Prop 19 doesn’t make sense and it’s cruelty. If parents die in an accident, kids not only have to deal with the loss of parents but also have to prepare to move out of home.
You're right, Prop 19 can be tough on families. It's hard when kids lose their parents and might have to leave their home too because of high taxes. That's why we do what we do. We guide savvy, caring families in the protection and transfer of multi-generational wealth. Contact our office to put a plan in place: www.cunninghamlegal.com/california-law-offices/contact/
You forgot to mention that Prop 19 passed because of the deceptive Proposition Title that didn't state "This is a Tax Hike!" Instead, the title stated something like "Help the firefighters...."
On November 3, 2020, California voters approved Proposition 19, The Home Protection for Seniors, Severely Disabled, Families, and Victims of Wildfire or Natural Disasters Act. Please visit the California State Board of Equalization (BOE) website for updates, as additional legislation will provide further clarification: www.boe.ca.gov/prop19/#Introduction
..... The more I watch this the more resentful I am of taxes on property. The state does absolutely nothing for you so what are you getting for your money? I see no difference between Govt. & organized crime.
And it's a tax increase each year on unrealized capital gain. Also all entities get at least a 2% increase in their funds received , like schools and fire departments, yet bonds keep coming up for them to get more money. Unbelievable how we get scammed.
Thank you very much for the wealth of information you provide. Very generous with your time in providing these videos. We are worried about the deceitfully passed lawmaker backed ACA 1 and ACA 13 as these will gut Prop 13 by increasing property taxes. We do not want to loose our family home to unaffordable higher property taxes as ACA 1 and ACA 13 will make it easier for city and county to increase our taxes. Please vote no on the ACA 1 and ACA 13 on the next election. Please tell everyone you know.
Adding your name to your daughter's house could lead to a property tax reassessment, depending on how the transfer is handled. Under California's Prop 13, changes in ownership often trigger reassessments unless you qualify for an exclusion, like a parent-child transfer. It's a good idea to meet with an attorney that handles Prop 19 matters to make sure you're on the right track and to explore any available exclusions. If you are not already represented, you can contact our Firm: www.cunninghamlegal.com/california-law-offices/contact/ and we can discuss this transaction.
People complain that it’s not fair that a long term neighbor has lower taxes. Remind them that they paid market rate taxes for years, and even though the taxes went up albeit slowly they paid taxes for decades. They paid for everyone in the neighborhood to get school taxes for their kids and also all the new kids. They have been paying for decades. Ok , so the new person pays more, so let them catch up.
Yep. And even if it‘s “not fair“, if your child decides to become a teacher or nurse, they won‘t be able to afford the property taxes on the house they grew up in.
Very cruel these people are seniors and they live on social security and they are living longer and the 1980 the interest were high and they sacrificed $17%
I am 52.5 now and am selling my primary residence due to divorce. Can I claim my current low taxes on my new property when i reach 55? I hate to lose the low rates.... I dont see specific language on if you have to be 55 at time of sale or can do the 2 year lookback. Timing is tight though.
My wife and I live with my wife's mother. House and all property is in trust (my wife is sole beneficiary) Let's say current assessed value for tax purposes is $500k At time of death of the mother, let's say that FMV is now $1.5 million. With the $1 million allowance, would that mean our taxes would remain the same? We will be living in the house until we sell and dissolve the trust and move. Thanks
Thanks for covering some “edge cases”. They may not apply to me, but give me a better understanding of how to get around Prop 19. You should put out a “Prop 19: Use an LLC to buy a new business property (if you have two kids)” video if you haven‘t done so already! (:
Thanks for watching! As a matter of fact, we just did a video on how to use an LLC for real estate investing: ruclips.net/video/RaNbnMaE9bg/видео.htmlsi=3CiWlbfM7bdho7Ox
Hi Jim, I’m on my third pass on this video. Also have about 60 pages left in your book as I slowly chew through it. Really interested in a proper LLC for a beach house we own to pass to our 3 adult children. I understand a lot of the California pitfalls but was also curious about putting Washington state rental into the LLC to offset costs as time goes on. Are there any videos on out of state property held in an LLC. Trying to get our ducks in line before meeting with you.
Hi there! Thank you for watching our videos and getting the book! We do have a couple videos on putting real estate in LLCs: 1. Real Estate Investing... NOT in California: ruclips.net/video/F3FF6qT1KKc/видео.html 2. Using an LLC for Real Estate Investing: ruclips.net/video/RaNbnMaE9bg/видео.html 3. Asset Protection and the Corporate Veil: ruclips.net/video/JcXNliHWEEY/видео.htmlsi=QKFprLVyDgCIDCAq
While Texas does not have a state income tax, which may initially seem attractive, it does have high property and sales taxes. The state's average property tax rate is 1.60%, one of the highest in the U.S., which can significantly impact homeowners. Additionally, Texas has a state sales tax rate of 6.25%, but with local taxes, the total can reach up to 8.25%. These factors could increase the overall tax burden for those considering a move to Texas. If you are interested in financial planning, please contact our office to be connected with one of our Trusted Advisors: www.cunninghamlegal.com/california-law-offices/contact/
This is a great video. Covers tons of different strategies related to proposition 13 type planning. Jim, I have a question for you. Following the video you say that if a person purchased a home prior to 2020 or so, that they were covered under the original proposition 13. Then I guess there was something like a proposition 54. And then I think proposition 19 came in and voided 54. Or at least parts of it. Now this person who purchased a home a long time ago is covered under proposition 54 and the remnants of 13. At some point they put the home in a trust. Now they pass away and the successor trustee sells the property and distributes the assets. Here is my question, can that success or trustee instead of living in the property to keep the state tax basis, can that person transfer that to a new house as long as they do it within 2 years. For example if the person bought the house for $400,000 20 years ago, transferred it into a trust, passed away, the successor trustee sells the house and buys a new house. Can that successor trustee keep the original $400,000 tax basis or assessed basis to keep their annual tax bills low?
