I’m sorry for the news. They care about you and for many people, a house is the largest and most valuable asset they have.
1. They paid $30k for it, but when the house transfers to you, you gain a tremendous benefit: the “basis” of the house will reset to current market price. If you were to sell immediately, there would be no taxable gain since you’d gain $0. Since the house never re-appraised, the residential property taxes will also remain set at theoretical last appraisal done on the house. Likely the property taxes owed on the house are substantially less than what would be owed if you bought the house new.
2. If you rent the house out, you can sell the house in a “1031 Exchange” and transfer the built-up equity and basis into another house (or multiple properties) of “like kind and value” to keep renting out. Simply put, the money you’d make from the sale of their house could be applied toward 1 or more rental houses elsewhere (even in Idaho or other states) so you could have a nice income stream. Note: 1031 exchanges are only for rental properties, not for a place you live in. You cannot commingle the gains in 1031 into a house you live in without paying capital gains / taxes.
VERY importantly — you need to find out if the instrument that transfers the property WILL NOT be subject to probate. Probate is a court process to determine the deceased assets and liabilities and square them up before executing the last will and testament instructions. The proceeds of probate are TAXED in most places and it can eat a lot of your inheritance up.
Skipping this mess can usually be accomplished by having a TOD (“Transfer On Death”) document witnessed and signed by all parties, usually recorded with the County Recorder’s Office. This lets you skip probate (and costly probate taxes). Check with the County Recorder’s Office where the house is located to inquire about a TOD.
You can do the same with bank accounts; you can make them POD (“Payable Upon Death”) and do something similar with stocks / bonds / CDs. Brokerage accounts, if they have any, usually have a beneficiary process. Each brokerage will have different forms and a slightly different method to confirm the account owner’s wishes.
All of this is a tremendous gift. I doubt your grandparents want the tax man to take half because of some simple paperwork. Talk to them about it if it turns out there’s no TOD and see if they are amenable to singing one and getting that in place else the tax burden could be quite substantial.
Of course, consult with qualified professionals to make sure you’re doing all this by the book and the right way.
Good luck and I’m sorry to hear your grandparents are in the years of their twilight. How wonderful that they think so highly of you.
>Of course, consult with qualified professionals to make sure you’re doing all this by the book and the
This comment was full of good advice but this is the best. Spend a few hundred dollars to consult with an attorney so you don't make a costly misstep.
A few hundred or $1000 on an attorney will be very well worth ensuring this property transfer is executed correctly. Don't want to make a mistake that's costs you cold hard value in the form or taxes or fees.
When did the IRS start collecting estate taxes on an estate as small as 1.05 million? See https://www.irs.gov/businesses/small-businesses-self-employed/estate-tax. It looks like the limit for 2023 is over $13 million. (NAL).
State law will prevail. I am unfamiliar with California law. In this situation OP may or may not have federal tax depending on total value of estate given they are not a spouse.
The IRS disproportionately audits people with less money. But the tax laws are still the tax laws, and they can't make you pay taxes just because you're poor, only if you have a taxable event -- and then only to the legal amount.
Estate taxes are the estate taxes, and they aren't going to audit you into paying more than the legal estate taxes just because you're poor.
I've found this to be true anecdotally. I have an acquaintance that made under 100k that was audited twice in three years. Both times he owed no money.
> The proceeds of probate are TAXED in most places and it can eat a lot of your inheritance up.
Be very careful in accepting this comment. This bequest would not be subject to Federal estate tax, and a quick lookup discloses that California has no inheritance taxes. There will be costs and fees involved with the probate process, of course. The phrase "it can eat a lot of your inheritance up" is not very informative.
Meanwhile in PA, it’s 5% for parents inheritance or more depending on your relationship to the person that died. Doesn’t matter if it’s $10 or $100 million. I think that’s a good caveat to be aware of, just not for this case for sure.
In 2021 our Calif estate attorney stated there were taxes if the house passed to a grandchild, but not to a child.
Best ask an attorney .
Estate tax has a threshold of around 11 million ish. If below that, no estate ta estate. If total estate value is above that, there are taxes.
