Legal Question in Tax Law in California

Re: taxes on a transfer of property

A transfer between a parent and a child (in either direction) will not create a reassessment for property tax purposes, but you must file an application after the transfer with the county.

They will receive your basis in the property. When they sell, they will be required to pay capital gains. If they live in it for 2 years, they will be entitled to a $500K exemption.

Re: taxes on a transfer of property

this would also be a taxable gift for federal gift tax purposes and a gift tax return should be filed. the first $22,000 would be excluded by the current annual gift tax exclusion ($11,000 per donor per donee), but the balance would be taxable. you will use part or all of your $1,000,000 lifetime exclusion, which means that if your equity in the property is $1,022,000 or less no gift tax will be due.

you should also be aware that as the property is not your personal residence, the child-parent exclusion for real property tax reassessment purposed is a maximum of $1,000,000 (assessed value, not equity), assuming you have not previously claimed all or part of this exclusion for prior transfers to parents or children.