Thanks! Death is a Change in Ownership (CIO) unless the property passes to a Spouse or Registered Domestic Partner. When a CIO occurs the property is subject to reassessment unless one or more exclusions apply. These include the Parent to Child reassessment exclusion (about $1M) for a Home, Co-Tenancy, and Family Farm to name a few. When a property is reassessed the portion of the property subject to reassessment is reassessed at its then-fair market value. Hope this helps! You can also contact us for a consult: www.cunninghamlegal.com/california-law-offices/contact/
Hello Jim. I really appreciate your videos. On this video, How to Pass on Real Estate Under Prop19, at 22:00 time mark, you said holding property as joint tenant is not good for taxes and tenant in common is better. Can you please, briefly explain for which taxes, it’s not a good idea? I , my spouse and child are on the title as joint tenants and all three have have co-tenancy. Thanks.
Hi there! Property held by a person in Joint Tenancy can be 100% included in a person’s estate (the full value of the property) yet only receive an adjusted basis based upon the proportional interest (like one-third). If three people were on title as Joint Tenants, and one of them leaves the house to someone else (like a friend), in the eyes of the law, the house's full value ($400k) could be considered part of what the friend is inheriting. But, if the friend decides to sell it, they're only allowed to consider their inherited third as the starting point for any profit calculation. Not getting a full adjusted cost basis can be potentially disadvantageous because it might result in higher capital gains taxes when the property is sold. (The higher your adjusted cost basis, the lower your capital gain, and the less you might owe in taxes.) There are also factors to consider, like the potential for creditor issues: If one joint tenant encounters financial difficulties, a creditor may be able to place a lien on the property, affecting all owners. There's also the question when it comes time to sell because if a joint tenant wants to sell their interest in the property and the others don't agree, they may have to go to court to force a sale of the property. There are also some Prop 13 property tax reasons to use Joint Tenancy, so it’s really a balancing act. The best thing to do is to seek expert advice, and we're here if you need it: www.cunninghamlegal.com/california-law-offices/contact/
@@farainfarsai5098i have lived with my parents since hirricane Michael in 2018. I am not on the mortgage. They want to leave it to me. Do i need to be added to the mortgage? Can they Add me? It has been primary residence for 10 years @CunninghamLegal
The Preliminary Change in Ownership report in Part 1 Transfer Information box J “This transaction is recorded only as a requirement for financing purposes or to create, terminate, or reconvey a security interest (e.g., cosigner). If YES, please explain: _______” can be used to avoid reassessment. For example, dad could convey to dad and daughter as joint tenants, get the loan, then daughter re-conveys (transfers) the property back to dad. THIS IS NOT LEGAL ADVICE! Get legal advice before doing any of this!! www.boe.ca.gov/proptaxes/pdf/sample-boe502a.pdf
CunninghamLegal has several strategies for maintaining tax bases, but they all require a one on one consult with one of our expert Estate Planning attorneys. Please contact us here: www.cunninghamlegal.com/california-law-offices/contact/ Here's another video on Family Farms that you might find interesting: www.cunninghamlegal.com/legal_webinars/family-home-or-farm-not-in-your-trust-how-can-you-save-prop-13-caps/
I read that as long as one of the beneficiaries is using the property as their principal residence, the transfer would qualify for the full exclusion. I'm a senior - a widow-no children. I own a home that's been mine since 1985. My friend has lived with me for 5 years in my mortgage-free home. If I leave my home to him [via a trust] can he remain in the home and pay the same property taxes as I am paying?
Properly structured, the property can likely pass to you friend free of reassessment. You should reach out to our office if you are not represented, and we can help you with this: www.cunninghamlegal.com/california-law-offices/contact/
If a parrent transfered 100% of their property into an LLC and gave 25% to each of their 2 children = 50% total, and then took the property out of the LLC after a few months, then waited a year and did the process again would that avoid reassessement? I've had multiple assessors and attornies tell me this is the best and only option with the way the laws are setup. What do you think? keep in mind the transfers need to happen before 2026 because the end life death tax exemption for the parrent drops to 5-7 million, where as it's 14 million in 2025.
Under these facts, the risk (a substantial one) is that the assessor may apply the “step-transaction” doctrine. (41:59) “The step transaction doctrine allows an assessor to disregard for tax purposes a series of steps utilized to effect the transfer of real property when the facts suggest that the transfer might have been accomplished in fewer steps and that the purpose for using a series of steps was to avoid a change in ownership.” Property Tax Annotation 220.0674. “However, the step transaction doctrine does not apply to multiple transfers of real property and legal entity interests between parents and children consistent with the legislative intent, expressed in the uncodified note in the bill that enacted Revenue and Taxation Code section 63.1 (section 2 of Chapter 48, Statutes of 1987), that its provisions be liberally construed.” Annotation 625.0196. 625.0196 references the “Pre-Prop 19” parent to child reassessment exclusion. It remains to be seen how Prop 19 changes 625.0196. Stay tuned.