This comment deserves 341 upvotes votes! Spot on! I’d highly suggest keeping the property and ultimately renting it out. It could provide 3-5,000 a month in passive income for you for decades while the property taxes is roughly under 3,500 a year which is unheard of in OC and no mortgage. Or move into this home and live rent free with extremely low property taxes in the most sought after area of the country/world.
I don’t think this is true anymore on the taxes. Due to a recent law change, unless OP moves into the house and lives there full time, the tax basis will reset to market value. Still may be well worth renting out and keeping the procees but the annual taxes will likely be around $18000 per year
Thank goodness. Nobody should get a break on property taxes just because they've lived somewhere a long time. And definitely not when they pass the house on after death.
I think it should, to be honest.
If you're living in a house with your parents and your parents die, you shouldn't be forced to sell your actual home to pay taxes. Same if you're living in your grandparent's house.
If you inherit the house and immediately move in, that's essentially the same thing. When someone dies and you inherit something major like a house, it's entirely possible that the person who died was helping support you in some way.
But if you are inheriting from someone other than your parents, AND you immediately sell the house without living in it, it seems likely that this is a windfall for you. Taxing windfalls makes sense.
They tried but the voters voted it down. The propaganda being put out was that it would wipe out residential taxes protection too, which was untrue but people were afraid.
They are advocating that someone that inherits a house from their grandmother pay the same property taxes as the next-door neighbor that bought their house with the money they earned from their job.
Because their kids will go to the same schools and the fire department will show up at both houses just the same in an emergency. And that's what property taxes pay for.
My 95 year old neighbor and I live in identical houses but she bought hers in 1952 and I bought mine in 2017. I pay $18k per year and she pays $3k per year. If her taxes had been raised she wouldn’t have been able to afford to stay in her home, and I think she makes or neighborhood a better, richer place. When she dies her kids will need to pay the new tax basis unless they move in, which makes sense. But I’m glad she didn’t get pushed out as he value increased.
I don’t follow your logic at all. Luckily in Canada, there is no discount on prop taxes just for having lived in thr house longer. The cost of living increases as do property taxes, this is why we need to save enough for retirement.
She doesn’t get a “discount” on her property tax, rather there is a limit of 2% on how much it can increase each year.
Subtitle difference perhaps. But if the house values were flat or only slightly increased then there would be no difference.
When the house is sold (and now when it is inherited) the tax rate is reset using the current value.
I totally agree! I was reading about an elderly man in Washington State that is being forced out of his home because the property taxes are based on the current value. He is paying almost $20k a year now. I grew up with the goal being paying off your home so you can afford to stay there in your golden years. Now this guy is looking for an apartment to rent instead of being comfortable in his life long home.
You get to keep the same property taxes as when you bought the house. When your house value goes up 3x, you will be glad you had prop 13 protecting you.
This sounds like old people telling me that when I get older, I'll understand all of their conservative politics and pick them up myself.
Prop 13 has been a disaster. It privileges old NIMBYs over everyone else. It creates a neo-feudal structure where people who got there in the '70s and their descendants are the only ones who can afford to live there. And it insulates people from the consequences of the housing shortage they keep voting and advocating for.
This is why gentrification happens, the original residents can’t afford the now higher property taxes and are forced to move further from the city. If they have been there long enough they may be able to cash out and refi to stay longer but it’s still a ticking clock.
I am.
Two people own essentially identical houses next to each other. They would sell for the same price when sold. They are owned by people with similar net worth and income.
In what world is it ok for them to be paying different property taxes? That is just utter BS.
Having some adjustment for ability to pay does make sense to allow long time residents to stay in their home.
Do you know anything about real estate? The only time that it’s a good thing that your home skyrockets in value is when you’re going to sell it.
If you want to stay in your home, that’s the worst thing that can happen. I wish my house would go down in value so that my property taxes would be less, but my property taxes have doubled in the past five or six years.
Yes. Tax skyrockets ~~even~~ when value skyrockets. You can sell the house if you can't afford living in it, and get a massive payout that will allow you to buy two equivalent homes in okay states, and even more in states that suck.
