@Katie Lepore would taking title with parents as joint tenants with right of survivorship be a good idea?
@Deanne Bourne thanks for sharing that link!
I cannot give legal advice to non-clients, and particularly not on such a public forum with minimal facts. I would suggest that you look into whether holding title as joint tenants will trigger the change in ownership needed to effect pre-Prop 19 benefits.
*This post does not create an attorney-client or CPA-client relationship. The information contained in this post is not to be relied upon. Readers are advised to seek professional advice.
I spoke to someone today about a Dynasty Trust. It is a different and long-lived (generational) trust. I don't have all the particulars yet and I don't want to trigger a "come do" paragraph in my mortgage. Does anyone here have a Dynasty Trust?
Be careful about what you might do to the stepped up basis on the capital gains tax side by changing title. I called several estate planning attorneys and there didn’t seem to be a way out . If you could effect the property tax burden you also effected the capital gains your heirs would have to deal with. Also after a very expensive discussion with my high priced estate and trust attorney I was told that the Board of Equalization who will implement this prop, doesn’t really say what the rules will be. Difficult to play the game without knowledge of the rules.
1031 out of California is my plan.
Here is the California Proposition 19 ballot title: The Home Protection for Seniors, Severely Disabled, Families, and Victims of Wildfire or Natural Disasters Act. This was a name that was carefully crafted by the Democratic politicians who have been in control of the California legislature for about three (3) decades.
It was not submitted or introduced by the California Association of Realtors as someone had indicated. It was introduced by our democratic controlled legislature who approached CAR and obtained their endorsement because this will result in many more real estate sales (and commissions).
Here is my first comment. Everyone that reads this needs to remember that the current politicians did this to us, and they keep doing it to us because we keep voting for them. It is the definition of insanity (keep doing the same thing over and over and expecting a different outcome). We keep voting for the same democrats that have ruined California hoping for a better result. It is time that we all showed up at the polls and voted the current politicians out. It is high time that everyone gets involved. We need to tell them that enough is enough. If we do this, we can take back California and then undo these ridiculous propositions. OK, enough politics.
Yes, you can 1031 Exchange out of California in order to avoid the Proposition 19 problems. However, remember that California has the California Claw Back until someone decides to challenge California on the grounds that it is unconstitutional.
Though the deadline has passed, I wanted to make an update here. One thing that several people in California did to protect family property was to pass their property/estate to their children before they passed by signing a deed over to them. It seems like this was one of the best solutions proposed after spending countless hours researching the situation.
Not sure how everyone else on this thread did. Any updates on what you guys did? Nic Lynette Deanne Collin Bob?
I'm still proceeding with doing a 1031 exchange. We have receive multiple offers 10% over asking price so the market is hot. Great opportunity to move the equity into a multifamily out of state!
Our other properties still TBD but like was mentioned, we might look into what happens with future policies.
When you give away all or part of your property to children during your lifetime, the capital gain tax basis ( or the original cost) of the property for the giver becomes the tax basis for the recipient. If I gave some or all of my house to my son before Prop 19 became effective he might dodge the property tax increase upon my death BUT he would inherit my tax basis for capital gains taxes when he sells after or before my death. My house was $150k 40 years ago. If I transfer say 50% to my son while I am alive, when I die his basis for the part has a tax basis of $150k. So the property is now worth over $1M so if I gave him half his capital gains after my demise now. 1M - 150k=. 850k His tax obligation for capital gains is calculated on half $850k if I expired today. The other half gets a stepped up basis so no capital gains tax.
If I give him nothing. If I will it to him; when I die he gets a stepped up basis if he sells before it appreciates during his ownership. If it appreciates starting the day after I die he pays capital gains on that appreciation.. The huge equity I have made it a poor decision to share title now .
CA is lame