All this talk about "step up in basis" upon death is irrelevant for those who are left over $6M in total property since Estate tax about to drop in 2025 to around that amount. What to do if estate is over this amount that will be reduced to less than half per spouse
My parents had my sister and her husband on their deed as joint tenants and when they made a trust for their half of the property it triggered a supplemental tax. Is this a mistake since they all live in the property as their primary residence and are family?
Perhaps. Even if it was appropriately reassessed, there may be a way to “unwind” the transaction. This is best handled on a one-on-one basis. Feel free to reach out to us: www.cunninghamlegal.com/california-law-offices/contact/
Transfer on Death Deeds are great (TODD). The taxes will be based on the market value as of the date of death so there's no capital gains tax to deal with. You do not need a lawyer, it's quite simple.
There are a few downsides to the Transfer on Death Deeds that are worthy of consideration. If the owner of the property has a Medi-Cal bill, the equity in the home may have to be paid to California. Also, a Transfer on Death Deed a public document. If your intended beneficiary declares bankruptcy, a Federal Bankruptcy Judge could order that the property be paid to creditors after your death. Living trusts offer creditor protection, among other benefits. Read more on living trusts here: www.cunninghamlegal.com/how-much-should-a-living-trust-cost/
Hi! I assisted my father in inheriting/buying out his parents home from the trust he is owner occupying and has maintained the tax basis. He’s been owner occupying for three years now. Question: is it OK for him to move out of the home at this point and turn it into a rental? Or does that trigger reassessment? How long does he need to own occupy it?
Jacob, thank you for your question. It would be inappropriate for us to give you legal advice on a RUclips post, so please contact our office if you are seeking legal advice. In terms of information, generally, if the parent to child reassessment exclusion was based on Prop 19 which was effective February 2021, the FTB has taken the position that once the property ceases to qualify for the homeowner’s exemption, the reassessment exclusion ($1M+) goes away, and the property taxes go up accordingly. With more facts, we can walk you through this on a consultation. You can contact us by filling out the form on our website: www.cunninghamlegal.com/california-law-offices/contact/ or calling us at 866.988.3956
Currently there are attempts to destroy Prop 13 protections with the lawmaker backed ACA 1 and ACA 13 as these two will appear to the ca voters on the next elections. But do not be fooled by the wording on the ballot. ACA 1 and 13 will make it easier for City and county to raise property taxes every year. VOTE NO on ACA 1 and ACA 13. Tell everyone you know.
Prop 13 was replaced by Prop-19. If Prop-19 gets repealed, then the LLCs still work for Prop 13 situations, since the LLCs are to be set up for commercial and business purposes. It is still a good idea to consider them with your estate planning attorney as a long term strategy!
There are several strategies that can be used to keep your home in the family. In order for us to offer legal advice (and decide which is right for you), we have to meet with you to fully understand your entire estate and family situation. You can contact us here to begin the process to meet with an attorney: www.cunninghamlegal.com/california-law-offices/contact/
Hi Jim, my husband passed away 11 years ago. Estate of deceased transferred to our 2 sons with their names placed on Title( Deed of Primary Residence ( I think approximately 51% ) and approximately 49% kept by me , the widow. Younger son has lived with me ever since. The brothers intend to keep the house with younger son continue using it as his primary residence after I pass. Will Assessor apply a Step Up on my half of the value of house? Tyia
The Assessor’s office reassesses property taxes upon the transfer of control (i.e., death) unless exclusions are applied (using Prop 19). For capital gains tax purposes, a receive a step-up in basis will be provided for the percentage of the property that the decedent owns as of their date of death. It is crucial that you properly hold the property to take advantage of this exclusion (tenants in common vs joint tenants). You can contact our office for a full review: www.cunninghamlegal.com/california-law-offices/contact/ We are here to help you and think this would be a better one-on-one conversation to further understand your situation! Please note that this does not constitute as legal advice.
@@CunninghamLegal, we, the family, will be your client in the coming 2 weeks. My son passed his CFP with the help of one of your videos (presented by one Accountant)while reviewing for the CFP exam.
What if the home is in a Trust (at the time of purchase)? Does that allow the children (beneficiaries) to inherit the home at the "stepped up basis"? TY !!
The "step-up in basis" can potentially reduce the capital gains tax on later sale of the property. Assets that are included in a deceased person’s “gross estate” (taxable estate) typically get an adjusted cost basis. But, the percentage of the property that "steps up" at death will depend on how the property title is held. If property is held in a trust, the step-up rules depend on the type of trust (and can be especially complex for irrevocable trusts). Upon the death of the grantor, assets in a revocable trust generally receive a step-up in basis to the fair market value at the time of the grantor's death, just like assets owned outright by the deceased. For specific information about your estate, please contact our office for a review of your estate plan: www.cunninghamlegal.com/california-law-offices/contact/
So I assume that acquisition of a new property by an LLC would not allow for use of the cost basis transfer now allowed by Prop 19 on previously owned property to the new property to be owned by the LLC? We have two homes, one in the Bay Area and one in Tahoe, each purchased 31 and 24 years ago. I assume we could not sell one and buy a new property and transfer the cost basis to the new home to be purchased by a newly established LLC, since I am guessing under the law, the homeowner (who can transfer the tax basis) and the LLC are considered different entities?
