Here is the scenario. The mother and father wants to sell or have the property transferred over to their daughter. The parents owe 550k and cannot afford to make these payments any longer. The mother wants 750 k and would be happy. The home is worth around 900k.

My question is this. What is the easiest way to transfer this property to the daughter and avoid the taxes from being reassesed and for the clients to avoid capital gains? By the way, the daughter needs to have this loan on an option arm.

Any suggestions would be great!

Sounds like a question for a r.e. attorney.

anyone else?

Paceryder is right....that would be "advice" and would require either a R.E. attorney or their CPA to guide them through their options.

In Los Angeles are property taxes automatically reassessed whenever the ownership is transferred???

In most localities reassessment is only done periodically and then all properties are reassessed together; not just the ones that have sold recently.


IRS Publication 523

If the mother and father have lived in the house for at least 2 of the past 5 years there would be no capitals gains tax on the first $500,000 of gain.

Assuming mom and dad paid at least $250,000 for hte house and have met the principal residence test, there could be $0 capital gains tax for the to pay.

The capital gain is calculated by subtracting the basis (original cost to get in the house, i.e. sale price) plus some allowable settlement costs, improvements, and costs of sale. You need to get a CPA or knowledgable tax person to guide you on this.

The type of loan the daughter gets is not relevant to mom & dad's tax situation.

Thanks Jim

To try and avoid taxes I think its called Proposition 13 where the son or daughter continue on paying the same tax amount. But this is in Orange County. I don't know if this varies by county. Here's more info

http://www.oc.ca.gov/assessor/TaxSaveProps.asp#PC