To transfer property from a parent to a child in California, you sign a deed (or set up a trust or transfer-on-death deed), file it with the County Recorder along with a Preliminary Change of Ownership Report, and then file a Proposition 19 exclusion claim with the County Assessor to protect the property tax basis. The method you choose — gift deed, sale, revocable living trust, or transfer-on-death deed — controls when the transfer happens, whether it avoids probate, and how much your child will owe in capital gains tax if they later sell.
Decide First: Transfer Now or at Death
Before picking a form, decide whether the property should change hands during your lifetime or after you die. This choice usually matters more than any other, because of how capital gains tax works.
When you gift property during your lifetime, your child takes your original cost basis. If you bought the home for $150,000 in 1990 and it’s worth $900,000 today, your child’s basis is still $150,000. If they sell for $900,000, they face capital gains tax on the $750,000 difference. Federal long-term capital gains rates go up to 20%, and California adds state income tax up to 13.3%, so the combined bill can easily reach $150,000 or more.1Office of the Law Revision Counsel. 26 USC 1015 – Basis of Property Acquired by Gifts and Transfers in Trust
When a child inherits property after a parent’s death, the basis resets to the fair market value on the date of death. That stepped-up basis can eliminate the capital gains tax entirely. If the child inherits the same $900,000 home and sells shortly after for that price, they owe nothing.2Office of the Law Revision Counsel. 26 USC 1014 – Basis of Property Acquired From a Decedent
For most families whose main goal is passing the home efficiently, a transfer at death through a trust or transfer-on-death deed is often cheaper than gifting now. It avoids probate and keeps the stepped-up basis. Talk to a tax advisor before you decide, because the capital gains math often outweighs any property tax savings you’d get from an early transfer.
The Four Ways to Transfer
Gift by Deed
The simplest lifetime transfer is signing a deed with no money changing hands. A grant deed includes basic guarantees that you actually own the property and haven’t secretly encumbered it. A quitclaim deed makes no such promises and transfers only whatever interest you happen to hold.3Los Angeles County Department of Consumer and Business Affairs. Understanding Real Estate Documents: Quitclaim Deed For parent-to-child transfers where ownership is clear, either works, but a grant deed gives your child slightly more legal protection.
Sale or Bargain Sale
You can sell to your child at full fair market value, or at a discount. In a bargain sale, the IRS treats the gap between the sale price and fair market value as a gift, so you account for both the sale and the gift on your taxes.4Internal Revenue Service. Publication 544 (2025), Sales and Other Dispositions of Assets This can work when the child can afford part but not all of the cost.
Revocable Living Trust
You place the home in a trust, name your child as beneficiary, and keep full control during your lifetime. You can change the terms or revoke the trust. At your death, the property passes to your child without probate, which in California can take a year or more and creates a public record. Setup with an attorney typically runs $1,500 to $3,000 or more.
Revocable Transfer-on-Death Deed
California allows a simpler probate-avoidance tool. You sign a deed now that names your child as beneficiary, but the transfer only takes effect when you die. You keep full ownership and can revoke it any time. A valid TOD deed must be signed by the owner, witnessed by two people, acknowledged before a notary, and recorded with the county recorder before you die.5Justia Law. California Probate Code Division 5 Part 4 – Revocable Transfer on Death Deed California’s TOD deed law is currently set to remain in effect through at least 2032.
Property Tax Under Proposition 19
Proposition 19, which took effect in February 2021, sharply narrowed the property tax break for parent-child transfers. The old rule let a child inherit the parent’s low assessed value on a primary residence and up to $1 million in other property with no reassessment. That rule is gone.6Board of Equalization. Proposition 19
Now the exclusion applies only if two conditions are met: the property was the parent’s primary residence, and the child uses it as their own primary residence within one year of the transfer. Investment properties, vacation homes, and rentals no longer qualify for any parent-child exclusion.6Board of Equalization. Proposition 19
Even when the conditions are met, the exclusion has a cap. The child keeps the parent’s assessed value up to that assessed value plus an adjusted amount recalculated every two years. For transfers between February 16, 2025 and February 15, 2027, that adjusted amount is $1,044,586.7Board of Equalization. BOE Adjusts the Proposition 19 Intergenerational Transfer Exclusion Amount If the market value exceeds the assessed value plus $1,044,586, the excess gets added to the assessed value.
An example. A home has an assessed value of $300,000 and a market value of $1,500,000. The excluded amount is $300,000 plus $1,044,586, or $1,344,586. The remaining $155,414 gets added to the $300,000 base, producing a new assessed value of $455,414.