I advocate that people pay their fair share in taxes. There are million dollar homes all around me, and I’m paying significantly more in property taxes for a two bedroom condo because I’m younger? That’s nonsense, and one of the forces contributing to our housing crisis.
It doesn’t affect the original purchaser. Only people who inherit and don’t move into the house.
If you move into the house and make it your primary residence you get like a million dollar jump in basis tax free.
Prop 13 fuuuuucked the property market in California. Prop 19 is a good thing.
This doesn’t change prop 13, which means you do have lower property taxes after a long ownership. It just rightly takes care of heirs also getting that tax break if they don’t live in the home
Which is 3-6 months of profit, and you'd still bring in $3-6k in passive income.
However you'd probably do better converting it to multiple rentals in Idaho, as Boise is growing fast and the cost to maintain a home in OC will be much higher than elsewhere, which limits rental upside. Plus with climate change, wildfires and other issues in OC may make insurance increasingly expensive in the near future.
Renters laws in California are bonkers.
The headache probably won't be worth the return.
Best to liquidate and reinvest probably.
Renters insurance, property mgmt fees, repairs..nope. not out of state and definitely not in California.
That’s the normal rate in NJ in any decent town. My suggestion for the OP is to rent out the home like AirBnb or rent it out to college students. Don’t selling, OC is a hot market for homes and why pay additional tax on the sale of the home.
>This comment deserves 341 upvotes votes!
Except for the very important part that is wrong. OP needs to plan on moving to CA or start paying big property taxes.
Thats 3.6% to 6% gross before expenses. That's an awful idea when factoring in all the risks. You could earn the same amount for decades by purchasing treasuries with the proceeds. You would need at least $10k a month in rent to make this a worthwhile investment.
that factoring in all the risks can be huge - as an absentee landlord you’d have to arrange for property management, professional services for things like plumbing/etc., a tenant could destroy the house, a tenant could stop paying rent and it would take you months to years to evict. Being a landlord is not for the newby and physically remote. Far better to divest and then take the case in to much saner investments or closer if you believe firmly in real estate.
You’re 3-6% assumption comparing to bonds is flawed. You’re not factoring in the gains of increased equity in the house. It’s like having a growing stock that pays a dividend. You have to factor both the rent $ and expected gain to compare to other stocks.
I’m not saying he should rent it out. Being a landlord is a lot of work and worry so it would need to be thought about way harder if it’s something to take on. Just saying it’s more nuanced.
Hard to manage a rental that is half a country away. I'd either move in or sell it and buy 4 properties near their current home and turn those into rentals.
Hell if i was graduating soon in idaho i would look for any excuse to move to the OC. Help grandpa out till its his time. Move a roommate or two in and get paid to live there.
This is incorrect.
Property taxes do reset. Previously you could petition for a parent-child transfer.
That’s is now limited to 1m if you are going to live in house.
And you still have to petition, the taxes by default will reset
Pray that this property is in a TRUST. Why?
Being the beneficiary of a +million-dollar real estate property held in a trust can offer several tax benefits. Here are the key advantages:
1. **Avoidance of Probate**
- **Benefit:** Assets held in a trust typically bypass probate.
- **Tax Impact:** Probate avoidance can save on probate fees and potentially reduce estate taxes, as the property is not subject to probate court oversight.
### 2. **Potential Estate Tax Reduction**
- **Benefit:** Trusts can be structured to minimize estate taxes.
- **Tax Impact:** For example, irrevocable trusts can remove the property from the grantor's estate, potentially reducing estate tax liability if the total estate exceeds the federal estate tax exemption.
### 3. **Gift Tax Advantages**
- **Benefit:** Transferring property into certain types of trusts can be considered a completed gift for tax purposes.
- **Tax Impact:** This can help in reducing the size of the taxable estate and may allow for leveraging the lifetime gift tax exemption.
### 4. **Generation-Skipping Transfer (GST) Tax Planning**
- **Benefit:** Trusts can be designed to pass assets to grandchildren or later generations.
- **Tax Impact:** This can help in avoiding or reducing the generation-skipping transfer tax, which is applied to transfers to beneficiaries who are more than one generation removed from the grantor.
