All Forum Posts by: Yonathan Randolph

In California, one of the laws passed during the last drought encourages (and requires for new construction) water submetering of apartment buildings (SB 7 https://leginfo.legislature.ca... see https://caanet.org/kb/water-su...). The water meters have to be certified (right now there are only 8 certificated meters https://www.cdfa.ca.gov/dms/ct...) and regularly inspected by the local authority

The guest is probably wrong about rent control restricting him from raising the rent next year. If you rent out a single-family house or condo as a single rental unit, then it is exempt from San Francisco’s 60%×CPI rent control thanks to California’s Costa-Hawkins law (Civil Code 1954.52 https://leginfo.legislature.ca...). A single-family house or condo owned by a human (not owned by an REIT, corporation, or LLC) is also exempt from the statewide CPI+5% rent stabilization law (AB 1482 https://leginfo.legislature.ca...), although you have to include a notice in the lease that it is exempt. So it is probably safe to rent out the unit today and keep raising the rent to market rate in the future.

However, although a single-family house or condo in San Francisco does not qualify for “rent control”, all rentals now qualify for “just-cause eviction protection” due to a new ordinance that took effect Jan 2020 (https://sfbos.org/sites/defaul...). Also, you can’t raise the rent substantially over market rent with the intention of eviction by rent increase (https://www.kqed.org/news/1183...). So if you ever intend to move back in to the condo or sell it, then you may not want to rent it out, since you won’t be able to evict the tenant based on your own life events.

@Alice Chen, no, I meant that if the property is already assessed at over $1 million, then only the first $1 million of transfer is excluded from change in ownership under Proposition 58 if you do it by Feb 15, 2021, and so you can transfer whatever percent that adds up to $1 million of assessed value.

I think you are describing a joint tenancy, in which the “original transferors” are treated as the owners under Proposition 13 and 100% of the property is transferred to the “other than original transferors” when the “original owners” die (basically, creating a joint tenancy to add a child is treated similar to a will) (BoE rule 462.040 https://www.boe.ca.gov/proptax...). I didn’t discuss this at all. You’re right that the 100% transfer when the “original transferors” die will cause reassessment to fair market value if the property is not a “family home” of the parent and children due to Proposition 19.

Here are some more ideas in this webinar by Gina Lera (https://capfamilybus.org/webin...). She suggests intentionally defective irrevocable trusts as a way to to a change in ownership under Proposition 19 but that don't transfer the property yet according to capital gains taxes. Or to put the property into an LLC and give minority ownership to each child.

Hi. I wrote down my thoughts about Proposition 19 in this blog post (https://blog.yonathan.org/post...). Basically you have to transfer an investment property to a child by February 15, 2021 (before Proposition 19 becomes effective) to be excluded from a “change in ownership”. But then you lose the step-up in basis, and if it’s a gift then the child will owe capital gains taxes when he sells. One possibility to reduce capital gains taxes would be to sell the property to the child at fair market value with seller financing (which I heard of on the Real Estate podcast e.g. https://www.biggerpockets.com/...).

But I’m not sure how selling to a child in installments interacts with the parent’s mortgage. Can you can sell a property to a child in installments if you already have a mortgage, or do you have to refinance in both your and your child’s name first? Is it possible to get a loan for repairs after signing a seller financing agreement, or do you have to pull out all the cash you need beforehand?

For ADUs that are enabled by state law (in main building or in separate building), ADUs (http://leginfo.legislature.ca....) must not have an owner-occupancy requirement between 2020 and 2025 per SB 13 (2019) (https://leginfo.legislature.ca...).

For JADUs that are enabled by state law (≤500 sq ft within the main building), they *do* have an owner occupancy requirement (http://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=GOV§ionNum=65852.22.)