Holding Title To Your Property

If you are considering adding someone to the title of your property for estate planning purposes or taking yourself off title in favor of someone else while still wanting to live on the property, it is important to understand the possible consequences of such changes. As County Assessor, I can only comment on the property tax implications of such changes. Property owners should consult their legal or financial advisors for a better understanding of income, capital gains and inheritance tax consequences before recording any changes in title.

Homeowner's Exemption: No Longer Qualify Examples

A couple decided to deed their property to their son and his wife but continue to occupy the residence. They had owned the home for many years. With the passage of Proposition 19 in November 2020, deeding to their children will trigger a reappraisal because the intergenerational exclusion only applies if the children move into the home with them. Unfortunately, since the parents removed themselves entirely from ownership, they are no longer entitled to the homeowner’s exemption, which had reduced their property taxes approximately $71 per year. If they had deeded ninety-nine per cent of the home to their children and retained one per cent, they would have been entitled to keep their homeowner exemption since they were still “owners” of the property. While $71 per year is not a lot of money, there were different estate planning techniques they could have used instead of deeding over the property that would have retained their homeowner’s exemption.

Adding people to title can also cause property tax complications. John Doe is a 100% disabled veteran and is entitled to at least an annual $100,000 exemption on his principal residence, which means approximately $1,000 per year property tax savings. John’s wife dies and he decides to put his daughter on title to the property for estate planning purposes. Since John now owns only one-half of the property and his daughter is not entitled to the exemption because she is not a spouse, John is now eligible for only one-half of his exemption or $50,000, which means that he has lost $500 per year in tax savings. 

Senior citizens over 62 and disabled persons of any age whose income is below $51,762 per year are entitled to postpone their property taxes for as long as they live in the property. Joseph and Edna Jones are both eligible for property tax postponement and have done so for many years. Jason dies and Edna decides to add her niece, who is not 62, nor blind nor disabled, to the property for estate planning purposes. Edna is no longer eligible for property tax postponement because one of the owners of the home is now not eligible for postponement and is not a direct-line relative of Edna (parent, child or grandchild only). Again, Edna would have been able to retain her postponement status if she had used a different estate planning technique that did not involve granting title directly to someone else. I always recommend seeking professional help when considering any changes to the title of your property.

Should you have any questions please contact Napa County Assessor-Recorder-County Clerk John Tuteur at 707.253.4459 or by e-mail [email protected] More articles can be found at http://www.countyofnapa.org/149/Assessor/