### 5. **Income Tax Benefits**
- **Benefit:** Depending on the type of trust, the income generated from the property can be taxed at the beneficiary's tax rate, which might be lower than the grantor's.
- **Tax Impact:** This is especially beneficial if the trust distributes income to beneficiaries who are in a lower tax bracket.
### 6. **Property Tax Benefits**
- **Benefit:** In some jurisdictions, property transferred to a trust might be eligible for property tax exemptions or reductions, especially if the trust is structured to benefit a spouse or other close relatives.
- **Tax Impact:** This can lead to lower property taxes over time.
### 7. **Step-Up in Basis**
- **Benefit:** For revocable trusts that become irrevocable upon the grantor’s death, the property typically receives a step-up in basis.
- **Tax Impact:** This can reduce or eliminate capital gains taxes if the property is sold shortly after the grantor’s death.
### 8. **Creditor Protection**
- **Benefit:** Trusts, particularly irrevocable trusts, can protect assets from creditors.
- **Tax Impact:** While not a direct tax benefit, protecting the property from creditors can prevent loss, ensuring the property remains in the family and continues to offer its tax advantages.
### 9. **Charitable Deductions**
- **Benefit:** Trusts can be used to make charitable donations.
- **Tax Impact:** Contributions to charitable trusts or from a trust to a qualified charity can provide income tax deductions for the trust or reduce the taxable estate.
### 10. **Special Use Valuation for Agricultural Property**
- **Benefit:** For agricultural or family business property held in a trust, special use valuation may be available.
- **Tax Impact:** This can reduce estate taxes by valuing the property based its current use and not the highest or best use.
### Important Considerations
- **Trust Type:** The specific tax benefits can vary depending on whether the trust is revocable or irrevocable.
- **State Laws:** State laws can significantly impact the tax benefits associated with trusts, especially concerning estate, gift, and property taxes.
- **Consultation with a Professional:** Given the complexity of tax laws, consulting with a tax professional or an estate planning attorney is crucial to maximize the benefits and ensure compliance with all regulations.
NAL, but have person experience in CA with one part of this. Since the house would transfer under prop 19 instead of 13, there would be a reassessment. Tha is, unless it became your primary residence. This means the property tax would increase a LOT. It is likely now based on the 30k + 5% (I think) appreciation as they were locked in under prop 13.
Property taxes go up for the new owner. They’d get a million worth of value waived if it’s their residence.
1031 is moot with a step up in capital gains. That’s for after years of using as a rental. Moot for op at this point.
Make sure to have the house appraised by a professional appraiser to establish its value on the date of death. This will establish the step-up basis. When you sell, you will use this appraisal to determine any capital gain, and any taxes owed.
I'm fairly informed in terms of Real Estate but the 1031 and similar sorts of exchange mechanisms are one thing I wished I had better understood over the past decades. I would encourage agents to take the time to educate their clients on this if they think it may be applicable.
In my state it is actually multiple questions on the RE exam and most teachers give math questions on it. But most agents do not even remember it has to be "like wise" properties or "similar".
I am so happy this has so many upvotes my god someone gave a legitimate answer.
Rent out the house, use a rental company they do take a percentage but now there’s less headache for you. Depending on location its realistically 3-6k/mo. Now that is constant cashflow every month coming in, and you still have an apprecating asset that can be used like a bank account (pull equity).
Only thing to really check like stated above is if it’s going into probate.
You will inherit it tax free. As if you bought for its current market value. If you sell it right away you will pocket the 98% of cash, sake price less expenses of sale.
However, you have a unique opportunity to live in that house and at the same tiny property tax that your grandpa paid. After a stint, you also would have the right to downsize within the state and have your property tax follow you.
The tax combination above was set up to protect the elderly from being chased out of their houses. The result however was a scheme that is a massive benefit to the upper middle and lower upper classes.
You have a unique opportunity. You can make California wages, 2-3x those of Idaho, and yet afford to live there with a fraction of the pressure as others.
Or you can pocket a million tax free.
You sit at an enviable decision node, a choice between two kinds of great. Make the right decision and you can take a long step away from the trials and tribulations of survival in 2024 America.
