Title Change Without Triggering Tax Reassessment

5 Replies

I have an opportunity to co-sign on a home refinance loan and in return, take 50% equity in a SFR in California. Currently, the Title is in the name of the current homeowner, who is having difficulty making her current payments under her existing loans (Primary Mortgage and HELOC). Homeowner has limited income to qualify for a refinance on her own. The idea is; I assume part of the risk in guaranteeing the loan, in exchange for equity in the property.

Question: is there a creative and successful way of re-titling the property using a similar name or trust as the homeowner, WITHOUT a property tax reassessment? The home has appreciated significantly and we would hate to burden the homeowner with higher property taxes.

Property is in L.A. County.

I am not a CPA or attorney.  Is the house currently in a trust?  is the trust revocable or irrevocable? If there is a trust in place, you could look at changing the beneficiary and portions there of. If not in a trust, see what CA thinks of changing the person on title to a trust.  The banks don't and actually *can't* care about changing title to a trust.

@Scott Newton

What is the relationship between the current owner and you? Spouses? Parent/child? Or unrelated 3rd parties?

*this post does not create an attorney client or cpa client relationship. Readers are advised to seek professional assistance. 

@Scott Newton

You may want to talk to an attorney then about possibly making use of the parent-child exclusion allowed in California (try researching Prop 58 in California). The exclusion should be available for a gift or for a sale but it can get complicated and there are certain steps and forms you will want to file. You'll want to also discuss with the attorney how best to structure the transaction as a gift or a sale, as there will be different effects both ways, and if you are not giving any consideration per se and only co-signing the loan, it may have to be treated as a gift. Talk with a professional who can be made aware of all the details and give you a full personal analysis. You also would want to discuss with the attorney how to hold title such as joint tenants versus tenants in common and the applications of both of those distinctions. There may be other ways for you to obtain an interest as well without having to formally go on title, such as through the owner's estate plan. Lots of options, but each will have its own pros and cons.

P.S. I grew up in Woodland Hills... howdy neighbor! :P

*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.