Should I put my adult child’s name on the deed to my California house?

Usually not, and the reason is a number most people have never been shown. A house left to a child at death gets its cost basis reset to the value on that day, so decades of appreciation are erased for tax purposes. A share handed over during your lifetime is a gift, and a gift carries your original basis with it — so that share keeps every dollar of gain. On a Palo Alto house bought decades ago, putting a child on the deed can hand them a capital-gains bill that inheriting would have wiped out entirely. There are good reasons to want the house to pass smoothly. A living trust usually achieves them without that cost.

Why people do it

The instinct is sound. You want the house to reach your child without probate, without a fight, and without a lawyer’s invoice at the worst possible moment. Adding their name to the deed looks like the simple version of that: one document, done this afternoon.

It is simple. It is also, for most families holding a long-owned California house, the most expensive way to achieve the goal.

The number nobody shows you

Two rules do all the work here, and they point in opposite directions.

Inherited at death: the basis resets. When a property passes at death, its cost basis for capital gains becomes its fair market value on the date of death. The IRS puts it plainly: the basis of inherited property is generally “the FMV of the property at the date of the individual’s death.”¹ California conforms to the federal rule and has no separate estate or inheritance tax of its own.²

Given during life: the basis carries over. A gift is different. The person receiving it takes the giver’s basis — “the donor’s adjusted basis at the time you received the gift.”¹ Nothing resets. Every dollar of appreciation that happened on your watch is still there, waiting.

Put a number on it. A house bought in 1978 for $180,000, worth $4,000,000 today, left to one child at death: the basis becomes $4,000,000 and a sale shortly afterwards produces almost no taxable gain. Put that child on the deed as a half owner during your lifetime instead, and half the house carries a basis of $90,000. When it sells at $4,000,000 their half shows roughly $1,910,000 of gain.

The house is the same house. The decision is a deed.

What it does to the property taxes

California’s second rule is Proposition 19, which replaced the old parent-child exclusion for any transfer on or after February 16, 2021.³

A parent’s principal residence can still pass to a child without full reassessment, but only on conditions people are routinely surprised by: the child has to move in and make it their own principal residence within a year, file for the homeowners’ exemption within a year of the transfer or death, and file the exclusion claim within three years.⁴ If the child does not live there, the exclusion does not apply.

And the protection is capped. The exclusion covers the parent’s existing assessed value plus $1,044,586 — a figure the Board of Equalization recalculates every two years, in effect from February 16, 2025 and next adjusting on February 16, 2027.⁵ Above that ceiling, the assessment is recalculated:

new taxable value = old taxable value + (market value − [old taxable value + the excluded amount])

The Board’s own worked example: a property assessed at $200,000, worth $1.5M, lands at a new taxable value of $500,000.⁶

For a rental or a second home there is no exclusion at all — the Board is explicit that Proposition 19 “contains no exclusion for the transfer of any property other than a family home or family farm.”⁶ And a qualifying home later converted to a rental loses the exclusion it was granted.

Whether a particular deed form triggers reassessment now, later, or not at all is exactly the question to put to the county assessor and an attorney. Santa Clara County’s own guidance says so.⁷

The other objections, stated as what they are

Two more come up constantly. They are worth knowing, and they are attorneys’ practical warnings rather than anything found in a statute:

Your child’s problems become the house’s problems. Once they are on title, their share can be reachable by their creditors and can be drawn into their divorce.
You lose sole control. Selling or refinancing now needs their signature — and their spouse’s, sometimes. Families change. Deeds do not change back easily.

One point often cited in favour of deeding deserves correcting: avoiding Medi-Cal estate recovery. Since 2017, California recovery has been limited to the decedent’s probate estate, so anything passing outside probate is generally beyond its reach.⁸ A living trust achieves that — and keeps the step-up.

What people usually want instead

Not advice about your family, which needs an attorney who knows it. Just the shape of what usually gets recommended:

A living trust. Avoids probate, keeps the property in your control while you are alive, and preserves the date-of-death basis reset. It is the tool most California estate attorneys reach for first, and it is why this page exists — the deed is the DIY version of a job a trust does properly.

A transfer-on-death deed, for simpler estates. Passes the house at death without probate and without giving anything away now.

Nothing at all, deliberately. Sometimes the right answer is to leave title alone and plan the sale instead.

If a sale is part of the plan

This is where the property question meets the tax one, and where the timing matters more than people expect.

If the house will be sold, the difference between selling it during a parent’s lifetime and selling it after can be several hundred thousand dollars on a Palo Alto property — in either direction, depending on the basis, who lives there, and whether the $250,000 / $500,000 principal-residence exclusion is available.⁹ An heir who never lived in the home does not qualify for that exclusion, but usually does not need it, because the step-up has already done the work.

What Maggie can tell you is the part that is hers: what the house would realistically sell for today, what preparation it would need, how long that takes, and how those answers change if the sale happens in two years instead of this spring. Bring that to your attorney and your CPA and the tax decision gets much easier to make.

Sources. ¹ IRS Publication 551, Basis of Assets · ² California Franchise Tax Board, conformity · ³ ⁴ Santa Clara County Assessor, parent-to-child transfers · ⁵ California BOE News Release 25-02 · ⁶ BOE Publication 800-1, Proposition 19 · ⁷ Santa Clara County Assessor, change in ownership · ⁸ California DHCS, changes to estate recovery · ⁹ IRS Topic 701, Sale of your home

Figures current at September 27, 2026. The Proposition 19 exclusion amount changes on February 16, 2027.

Maggie is a licensed REALTOR® (DRE #02117367), not an attorney, an accountant or a tax adviser. Everything here is general information about how these rules work in California, current as of the date on the page, and none of it is legal or tax advice for your family. Decisions about title, trusts and taxes should be made with an estate attorney and a CPA.