After belonging to the elderly grandparents, it might be a money pit with a roof, HVAC, water heater, plumbing and wiring needing updating, and 1970s carpeting, landscaping, kitchen and bathrooms needing a cumulative 100 thousand to make it an appealing place to live in or to attract renters.
I’m leaning towards using it as a rental property while I remain in Idaho for the foreseeable future, I’m attending law school in idaho to become a lawyer in the future and I’m not too worried about finding good paying work after graduation. Average starting lawyer salary out here is 80k and some of my upper class men started at 120k. There’s a lot of money to be made out here in my field. I’d rather lease it out as an additional income to help pay off my college debt while I work. Figure it would be a good move if I can sort it out. Rent for my 1 bedroom apartment 2 miles from downtown is 1,100 a month so on top of a future attorney salary it would be a good way for me to make money on the side I assume.
Use a management company. A quality one. It won’t be the cheapest process but it’s still passive income. I’m building an apartment. Ours does the advertising, showing, vetting and if needed evicting. We also have a contractor to fix the things. If he inherited the house the first month’s rent goes to the realtor plus a monthly fee then he can save a few months for the contractor as long as it’s in good shape now.
Do you know how to actually find a quality one?
The only time i have used one, i went off recommendations and they were still the hottest of garbage.
I’m sure there are some good ones but i bet the vast majority are shit.
Yeah, managing property is such a giant PITA. Management companies hold a ton of power to bend you right over.
Right now, CA rent rates are often a way better deal than mortgage rates, which maths out to selling being a better deal for OP. VTSAX and chill instead of renting.
If you had $1,000,000 cash in the bank, would you buy this house in CA and rent it out? Probably not.
The caveat being if you plan to move to that area, but want to earn cash on it before you move in the house later.
So remote landlording? When a pipe bursts how will you handle it? When the hot water tank stops heating? What if your tenant stops paying rent? What if your tenant trashes the interior? Consider property management firms if that’s your intent. Also triple check that your property taxes will stay low - indications are that it would escalate to be equivalent to others in the area including you paying the share of those elderly who are taxed at artificially low rates as is appropriate.
Do not underestimate the power of selling and, regardless of the bite taxes may take out, sticking the proceeds into the stock market for the long haul. Even if you only got half that amount, $500,000, in proceeds, and stuck them in Vanguard’s low-cost S&P 500 fund (VFIAX / VOO) as Warren Buffett recommends, and you get its long-term average of 10% annual return and let it compound, you’d end up with $8,700,000 in 30 years. That’s $8.7 million for doing basically nothing.
Sure it’ll pay some dividends you’d have to pay taxes on, but you can use a bit of the dividends themselves to do so! People sometimes think “retirement money” MUST be in a tax-sheltered retirement fund, but that’s just not true. You just need tax-efficient funds, like the one above.
If you’re curious about this idea, look up Jim Collin’s book *The Simple Path to Wealth* or check out his talk at Google on YouTube. You can also head over to /r/bogleheads.
Keep in mind $1M in an investment account today could go a long way over 20 - 30 years, and in many ways is less work than being a landlord. Even a very conservative 20Y treasury investment gives you approximately $45K/year, and that's pretty much "set and forget" with practically no risk.
No, you don't have to return to "deal with legal issues" of inheriting a house. What are you even talking about??
Why be concerned? You'll receive the step up in basis on the home at date of death, so no capital gain tax.
Just have the home cleared out and sold as is. Congrats, you then have a million in your pocket free and clear, no tax owed.
At most, you have to return for a weekend to clear out pictures and keepsakes that you want to keep and have room for. That's it. Two days tops.
Do your grandparents have other assets? This might be a moot issue especially because Grandma has Alzheimer's and memory care units are very very expensive..
You are so right!! Instead of counting what they will inherit, the concern should be that grandparents have legally taken care of the issue of care, for both, if needed in the future. If not, there possible might not be any inherit (or a much smaller amout) to think/dream about. Alzheimers can turn into a 24/7 care situation very quickly. My mother, unfortunately, reached a point that we weren't able to care for her any longer at home. She was in Alzheimers care unit for approx 5yrs.
