Would we somehow also be able to benefit from preposition 19's parent to child transfer?

They plan to sell H1 for 3M and plan to move into H2 in the next several months but are worried about losing the basis transfer from H1 to H2 if they convert H2 to primary because they did not buy H2 after selling H1Prop 19 says that for basis transfer, new property must be purchased within 2 years of sale of the current home.

@Darian Gore Here are the things that many CPAs support their clients with:Understanding tax impact of short-term vs. long-term vs. flip before you buyWhich entity structure is best for goals and investment property typeTax and compliance on LLC or S-CorpHow to transfer property out of personal name into LLC (hard to buy 1st through entity)Ways to optimize taxes throughout the yearHow best to set up accounting to track income and expenses (doing this late is a mess)Feedback on property management systems, accounting systems. systems, etcEstimated payments to avoid penaltiesKnowing when to file and getting things in on timeMaybe a few things I missed, but this is the high-level ….. if you can get answers to the above questions on your own, plan, and file your own taxes then you can avoid the expense of a CPA.

@Chris McKay I have been researching some more plans and I came up with starting a holding company LLC as a parent company for each of the subsidiary LLCs that will on their own protect each property separately with this I will also be able to utilize an S-Corp which will be attached to my Holding Company LLC and each subsidiary LLC will transfer the funds into the Holding Company LLC to cut down on my self-employment taxes by paying myself a W-2 along with dividend distributions paid out to the owner aka myself throughout the year.

Why shouldn't taxes be raised upon this transfer of ownership, similar to other transfer of ownership tax triggers?

We decided we'd like to transfer ownership to our children so we can help them avoid the new Proposition 19 law that requires property tax reassessment upon inheritance.

While looking I came across something called a dynasty trust it said you could have an LLC in Wyoming, transfer your properties to it and you'd be sheltered from estate taxes for up to 1000 years.  

If my parents transfer the property to me will the exclusion apply to the entire property or will it be pro-rated (given that 2 units are rented to tenants)?

If the property has already transferred to three siblings, the act of a buy out will trigger reassessment on 2/3 of the property.If the property is still in trust and has not yet been distributed, there may be more options.

Then you shouldn't have any issues with the transfer of the property upon their death.