Thanks for your question. Transfer of the tax base requires a sale of the relinquished property by an eligible human seller and purchase of a replacement property by the same human seller of the relinquished property. LLCs aren’t humans. It appears you are on the right track but please do not construe this as legal advice concerning your individual situation. If you would like legal advice we can certainly meet one on one. You can reach out to us to set up a consult: www.cunninghamlegal.com/california-law-offices/contact/
@@CunninghamLegal Thanks for the response! Unfortunately before I found you we started working with an estate planner who is doing a basic update to our trust. However, we may decide to reach out to you on specific questions, and in the mean time I plan to buy your book, which I was happy to see was on Audible!
6 месяцев назад
What about a parent who passed away years before prop 19 went into affect with leaving the property to his two children (remainder men) but he got married before he died he had a second wife she still living and she has a life estate in this home she’s not on the title nor owner of the home it was our childhood home we grew up in. Tile is held in irrevocable trust. Would that be under prop 58 still? He passed with intention of us being able to keep family home he never knew about this prop 19 change. From what I have read it goes by date of death of owner. How does this work with her still living in it past the prop 19 law passing. is her death the change of ownership or his? any info would be so appreciated.
It depends on how the irrevocable trust is written. If the surviving spouse is the sole income beneficiary, then the property is subject to reassessment at the death of the surviving spouse. If the kids and surviving spouse are beneficiaries, then reassessment may be fully or partially avoidable. However, the necessary documents will need to be timely filed. I would recommend you get legal advice on this and we are ready to assist if you aren’t currently represented. www.cunninghamlegal.com/california-law-offices/contact/
Hi, I am wondering about the co-tenancy exclusion (21:51). I moved in with my grandmother 5 years ago to help take care of her and she passed away 2 months ago. Under the trust she listed me as the beneficiary to the property and if I am not alive then it is my father. I was told I will not qualify for the tax exclusion because it is not direct parent to child transfer and grandparent to grandchild does not qualify. I was told the only way to receive the tax exclusion is to sign a waiver forfeiting my inheritance leaving it in my fathers name. This would then qualify for the tax exclusion but I would no longer have own ship. Is there no way for me to qualify for the tax exclusion and keep the property in my name while my father is alive? It sounds like I fit the criteria for co-tenancy since I lived here the last 5 years taking care of my grandmother.
Hi there, please contact our office for a free 15-minute Trust Administration consult. If you have hired an attorney and it appears like that person understands the issues, I would defer to your legal counsel. If you need legal representation, we would be happy to help, since there are some strategies that come to mind. We will need just a few more specifics during that phone call to determine how we can best help you: www.cunninghamlegal.com/california-law-offices/contact/
Prop 19 messes up everything for people who are inheriting property. If your parents had a low property tax once they pass your property will be reassessed at today's value making the property unaffordable for the heirs.
Prop 19 was very difficult for many people- it completely changed the landscape for inherited properties, potentially leading to higher taxes that can burden heirs.
Some good -however how many folks will suffer a natural disaster, how many 55 years and older will want to move? Mostly bad- Its a money grab for the government(which lets face it do a poor job managing the economy as it is) and real estate agents. My advice if you have to sell don't use an agent. Get a lawyer to help complete the paper work educate your self and sell it. My question is if you receive a rental or a few what happens to the tenants?- How can you run a business when expenses exceed revenue or your margins are so small maintaining a great looking property just doesn't make sense. The property will suffer, tenants will suffer because now they're paying higher rent for a subpar property, Owners will suffer. You sell right. Well let's say the tenant has enough of California(Rent, Pg&E, crime , schools traffic Etc.) so they leave. Now the unit is vacant. The owner thinks in order to keep up with expenses I must significantly raise the rent. Making it even more expensive for renters. I don't know what the elegant solution is. Owners will be okay in the end , but tenants will take the brunt. If you receive papas house thats worth 2 million you have a few options, sell and move/ invest to a tax friendly state, sell (1031) , pay the taxes and live there making sure you put your kids and grand kids on the property or setting up a corporation so when it comes time the transfer is smooth. The other options is to rent it out at a max rent sigh.. all the while your morning papas death. Goos luck California
What's unfair? The old house gets sold at market rate $580K, reassessed tax $5800. If the couple bought a new built house for the same price $580K as the old house, they would pay the same tax $5800. If you want a cheap house, move to Alabama. Guaranteed that the value will rise glacially so you never have to worry about property taxes, don't even need Prop 13. People think that you will live in a home for 30 years and not do anything, permits for remodels, additions... all raise assessments above the 2% per annum. Generally it you pass on a home as an inheritance, chances are that if the home hadn't been remodeled during that 30 years, it's going to need a lot of work and more money than the child would have to get it up to habitable condition. It will just get sold for market value and a higher assessed tax. If a couple can afford a $580K home then they can afford the $5800 property tax.
@@makas63 Something has to fund the government. I bet you think income and sales taxes are unfair, too. I guess magic gold dumping pixies would have to fund your government.
Prop 19 doesn’t make sense and it’s cruelty. If parents die in an accident, kids not only have to deal with the loss of parents but also have to prepare to move out of home.
You're right, Prop 19 can be tough on families. It's hard when kids lose their parents and might have to leave their home too because of high taxes. That's why we do what we do. We guide savvy, caring families in the protection and transfer of multi-generational wealth. Contact our office to put a plan in place: www.cunninghamlegal.com/california-law-offices/contact/
You forgot to mention that Prop 19 passed because of the deceptive Proposition Title that didn't state "This is a Tax Hike!" Instead, the title stated something like "Help the firefighters...."
