You can gift a house to a family member in California by signing and recording a new deed. For tax purposes it is a gift: you usually file a federal gift tax return (Form 709), and the recipient takes your original tax basis instead of the stepped-up basis they would get by inheriting it. The county also reassesses the house unless an exclusion applies, such as the Proposition 19 parent-child exclusion. Gifts to a spouse who is a U.S. citizen are the exception: no gift tax return for the transfer and no reassessment.
Gift vs. inheritance: the basis difference
When a child inherits a house, the tax basis becomes its value on the date of death. When a parent gifts the house while alive, the child keeps the parent's basis, usually the original purchase price plus improvements.
| Gift during life | Inheritance | |
|---|---|---|
| Child's tax basis | Parent's basis carries over | Steps up to date of death value |
| Federal return | Form 709 gift tax return | Form 706 only for larger estates |
| Property tax (Prop 19) | Reassessed unless the family home exclusion applies | Same rules |
| Appraisal needed | Value on the gift date | Value on the date of death |
In Marin and San Francisco, where many parents bought decades ago, the difference can be large. A house bought for $300,000 and worth $2 million carries a $1.7 million built-in gain if it is gifted, and close to none if it is inherited. Families weighing the two should talk with a CPA before signing a deed.
Gift tax and Form 709
Few people actually pay gift tax. A gift above the annual exclusion ($19,000 per recipient in 2026) just requires a Form 709, and the value counts against the lifetime exemption, which is $15 million per person in 2026.
The return needs a credible value as of the gift date. A gift tax appraisal from a qualified appraiser supports adequate disclosure on the return, and adequate disclosure is what starts the IRS's time limit for questioning the gift.
Proposition 19 and property taxes
A gift is a change in ownership, so the county assessor reassesses the house to market value unless an exclusion applies. Under Proposition 19, a parent-to-child transfer keeps part of the old assessed value only when the house was the parent's primary residence and the child makes it their own primary residence within one year and files the claim with the assessor.
Rentals and second homes are reassessed in full. The exclusion also covers only value up to roughly one million dollars above the existing assessed value, adjusted periodically.
Adding a child to the deed
Adding a child to the title is a gift of part of the house, usually half. That one step has the same consequences on a smaller scale:
- If the share is worth more than the annual exclusion, a Form 709 is due for the year of the gift.
- The child takes the parent's basis on the gifted share, so that share loses the step-up it would have received at death.
- The assessor may reassess the transferred share unless the Prop 19 exclusion applies.
- The house becomes partly the child's property, exposed to the child's creditors, divorce or later decisions.
Many families use a living trust or a revocable transfer on death deed instead, which pass the house at death and keep the step-up. An estate planning attorney can say which fits.
Gift tax appraisals in Marin and San Francisco
RealVals values the house as of the gift date, including gifts made in earlier years. Austin Fernald, a California Certified Residential Appraiser, inspects every home himself. Fees start at $500 for a single-family house or condo, with a free quote within one business day. See gift tax appraisals, or CPAs can order for a client.