Property transfer & taxes

[Daniel Bither]

I have a question about a property transfer and taxes. To sum it up: What I’m trying to accomplish is to gain ownership of a home without resetting the property taxes to their current value.

The story: My Grandparents (the trustor) made a trust and included their 4 sons as the beneficiaries of the trust. My Father (one of the 4) passed away years ago without any changes made to the trust. I inherited his share. I agreed with my Uncles that I’d be able to purchase the home from them once my grandparents passed away, which they now have. I’ll happily pay my uncles their share of the inheritance in exchange for the home at a fair price that we will agree upon. They are all pretty agreeable and want me to have the home, so no real family drama. As long as they get paid (which they will) I think they are open to all ideas in and out of the box.

The property taxes are set based on a 1950’s rate and if they reset, I’ll have to pay thousands more for every year that I own the home. I’d rather not keep the property in the trust as I imagine it would be hard if not impossible to borrow money from the home while it would be in my deceased grandparent’s names. Same for asking my uncles for their signatures on paperwork for any future changes to the property for permitted work, insurance claims, etc.

For any real estate investors, lawyers, title officers, or anybody else…Is there a way to transfer property while not triggering a tax rate increase? Any other tips/ideas?

The details:

Located in California, Los Angeles county.

Held in a trust

The home is the only real asset in the trust.

Small mortgage, about $50,000 owed.

No other liens.

[Katie Balatbat]

@Daniel Bither

If the only asset in the trust is the home, it would likely be very difficult to not trigger a reassessment for property taxes.  It might be possible with the correct type of loan to the trust, but would likely increase legal fees and other costs that your uncles may not be willing to go that route.  When did your grandparents die?  Was the property their primary residence?  Will it be your primary residence? You'll want to research some key terms called the grandparent-grandchild exclusion and Prop 19, as Miriam mentioned above.  Probably a long shot that it could work.

*this post does not create an attorney-client or CPA-client relationship.  The information contained in this post is not to be relied upon.  Readers are advised to seek professional advice.