On November 3, 2020, California voters approved Proposition 19, The Home Protection for Seniors, Severely Disabled, Families, and Victims of Wildfire or Natural Disasters Act. Please visit the California State Board of Equalization (BOE) website for updates, as additional legislation will provide further clarification: www.boe.ca.gov/prop19/#Introduction
They bind the two issues together and eliminated a major portion of Prop 13 benefits.
..... The more I watch this the more resentful I am of taxes on property. The state does absolutely nothing for you so what are you getting for your money? I see no difference between Govt. & organized crime.
And it's a tax increase each year on unrealized capital gain. Also all entities get at least a 2% increase in their funds received , like schools and fire departments, yet bonds keep coming up for them to get more money. Unbelievable how we get scammed.
Thank you very much for the wealth of information you provide. Very generous with your time in providing these videos.
We are worried about the deceitfully passed lawmaker backed ACA 1 and ACA 13 as these will gut Prop 13 by increasing property taxes. We do not want to loose our family home to unaffordable higher property taxes as ACA 1 and ACA 13 will make it easier for city and county to increase our taxes. Please vote no on the ACA 1 and ACA 13 on the next election. Please tell everyone you know.
If my daughter is going to add me to her house title, will it be a change of ownership and subject to reassestment??? Thank you 😊🤗
Adding your name to your daughter's house could lead to a property tax reassessment, depending on how the transfer is handled. Under California's Prop 13, changes in ownership often trigger reassessments unless you qualify for an exclusion, like a parent-child transfer. It's a good idea to meet with an attorney that handles Prop 19 matters to make sure you're on the right track and to explore any available exclusions. If you are not already represented, you can contact our Firm: www.cunninghamlegal.com/california-law-offices/contact/ and we can discuss this transaction.
People complain that it’s not fair that a long term neighbor has lower taxes. Remind them that they paid market rate taxes for years, and even though the taxes went up albeit slowly they paid taxes for decades. They paid for everyone in the neighborhood to get school taxes for their kids and also all the new kids. They have been paying for decades. Ok , so the new person pays more, so let them catch up.
Yep. And even if it‘s “not fair“, if your child decides to become a teacher or nurse, they won‘t be able to afford the property taxes on the house they grew up in.
Very cruel these people are seniors and they live on social security and they are living longer and the 1980 the interest were high and they sacrificed $17%
I am 52.5 now and am selling my primary residence due to divorce. Can I claim my current low taxes on my new property when i reach 55? I hate to lose the low rates.... I dont see specific language on if you have to be 55 at time of sale or can do the 2 year lookback. Timing is tight though.
My wife and I live with my wife's mother. House and all property is in trust (my wife is sole beneficiary) Let's say current assessed value for tax purposes is $500k At time of death of the mother, let's say that FMV is now $1.5 million. With the $1 million allowance, would that mean our taxes would remain the same? We will be living in the house until we sell and dissolve the trust and move. Thanks
Thanks for covering some “edge cases”. They may not apply to me, but give me a better understanding of how to get around Prop 19. You should put out a “Prop 19: Use an LLC to buy a new business property (if you have two kids)” video if you haven‘t done so already! (:
Thanks for watching! As a matter of fact, we just did a video on how to use an LLC for real estate investing: ruclips.net/video/RaNbnMaE9bg/видео.htmlsi=3CiWlbfM7bdho7Ox
Hi Jim, I’m on my third pass on this video. Also have about 60 pages left in your book as I slowly chew through it. Really interested in a proper LLC for a beach house we own to pass to our 3 adult children. I understand a lot of the California pitfalls but was also curious about putting Washington state rental into the LLC to offset costs as time goes on. Are there any videos on out of state property held in an LLC. Trying to get our ducks in line before meeting with you.
Hi there! Thank you for watching our videos and getting the book! We do have a couple videos on putting real estate in LLCs:
1. Real Estate Investing... NOT in California: ruclips.net/video/F3FF6qT1KKc/видео.html
2. Using an LLC for Real Estate Investing: ruclips.net/video/RaNbnMaE9bg/видео.html
3. Asset Protection and the Corporate Veil: ruclips.net/video/JcXNliHWEEY/видео.htmlsi=QKFprLVyDgCIDCAq
You failed to mention that Texas has no income tax. That needs to be incorporated into overall financial planning.
While Texas does not have a state income tax, which may initially seem attractive, it does have high property and sales taxes. The state's average property tax rate is 1.60%, one of the highest in the U.S., which can significantly impact homeowners. Additionally, Texas has a state sales tax rate of 6.25%, but with local taxes, the total can reach up to 8.25%. These factors could increase the overall tax burden for those considering a move to Texas. If you are interested in financial planning, please contact our office to be connected with one of our Trusted Advisors: www.cunninghamlegal.com/california-law-offices/contact/
There is also multiple exemption possibilities depending on individual situations.
This is a great video. Covers tons of different strategies related to proposition 13 type planning. Jim, I have a question for you. Following the video you say that if a person purchased a home prior to 2020 or so, that they were covered under the original proposition 13. Then I guess there was something like a proposition 54. And then I think proposition 19 came in and voided 54. Or at least parts of it. Now this person who purchased a home a long time ago is covered under proposition 54 and the remnants of 13. At some point they put the home in a trust. Now they pass away and the successor trustee sells the property and distributes the assets. Here is my question, can that success or trustee instead of living in the property to keep the state tax basis, can that person transfer that to a new house as long as they do it within 2 years. For example if the person bought the house for $400,000 20 years ago, transferred it into a trust, passed away, the successor trustee sells the house and buys a new house. Can that successor trustee keep the original $400,000 tax basis or assessed basis to keep their annual tax bills low?