Or my mother who fell and fractured her skull and had traumatic brain injury and had to be put in a home, which broke my heart, but I could no longer care for her. I could not provide the care that she needed.
There are all kinds of things that can happen to a person when they get old and nobody should ever count on an inheritance while the old person is still alive.
I know you were asking about the house in particular, but I wanted to mention as well about the care your grandmom and granddad may need. Please know that California has an exceptional Medicaid program. There's no asset test. All you need to do is be in need of the appropriate level of care and you qualify. Alzheimers will likely already qualify your grandmom for Medi-Cal (medicaid in CA).
Being on Medi-cal gets her fully paid for skilled nursing care. There's also the assisted living waiver program. Look into these things and more importantly, make sure your family consults with an eldercare/estate attorney. The moves you make now will protect your grandparents and their estate.
Do not let your family sell the home to pay for care! It's not needed in CA.
I do not know how Medicaid works in California, but in Washington state they attach to your house and then they basically take the house if the person you try to leave your house to can’t pay off the lien, and they tack on so much damn interest on top of the lien. Medicaid clawback (MERP) is a horrible fucking terrible thing.
California is an entirely different beast. Seriously, no asset test. Even when they still had an asset test, homes were exempt. They're really leading the way to what healthcare should be. You shouldn't have to be destitute to get healthcare.
Unless you plan on living in California, I would recommend selling it when it becomes yours. I see someone else suggested renting it, but California is very tenant-friendly and landlord-hostile, so that's not recommended unless you're willing to learn well and learn fast. For example, it can take months, if not years, to evict someone.
Are you inheriting 100% of the property, or are you sharing with someone?
Assuming it’s 100% yours. If you sell, you get the stepped up basis, so you’ll get the home value with no taxes except on any gains between day of death and sale date. Or, you can keep it and live in it or keep it and rent it out. If there’s no mortgage on it, you can cash out refi and get cash plus the home (but not you have a mortgage, and would have to qualify for it).
Legally, you’ll need a copy of the will and a copy of the death certificate, and will need to ask the lawyer how to transfer the deed to your name. With my aunt, I was the executor, but it was all in a trust, and only the trustee changed, not the deed, so… I can’t help you legally, but it should be easy, the lawyer/executor should guide you through probate.
I would suggest ensuring that the property automatically transfers to you upon both of their deaths. This way, it avoids probate – you do NOT want their ESTATE to transfer the property to you after their death, you want to instantaneously own the property when they pass away. In doing it this way, your basis in the property is “stepped up” to the fair market value on the date of death. So your basis would be ~$1,050,000 not $30k.
In Florida, this is called a Lady Bird Deed. Which is just a term for a regular warranty deed that is filed with the county. There is specific legal language that must be on this warranty deed in order for it to be valid & produce the desired result. A lawyer at a title company can easily draft this up, and it shouldn’t be very expensive either.
If you do not already own the house, this is your chance to move into a free house in sunny state. Just money you will save on Non paying real estate agents.
I lived in SoCal for 25 years before I left to idaho for grad school. Nothing but smog and expensive gas over there. My life goal is to be an attorney that owns land and runs a self sustaining household and own goats. I literally have a law professor who moved from Irvine California to move to Idaho get paid 120k a year to teach law at a university and now he owns horses on a farmland outside of Boise. Like WTF.. Boise turned me into wanting to be Thorfinn when I reach my 30’s.
Lol Orange County is not that smoggy. You could own land and farm goats in SoCal, not deal with snow and average law prof salary at UC Irvine is $190k. Not saying there aren't many other great reasons to stay in Idaho including much lower cost of living, but inheriting $1m+ can lead to doing what you want in much better weather.
Or sell the house and take the million dollar (tax free) proceeds and buy the dream house in Idaho and get some goats - then live on the rest as a million dollars would buy a HUGE place in Idaho.
I wonder if it’s in the forest fire region, the falling into the ocean region, the flood region, the mudslide region, or just the “200 foot well went dry” region.
