Tax/Trust Question in California (Proposition 13)

[Mark McManus]

To whom tax attorney's or CPA's... 

Would it be more advantageous to purchase a home in California from my grandmother and therefore she add me to on title; or wait till she passes (she is 99 yrs old) and then simply buy the home from the executor (my aunt) outright at full price?  Prices are declining but interest rates are going up. Also, the current property tax on this property is $800/annually and if I buy it outright from my aunt, the annual property tax will increase to $1200/monthly. Also, note how Proposition 13 might be a factor in determining best option.

This question stems from me wanting to buy now however what are the other pro's/con's to this? 

[Brad S.]

I am not an attorney or cpa and as always, don't ever blindly follow any advice you get on a public forum. But, I did work for the LA County Assessor a lifetime ago and know a little about prop 13 and less about the newer props passed. 

But, there was that pesky lil prop passed last year, Prop 19, which severely limited the parent to child transfer property tax reassessment exclusion. My understanding is, that a parent to child tfr or grandparent to grandchildren tfr (only if all parents of those grandchildren are deceased), or inheritance from parent, may not trigger a reassessment as long as the child/grandchild is using the property as their primary residence. 

So, if you plan on using it as your primary residence you may be able to "inherit" the low property tax base value, but if/when you stop using it as your primary residence, it can be reassessed to current market value. So, the property tax concern may not be as much of an issue in your decision, if you are not planning on using it as your primary.

And, in my non-CPA experience, it is better to inherit the stepped-up tax basis on the property when the family member passes. That could be the difference of 100k's+ in taxable gains and if you aren't living in the property when it tfrs to you, it can get reassessed anyway!