Thanks! Death is a Change in Ownership (CIO) unless the property passes to a Spouse or Registered Domestic Partner. When a CIO occurs the property is subject to reassessment unless one or more exclusions apply. These include the Parent to Child reassessment exclusion (about $1M) for a Home, Co-Tenancy, and Family Farm to name a few. When a property is reassessed the portion of the property subject to reassessment is reassessed at its then-fair market value. Hope this helps! You can also contact us for a consult: www.cunninghamlegal.com/california-law-offices/contact/
Hello Jim. I really appreciate your videos. On this video, How to Pass on Real Estate Under Prop19, at 22:00 time mark, you said holding property as joint tenant is not good for taxes and tenant in common is better. Can you please, briefly explain for which taxes, it’s not a good idea?
I , my spouse and child are on the title as joint tenants and all three have have co-tenancy. Thanks.
Hi there! Property held by a person in Joint Tenancy can be 100% included in a person’s estate (the full value of the property) yet only receive an adjusted basis based upon the proportional interest (like one-third). If three people were on title as Joint Tenants, and one of them leaves the house to someone else (like a friend), in the eyes of the law, the house's full value ($400k) could be considered part of what the friend is inheriting. But, if the friend decides to sell it, they're only allowed to consider their inherited third as the starting point for any profit calculation.
Not getting a full adjusted cost basis can be potentially disadvantageous because it might result in higher capital gains taxes when the property is sold. (The higher your adjusted cost basis, the lower your capital gain, and the less you might owe in taxes.)
There are also factors to consider, like the potential for creditor issues: If one joint tenant encounters financial difficulties, a creditor may be able to place a lien on the property, affecting all owners. There's also the question when it comes time to sell because if a joint tenant wants to sell their interest in the property and the others don't agree, they may have to go to court to force a sale of the property.
There are also some Prop 13 property tax reasons to use Joint Tenancy, so it’s really a balancing act. The best thing to do is to seek expert advice, and we're here if you need it: www.cunninghamlegal.com/california-law-offices/contact/
Thank you, sincerely. @@CunninghamLegal
@@farainfarsai5098i have lived with my parents since hirricane Michael in 2018. I am not on the mortgage. They want to leave it to me. Do i need to be added to the mortgage? Can they Add me? It has been primary residence for 10 years @CunninghamLegal
What about temporary transfers where an adult child goes on the deed with his mother so the property can be refinanced?
The Preliminary Change in Ownership report in Part 1 Transfer Information box J “This transaction is recorded only as a requirement for financing purposes or to create, terminate, or reconvey a security interest (e.g., cosigner). If YES, please explain: _______” can be used to avoid reassessment. For example, dad could convey to dad and daughter as joint tenants, get the loan, then daughter re-conveys (transfers) the property back to dad. THIS IS NOT LEGAL ADVICE! Get legal advice before doing any of this!! www.boe.ca.gov/proptaxes/pdf/sample-boe502a.pdf
I have farm property I inherited from my parent in 2011. The assessed value as of 2021 was $1.1 million. Is there a way to keep the base for my heir?
CunninghamLegal has several strategies for maintaining tax bases, but they all require a one on one consult with one of our expert Estate Planning attorneys. Please contact us here: www.cunninghamlegal.com/california-law-offices/contact/
Here's another video on Family Farms that you might find interesting: www.cunninghamlegal.com/legal_webinars/family-home-or-farm-not-in-your-trust-how-can-you-save-prop-13-caps/
I read that as long as one of the beneficiaries is using the property as their principal residence, the transfer would qualify for the full exclusion.
I'm a senior - a widow-no children. I own a home that's been mine since 1985. My friend has lived with me for 5 years in my mortgage-free home. If I leave my home to him [via a trust] can he remain in the home and pay the same property taxes as I am paying?
Properly structured, the property can likely pass to you friend free of reassessment. You should reach out to our office if you are not represented, and we can help you with this: www.cunninghamlegal.com/california-law-offices/contact/
Great video. I currently have a condo in beautiful city of Ventura.
That's wonderful! Thanks for leaving a comment.
If a parrent transfered 100% of their property into an LLC and gave 25% to each of their 2 children = 50% total, and then took the property out of the LLC after a few months, then waited a year and did the process again would that avoid reassessement? I've had multiple assessors and attornies tell me this is the best and only option with the way the laws are setup. What do you think? keep in mind the transfers need to happen before 2026 because the end life death tax exemption for the parrent drops to 5-7 million, where as it's 14 million in 2025.
Under these facts, the risk (a substantial one) is that the assessor may apply the “step-transaction” doctrine. (41:59) “The step transaction doctrine allows an assessor to disregard for tax purposes a series of steps utilized to effect the transfer of real property when the facts suggest that the transfer might have been accomplished in fewer steps and that the purpose for using a series of steps was to avoid a change in ownership.” Property Tax Annotation 220.0674. “However, the step transaction doctrine does not apply to multiple transfers of real property and legal entity interests between parents and children consistent with the legislative intent, expressed in the uncodified note in the bill that enacted Revenue and Taxation Code section 63.1 (section 2 of Chapter 48, Statutes of 1987), that its provisions be liberally construed.” Annotation 625.0196. 625.0196 references the “Pre-Prop 19” parent to child reassessment exclusion. It remains to be seen how Prop 19 changes 625.0196. Stay tuned.
