This is a question for all the trust attorneys, CPAs and those well versed in property tax assessment in California.
Fiancés Grandfather passed away. She wants to keep the cabin in the family, but trying to determine the smartest route to payoff the other heirs, lock in the current property tax amount, and use equity in the home as a form of down payment.
The Grandfather's WILL granted the home to her grandfather's 2 sons (fiances uncles) and my fiancé’s mother. The property title was already held by one of her Uncles, and the currently deceased grandfather. Her 2nd Uncle was added to title after the death.
My proposed strategy is for my fiance to be added to title, or transfer title to a trust containing all heirs and my fiancé. What is recomemnded and why?
1. The main objective is to lock in the low property tax assessment. If we avoid a true sale of the property, I'm under the impression the property will avoid a re-assesment. Can this be done by just adding her to title and then quitclaiming the Uncles off title after they are bought out? Or is this where the Trust plays a key factor in avoiding re-assessment?
2. The property is owned free and clear. She would do cash-out refinance to pay off the heirs. From the financing perspective, she will not be using conventional financing so title seasoning is not an issue (looking for any good Non-QM or Porfolio lenders to jump into the conversation).
3. After the inheritence of the property, is there a step-up in property value basis from a tax perspective after her grandfather's death? If not, would my strategy leave a large potential capital gain in the future if not treated like a sale/purchase?
This is just the start of the conversation, and I know there are additional holes to be filled to better explain the full picture. Appreciate any conversation to help shed some more light on what I am not considering or realizing.
"TAX, LEGAL ISSUES, CONTRACTS, SELF-DIRECTED IRA" seems like a good start for BP categories.
BTW - If you find someone who can address this issue competently pass along the name. I also have a somewhat similar issue I would not mind getting advice on.
@Jesse Hinaman Did you ever figured out what was the best strategy to help avoid an increase of property tax and capital gain?