Thus, it is necessary for the trustee to provide an entire copy of the trust rather than a mere certification of the trust.

 

Please view the Proposition 58 Resources page for additional information.