All this talk about "step up in basis" upon death is irrelevant for those who are left over $6M in total property since Estate tax about to drop in 2025 to around that amount. What to do if estate is over this amount that will be reduced to less than half per spouse
My parents had my sister and her husband on their deed as joint tenants and when they made a trust for their half of the property it triggered a supplemental tax. Is this a mistake since they all live in the property as their primary residence and are family?
Perhaps. Even if it was appropriately reassessed, there may be a way to “unwind” the transaction. This is best handled on a one-on-one basis. Feel free to reach out to us: www.cunninghamlegal.com/california-law-offices/contact/
Transfer on Death Deeds are great (TODD). The taxes will be based on the market value as of the date of death so there's no capital gains tax to deal with. You do not need a lawyer, it's quite simple.
There are a few downsides to the Transfer on Death Deeds that are worthy of consideration. If the owner of the property has a Medi-Cal bill, the equity in the home may have to be paid to California. Also, a Transfer on Death Deed a public document. If your intended beneficiary declares bankruptcy, a Federal Bankruptcy Judge could order that the property be paid to creditors after your death. Living trusts offer creditor protection, among other benefits. Read more on living trusts here: www.cunninghamlegal.com/how-much-should-a-living-trust-cost/
Hi! I assisted my father in inheriting/buying out his parents home from the trust he is owner occupying and has maintained the tax basis. He’s been owner occupying for three years now.
Question: is it OK for him to move out of the home at this point and turn it into a rental? Or does that trigger reassessment? How long does he need to own occupy it?
Jacob, thank you for your question. It would be inappropriate for us to give you legal advice on a RUclips post, so please contact our office if you are seeking legal advice. In terms of information, generally, if the parent to child reassessment exclusion was based on Prop 19 which was effective February 2021, the FTB has taken the position that once the property ceases to qualify for the homeowner’s exemption, the reassessment exclusion ($1M+) goes away, and the property taxes go up accordingly. With more facts, we can walk you through this on a consultation. You can contact us by filling out the form on our website: www.cunninghamlegal.com/california-law-offices/contact/ or calling us at
866.988.3956
well the question if prop 13 gets repealed what will happen to any prop 13 LLC
Currently there are attempts to destroy Prop 13 protections with the lawmaker backed ACA 1 and ACA 13 as these two will appear to the ca voters on the next elections. But do not be fooled by the wording on the ballot. ACA 1 and 13 will make it easier for City and county to raise property taxes every year. VOTE NO on ACA 1 and ACA 13. Tell everyone you know.
Prop 13 was replaced by Prop-19. If Prop-19 gets repealed, then the LLCs still work for Prop 13 situations, since the LLCs are to be set up for commercial and business purposes. It is still a good idea to consider them with your estate planning attorney as a long term strategy!
@@CunninghamLegalwould a Wyoming Statutory Trust be an alternative solution to the LLC and offer more liability /anonymity then the LLC?
I want legal advise to keep my home within my family. I don't have any children, only nieces and nephews. What are my options? I'm 81 years old.
This is an excellent question. I too have nieces and nephews and wish to leave my home to them.
There are several strategies that can be used to keep your home in the family. In order for us to offer legal advice (and decide which is right for you), we have to meet with you to fully understand your entire estate and family situation. You can contact us here to begin the process to meet with an attorney: www.cunninghamlegal.com/california-law-offices/contact/
Hi Jim, my husband passed away 11 years ago. Estate of deceased transferred to our 2 sons with their names placed on Title( Deed of Primary Residence ( I think approximately 51% ) and approximately 49% kept by me , the widow. Younger son has lived with me ever since.
The brothers intend to keep the house with younger son continue using it as his primary residence after I pass. Will Assessor apply a Step Up on my half of the value of house? Tyia
The Assessor’s office reassesses property taxes upon the transfer of control (i.e., death) unless exclusions are applied (using Prop 19). For capital gains tax purposes, a receive a step-up in basis will be provided for the percentage of the property that the decedent owns as of their date of death. It is crucial that you properly hold the property to take advantage of this exclusion (tenants in common vs joint tenants). You can contact our office for a full review: www.cunninghamlegal.com/california-law-offices/contact/
We are here to help you and think this would be a better one-on-one conversation to further understand your situation! Please note that this does not constitute as legal advice.
@@CunninghamLegal, we, the family, will be your client in the coming 2 weeks. My son passed his CFP with the help of one of your videos (presented by one Accountant)while reviewing for the CFP exam.
I forgot to mention that Title is held in Irrevocable Trust.
That's great to hear! Thanks for sharing.
What if the home is in a Trust (at the time of purchase)? Does that allow the children (beneficiaries) to inherit the home at the "stepped up basis"?
TY !!
The "step-up in basis" can potentially reduce the capital gains tax on later sale of the property. Assets that are included in a deceased person’s “gross estate” (taxable estate) typically get an adjusted cost basis. But, the percentage of the property that "steps up" at death will depend on how the property title is held.
If property is held in a trust, the step-up rules depend on the type of trust (and can be especially complex for irrevocable trusts). Upon the death of the grantor, assets in a revocable trust generally receive a step-up in basis to the fair market value at the time of the grantor's death, just like assets owned outright by the deceased.
For specific information about your estate, please contact our office for a review of your estate plan: www.cunninghamlegal.com/california-law-offices/contact/
So I assume that acquisition of a new property by an LLC would not allow for use of the cost basis transfer now allowed by Prop 19 on previously owned property to the new property to be owned by the LLC? We have two homes, one in the Bay Area and one in Tahoe, each purchased 31 and 24 years ago. I assume we could not sell one and buy a new property and transfer the cost basis to the new home to be purchased by a newly established LLC, since I am guessing under the law, the homeowner (who can transfer the tax basis) and the LLC are considered different entities?