You get a stepped up tax basis. So you can sell it and there won’t be much in the way of capital gains taxes. Usually if you sell within about 6 months of inheriting it, the sales price is considered your basis.
Note- Idaho is one of the few states that will tax capital gains on property sold in another state. So if you hold the home and sell it in a few years and have a gain, Idaho WILL collect capital gains tax, and you will have to pay California capital gains tax.
I'm not an expert on Idaho or California taxes, but that doesn't sound right about the capital gains tax. Typically, you'll receive a tax credit for taxes paid to another state. That way, you won't be taxed twice for the same gain.
You’re getting a lot of really bad advice here. Call your accountant and your attorney. Make sure they both understand California tax and real estate laws. CA is a completely different animal when it comes to taxes and inheritance. If you don’t have one or both, get them.
Talk to a lawyer about putting it in a trust, I don't know the exact process but I believe you can skip a lot of taxes on the gain of the house that way
Sell the house. Buy another where you want to live. Invest the rest in dividend stocks.
When you speak of your grandparents, speak well, and remember them fondly.
Prop 19 allows for grandchildren to inherit the property tax basis of their grandparents but one of the conditions of doing so is that your parents must already be deceased. I would have a look at this [document](https://www.boe.ca.gov/pdf/pub800-2.pdf) and find a good estate lawyer
When the time comes, a big Thank you to your Grandparents. You will need a tax attorney and the estate attorney. Prop 19 may come into play and protect your low tax basis BUT you will need to live in the home. There are many if's and but's that may exclude you from this. Get a copy of the will or trust and have it in your possession if you can. The Trustee will be the one driving the closing and disposition of the assets.
Under Prop 19, OP will have to move into the home to take advantage of the property tax transfer (up to $1M valuation). Otherwise, it gets assessed at market rates, meaning a \~$1M home in OC will probably owe something like $12K/year in property tax. As is, his grandparents are probably paying something like $1K-$1.5K/year - an absolute gold mine.
I truly don’t understand this perspective. So taxes being lower for elderly makes sense to me, but for an inherited million dollar property? Why should they pay less property taxes than a working neighbor who saved and purchased?
Who says they aren’t working? Have you been to CA? A million dollars doesn’t get you much. Basically the old law keeping taxes the same was to help give beneficiary children a chance to stay in their neighborhood.
So yes the gentrified neighborhoods that cost $1.5 million for a home, you cannot afford the taxes unless you are either rich or have a high-paying job.
And are supported by your neighbors paying more tax for your benefit. I agree with the elderly idea and we all pay to support it. Their kids receiving the same benefit kind of smacks of inherited privilege at some point.
Well then, thank you realtors for stopping those who inherit from living off the taxes of those who live around them. I didn’t see that coming - that I’d thank a realtor today!
Already married to a loyal big booty Latina LVN nurse. She’d throw hands on any woman who would hit on me or disrespect me. Together for 10 years married for 2 years. we have no kids so we both went back to school to get a higher education as of now. I plan on becoming a lawyer and she’s getting her BSN. Not terrible for First gen college graduates.
Just get a real estate attorney and a good CPA, they’ll know how to guide you through the financials and legalities.
That’s what I did when I inherited my house.
I found a good agent and sold it right away. One step at a time.
Lease it out and let the asset rise in value. Guessing you could easily lease it out for $5K+/month with minimal expenses since the tax value will be so low
There should be a form to fill out with the county to keep their tax basis on the house so you can pay the same property tax basis they were, probably around $50/year vs the $10,000 or so it would be today. This makes the house far more valuable to you as a rental if you do t want to live in it. You sell it and it goes up to market.
This, and get a fiduciary financial advisor asap to avoid probate by putting the home into a trust and an accountant to avoid taxes. Also, remember that if you're not renting that out, you'll be on the hook for state property taxes for a million dollar home, so there will be annual costs plus insurance and maintenance. You'll want to convert this into a rental to cover the costs and make some income, use that income to help out you aging parents and grandparents.
good luck. take some time and go visit your grands while you can. don't mention the will or house, just enjoy their presence because once they're gone, you will want some late life memories. even if the will doesn't turn out exactly, be a good grandkid. i don't like the right wing politics down there but you can make your own decisions.