To claim the exclusion, the child files Form BOE-19-P with the County Assessor and applies for the homeowner’s exemption within one year of the transfer.8Los Angeles County Assessor. Homeowners – Proposition 19 The BOE-19-P must be filed within three years of the transfer and before the property is sold. Filing late doesn’t permanently disqualify you, but the exclusion only begins from the year you file, not the year of transfer.9Board of Equalization. Proposition 19 Fact Sheet If more than one child receives the property, at least one must live in the home and file for the homeowner’s exemption to preserve the exclusion for everyone on the deed.6Board of Equalization. Proposition 19
Forms You Need to File
The Deed
The deed must include the full legal names of the parent (grantor) and child (grantee) and the complete legal description of the property, which you can find on the current deed or a recent title report.
Preliminary Change of Ownership Report
Every deed recorded in California must be accompanied by a Preliminary Change of Ownership Report (PCOR), which goes to the County Assessor. It captures the nature of the transfer, the relationship between the parties, the Assessor’s Parcel Number, and the property address.10California State Board of Equalization. Frequently Asked Questions Change in Ownership Skipping it adds a $20 penalty to the recording fee.11San Mateo County Assessor-County Clerk-Recorder & Elections – ACRE. Preliminary Change of Ownership Report (PCOR) On the PCOR, the child indicates their relationship to the parent, which is the first step toward the property tax exclusion.
Proposition 19 Exclusion Claim
The PCOR alone does not secure the exclusion. Form BOE-19-P must be filed separately with the County Assessor, and the child must apply for the homeowner’s exemption within one year of the transfer.8Los Angeles County Assessor. Homeowners – Proposition 19 Both forms are available on the County Assessor’s website for the county where the property sits.
Recording the Deed
The parent signs the deed before a California notary public, who verifies identity, takes a thumbprint in their journal, and attaches a certificate of acknowledgment with an official seal.
The signed deed and completed PCOR go to the County Recorder’s Office in the county where the property is located. Filing can be in person, by mail, or through the electronic recording system many counties offer. Recording fees generally follow a base fee for the first page plus a smaller per-page charge, with statutory surcharges added. Expect roughly $15 to $75, depending on document length and county.
Once recorded, the transfer is legally effective against third parties. The original deed is mailed back to the person designated on the recording, usually the child.
Other Costs and Traps to Plan For
Federal Gift Tax Filing
For 2026, you can give up to $19,000 per recipient per year without reporting the gift. Because nearly all California real estate exceeds that in equity, gifting a home means filing IRS Form 709. Filing doesn’t mean you owe tax. The excess reduces your lifetime gift and estate tax exemption, which for 2026 is $15 million per individual, or $30 million for a married couple. Unless your total lifetime gifts and estate exceed that threshold, no federal gift or estate tax is owed.12Internal Revenue Service. What’s New – Estate and Gift Tax Don’t skip the form. The IRS otherwise has no record you used part of your exemption, which creates complications for your estate later.
Documentary Transfer Tax
California counties charge a documentary transfer tax of $1.10 per $1,000 of value, and some cities add more.13California Legislative Information. California Revenue and Taxation Code 11911 A pure gift where the parent receives nothing is exempt under Revenue and Taxation Code Section 11930. The deed should state that no consideration was exchanged and reference the gift exemption. A bargain sale triggers the tax on the portion represented by the sale price.
Existing Mortgage
Transferring a mortgaged home to your child doesn’t wipe out the loan. Most mortgages contain a due-on-sale clause, but federal law prohibits lenders from enforcing it when a parent transfers residential property with fewer than five units to their child.14Office of the Law Revision Counsel. 12 USC 1701j-3 – Preemption of Due-on-Sale Prohibitions The catch: the parent remains personally liable on the mortgage unless the child refinances. Late payments hit the parent’s credit, and the lender can foreclose regardless of who holds title. Both sides should understand this before recording the deed.
Title Insurance
A parent’s existing title insurance policy generally doesn’t protect the child after a voluntary transfer. Standard California policies cover the named insured and heirs who inherit by operation of law, but a gift or sale to a child usually falls outside coverage. Before recording, contact the title insurance company to ask about an endorsement or a new policy. Without title insurance, the child has no protection if a previously unknown lien or ownership claim appears later.
Medi-Cal Planning
If the parent may need long-term care, get advice before transferring. California has a 30-month look-back period for Medi-Cal long-term care applications, so the state reviews asset transfers made during the 30 months before an application is submitted.15California Department of Health Care Services. ACWDL 23-28 – Medi-Cal Look-Back Period If the state finds property was given away to qualify for benefits, it can impose a penalty period of ineligibility.
Separately, Medi-Cal’s estate recovery program seeks repayment of long-term care costs from a deceased beneficiary’s estate, with exceptions for a surviving spouse, a child under 21, or a blind or disabled child of any age.16Medicaid.gov. Estate Recovery Transferring the home before death and surviving the look-back generally moves the property outside the estate, but bad timing can leave a family facing a Medi-Cal lien or a benefit penalty at the worst possible moment. If the parent’s future care needs are uncertain, consult an elder law attorney before signing anything.