Family Partnership

What happens to property taxes?

When done correctly, there will be no property tax reassessment. A change in ownership does not include a transfer between any person and a partnership in which the proportionate share of that person’s ownership in the subject real estate remains the same (California Revenue & Taxation Code Section 62(2)).

In establishing your partnership with your children, a small percentage of the interest in the underlying real estate will be transferred, first to the children. Together, you and the children will transfer the real estate to the family limited partnership and receive in return limited partnership shares in the same proportion to your ownership in the real estate. This technique which we have used and recommended has been specifically approved in a recent decision, Hunter v. County of Santa Barbara (1995), 37 Cal Ap 4th 1672, 44 CR 2d 606.