Thanks for your question. Transfer of the tax base requires a sale of the relinquished property by an eligible human seller and purchase of a replacement property by the same human seller of the relinquished property. LLCs aren’t humans. It appears you are on the right track but please do not construe this as legal advice concerning your individual situation. If you would like legal advice we can certainly meet one on one. You can reach out to us to set up a consult: www.cunninghamlegal.com/california-law-offices/contact/
@@CunninghamLegal Thanks for the response! Unfortunately before I found you we started working with an estate planner who is doing a basic update to our trust. However, we may decide to reach out to you on specific questions, and in the mean time I plan to buy your book, which I was happy to see was on Audible!
What about a parent who passed away years before prop 19 went into affect with leaving the property to his two children (remainder men) but he got married before he died he had a second wife she still living and she has a life estate in this home she’s not on the title nor owner of the home it was our childhood home we grew up in. Tile is held in irrevocable trust. Would that be under prop 58 still? He passed with intention of us being able to keep family home he never knew about this prop 19 change. From what I have read it goes by date of death of owner. How does this work with her still living in it past the prop 19 law passing. is her death the change of ownership or his? any info would be so appreciated.
It depends on how the irrevocable trust is written. If the surviving spouse is the sole income beneficiary, then the property is subject to reassessment at the death of the surviving spouse. If the kids and surviving spouse are beneficiaries, then reassessment may be fully or partially avoidable. However, the necessary documents will need to be timely filed. I would recommend you get legal advice on this and we are ready to assist if you aren’t currently represented. www.cunninghamlegal.com/california-law-offices/contact/
Hi, I am wondering about the co-tenancy exclusion (21:51). I moved in with my grandmother 5 years ago to help take care of her and she passed away 2 months ago. Under the trust she listed me as the beneficiary to the property and if I am not alive then it is my father. I was told I will not qualify for the tax exclusion because it is not direct parent to child transfer and grandparent to grandchild does not qualify. I was told the only way to receive the tax exclusion is to sign a waiver forfeiting my inheritance leaving it in my fathers name. This would then qualify for the tax exclusion but I would no longer have own ship. Is there no way for me to qualify for the tax exclusion and keep the property in my name while my father is alive? It sounds like I fit the criteria for co-tenancy since I lived here the last 5 years taking care of my grandmother.
Hi there, please contact our office for a free 15-minute Trust Administration consult. If you have hired an attorney and it appears like that person understands the issues, I would defer to your legal counsel. If you need legal representation, we would be happy to help, since there are some strategies that come to mind. We will need just a few more specifics during that phone call to determine how we can best help you: www.cunninghamlegal.com/california-law-offices/contact/
Where can I buy your book?
You can get there from our website! www.cunninghamlegal.com/estate-planning-book/
What is LLC?
Here is some information on what an LLC is: ruclips.net/video/OuXYgOw9fZI/видео.htmlsi=fK1VHsAK8Wb-9NZL
Prop 19 messes up everything for people who are inheriting property. If your parents had a low property tax once they pass your property will be reassessed at today's value making the property unaffordable for the heirs.
Prop 19 was very difficult for many people- it completely changed the landscape for inherited properties, potentially leading to higher taxes that can burden heirs.
Some good -however how many folks will suffer a natural disaster, how many 55 years and older will want to move? Mostly bad- Its a money grab for the government(which lets face it do a poor job managing the economy as it is) and real estate agents. My advice if you have to sell don't use an agent. Get a lawyer to help complete the paper work educate your self and sell it.
My question is if you receive a rental or a few what happens to the tenants?- How can you run a business when expenses exceed revenue or your margins are so small maintaining a great looking property just doesn't make sense. The property will suffer, tenants will suffer because now they're paying higher rent for a subpar property, Owners will suffer. You sell right. Well let's say the tenant has enough of California(Rent, Pg&E, crime , schools traffic Etc.) so they leave. Now the unit is vacant. The owner thinks in order to keep up with expenses I must significantly raise the rent. Making it even more expensive for renters. I don't know what the elegant solution is. Owners will be okay in the end , but tenants will take the brunt.
If you receive papas house thats worth 2 million you have a few options, sell and move/ invest to a tax friendly state, sell (1031) , pay the taxes and live there making sure you put your kids and grand kids on the property or setting up a corporation so when it comes time the transfer is smooth. The other options is to rent it out at a max rent sigh.. all the while your morning papas death. Goos luck California
What's unfair? The old house gets sold at market rate $580K, reassessed tax $5800. If the couple bought a new built house for the same price $580K as the old house, they would pay the same tax $5800. If you want a cheap house, move to Alabama. Guaranteed that the value will rise glacially so you never have to worry about property taxes, don't even need Prop 13.
People think that you will live in a home for 30 years and not do anything, permits for remodels, additions... all raise assessments above the 2% per annum. Generally it you pass on a home as an inheritance, chances are that if the home hadn't been remodeled during that 30 years, it's going to need a lot of work and more money than the child would have to get it up to habitable condition. It will just get sold for market value and a higher assessed tax. If a couple can afford a $580K home then they can afford the $5800 property tax.
Property taxes are unfair. If the property is paid off, why are we paying taxes on it every year? Tax slaves
@@makas63 Something has to fund the government. I bet you think income and sales taxes are unfair, too. I guess magic gold dumping pixies would have to fund your government.