Parent-Child Exclusion from Property Tax Reassessment Not Automatic…

Dear Mr. Miller:  I just received a tax bill from the county tax assessor for $10,000 more than it should be.  Something is wrong!   What can I do?

My Mom died 5 years ago.  I inherited the house.  It’s been rented out for some time.  This is the first property tax bill I have received.  According to the appraisal my attorney had me do, it was worth about $1.25M when she died.  But because of the parent/child exclusion from property tax re-assessment I am supposed to continue paying property tax at her old level, based on a $250,000 value. 

I called the tax assessor and they said there was nothing I could do about it–it was too late.  They had been mailing everything to my mom’s house for years.  This is going to force me to sell the house.  What can I do?

Panicked Daughter

Parent Child Exclusion
Claim Form Required
Time Limit
Prospective Relief
Hiding vs Checking
Update Addresses

Dear Panicked:

Parent Child Exclusion:  You have fallen into a giant trap.  Yes, you are correct, since you were the only one to inherit from your Mom and since you are her child, the property should have been exempt from re-assessment; so you should have kept the old property tax base and been paying tax at the $2,500 level instead of $10,250.

Claim Form Required:  But to get that treatment, a special claim form needs to be filed with the tax assessor to obtain that exemption.  The form is available on most tax assessor’s websites.  Often, they even mail it to you.  Depending on the circumstances, it is typically a very easy form to complete.  In the more complex situations, we generally send in the completed form for the client with a letter explaining what occurred with the inheritance and the reasons why the transaction qualifies for the exemption.

Time Limit:  Here’s the rub:  If you don’t file you don’t get the exemption and even if you do file but file late you may not get the exemption.  So as with most things in the law, you have to do things correctly. 

The time limit is three years after your Mom died or a transfer of the property to a third party, whichever occurs first.  This situation is over three years so you are obviously late and the property taxes for the last 5 years, along with penalties and interest will have to be paid.

Prospective Relief:  There is, however, one saving grace.  You can still apply for the exemption and obtain relief, but it will be prospective only.  Of course, that is certainly better than nothing. 

Hiding vs Checking: Now before all of my readers start feeling overly sorry for you, didn’t the fact that you had not received property tax bills in 5 years alert you to think that something was off?  Had you checked with the tax collector you would have noticed that the address had not been updated and that the property tax had increased substantially.  That should have caused you to start checking further and almost undoubtedly found out that you needed to file the exemption claim form.  In other words, no news is not necessarily good news.

Update Addresses:   The lesson to be learned is that you should make sure that all billing agencies (i.e. the tax assessor and collector) have updated addresses for you.  Don’t try to hide from these things.  And maybe you should speak to your attorney as to whether a claim form had been filed.  If so, you may be able to still save the family bacon.