Santa Ana, CA · Member since 2016 · 2 posts · 0 votes
Both parents are dead now and the house is held in a living trust that I am co-trustee of with one other sibling. I need to pay out 4 other sibling's interest in the home and am going to move into the house. I'd like to just refi the house (it's paid off) to buy out the other siblings and thereby also keep the tax base as it is. The current tax base is $250k and the homes fmv is about $700k so the reassessment of buying it will add about $5k in property taxes annually.
There will be no personal issues from other siblings, everyone is on board with whatever I need to do to move into the home and buy them out.
Only negative I see now is that I don't know how I'd claim the mortgage tax deduction since it wouldn't be in my name. Can my co-trustee and I each claim half of the mortgage tax deduction?
You really need to understand the value of the problem.
In order to maintain low property taxes and avoid reassessment during the course of trust administration you'll need to obtain a "fiduciary mortgage" to the trust.
If you take the property out of the trust, even temporarily to refinance, or to buy out the other beneficiaries, you'll trigger reassessment.
Fiduciary mortgages will also limit you to borrow only about half the current value, less any existing liens and mortgages, if any. They are also more expensive and higher rates because they are not conventional loans and equity driven.
Thanks @Rick H. I should have pointed out that there is no probate as we are the trustees of the revocable living trust. It seems clear the that our parents could have pulled the property out of the trust, refi it, and then place it back in the trust. What I can't seem to find any info on is if the trustees can do the same after the death of both parents ( ie e original co-trustees).