What Areas Of Real Estate Law Do You Handle?
I handle transactional real estate cases. Anytime we’re doing a transfer of real estate that’s something other than your typical sale through a real estate agent.
Do You Handle Both Commercial and Residential Real Estate?
Yes, I handle both commercial and residential real estate. As far as the transactions we do, the transfers involved are very similar.
What Are Some Reasons To Hire A Real Estate Attorney?
For the services I do, it would be to transfer properties at the death of someone from their estate to their beneficiaries, or to handle the sale of property or transfer of property generationally. This could be parents transferring to children or creating joint ownerships between family members. We also do transfers that are associated with a sale of a business. We do those and then transfers of properties into or out of corporations or other types of business entities.
What Are Some Tax Issues Related To Real Estate?
There are two main tax issues related to real estate in California. One is property tax issue. Because of Prop 13 in California, there are unusual taxes on properties in the way they’re calculated. The other major tax issue is capital gains taxes and the avoidance of those.
Can Someone Avoid Tax Consequences By Transferring Their Property In Their Lifetime?
It’s possible to avoid the property tax issue. It’s possible to transfer the parents’ property tax assessment to the children. But by doing that during their lifetime, it can cause problems with the capital gains tax issues. So it doesn’t avoid all of them.
Can I Leave My Parents’ Property In My Parents’ Name After I Die?
It’s really a bad idea to do this. I see this happen too frequently; parents die and the children who are the beneficiaries of the trust want to just leave the parents’ trust to continue on and not transfer the property. Usually they do this out of a concern that if they transfer the property, there would be tax issues that would be triggered upon the transfer. The reality is, any tax issues that arise do so upon the death of the person, not upon the transfer of the property. So the longer they delay the transfer the more the tax issues, if any, will compound. The reality is that there are hardly ever any tax issues on transfers of properties from parents to children, so there’s not even a reason to be concerned about this.
The children will maintain the parents’ property tax assessment and there won’t be any capital gains issues to deal with.
Can Capital Gains Tax Be Minimized In A Transfer Of Property?
The best way under the current law is to leave the property either to a spouse or to leave it to children as an inheritance. The reason is that the capital gains tax is a tax on the increase in value of a property. It’s usually based on the purchase price of the home. It’s called the “basis” in the property. It’s that basis amount that is tax free. When a property is inherited, the basis amount changes from the purchase price of the home to the value of the home at the date of death. It increases that basis amount, the tax free amount, to the property’s value on the date of death.
Because of this, the children or any other beneficiaries who receive the property can sell the property and have no capital gains tax liability. However, if a property is transferred during a person’s lifetime and then they die, that stepped up basis does not occur and the beneficiary who received it during their lifetime, if they were to sell it, would have to pay the capital gains taxes based on the original purchase price of the property, rather than its value on the date of death.
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