Congratulations. There's nothing like the dream of living rent or mortgage-free, your ability to save money will be huge. However it's very expensive to live in California, for all the other goods and services you will need, not to mention the increased risk of natural disasters caused by climate change denial such as wildfires. If you sell, be sure to look into capital gains taxes, and make sure you don't lose a big chunk of money to paperwork, policies, and stupid laws.
Without a mortgage, living in California is relatively easy because our wages are higher. Seriously, if I didn’t have a mortgage payment I’d be vacationing internationally, retiring early, eating at high end restaurants, etc. the mortgage is the hardest part about living here.
once they both pass away you will get a step-up basis when you inherit the property - then you can sell without gain/taxes.... but make sure you dont get title to the property until after their death - if they gift it to you before death, you will not get the step-up basis and owe a bunch of taxes upon sale.
Read up on smart investing now or you will day trade the money away. Do NOT think you can read lines on a chart like tea leaves, and just because an earnings report will show favorable profit doesn't mean the stock MUST go up. Don't run Options! Never leverage! You may be a smart law student, you aren't a seasoned financial analyst.
You said you want land in Idaho, sell the house, invest most of it and pay off your debt, buy land and expect to retire early or richer than any of your colleagues. Look at the percentage on your graduate loans to consider paying that off. Other investment returns fluctate, you know what you owe. If you like prosector work, consider it, it would pay off your loans with forgiveness after 10 years and it isn't like you need the money of private sector work. Could always transition into a Judgeship later, they make good money.
I wouldn't rent it when you can get the money out tax free and put it into other investments. Taxes and House Insurance in CA will only go up. Not only is home insurance going up but insurance companies are leaving CA. Mortgages require insurance and insurance rates-- both impact house values negatively. Owning a rental property in another State is annoying at best, and a potential headache.
Also don't tell friends and colleagues about your money, there is no upside to that disclosure, only negatives.
Look into a Lady Bird Deed!! Cost in Michigan is about $500-$600. I just sold a home where title passed automatically to 3 siblings via a Lady Bird Deed with all other possessions distributed via a will. It’s similar to a quit claim deed except it doesn’t transfer to you until your grandparents pass away. You avoid probate and you’re not on the deed until they pass so there’s no legal entanglements like a quit claim deed.
All the comments on the “property taxes should go up” to pay for services forget there are states that don’t have property taxes and still have all the services!! Property taxes are just rent to the government because the state can seize you home if you don’t pay your property taxes even if it’s paid off 🤬
First of all, you have not inherited yet. The equity in that house could still be taken by the government to pay for their end of life nursing home care. But if you are lucky enough to inherit it, rejoice! You inherit it at the value as of their death, no capital gains tax. There may be state inheritance tax, but you will still get a lot. Prepare to sell it upon their death.
1031 exchange would have to be another business property and you need to use an intermediary (risk?) also may not be that easy to find person interesting in exchanging. That’s way down the road an only if you want to be a landlord.
Your best bet might be to sell it. Like the poster said, you would not have to pay capital gains tax. Unless you want to be a landlord. You could buy anything you want with the cash.
In any case, though it’s worth having a general game plan, this is a potential outcome. The grandparents have not passed away yet, and one never knows if they may have a cash need.
So I wouldn’t get too entrenched in the details until the day comes BUT.
Try to get a copy of the will. You will need it when that day comes.
You shoul be. Prop 19 hope you got 20 30k lying g around for prop taxes every year forever.
They are reassessing no matter what you do living there not living there trusts transfers inheritance there is no way out of it Repeal prop 19. Guess how we know
If you inherit this asset by Will or by Trust, you should get a step up in basis. I would suggest that your grandparents talk with an estate planning attorney and put the property in trust. Www.naela.org is a good place to start.
do this!
Someone I knew in Seal Beach lived in a house that was worth millions and millions, and paid no taxes on it, because they were the executor to the trust, … The Trones the house, and you run the trust… Slick way to bypass this is what the wealthy do. I'm not a lawyer tax professional, but transfer it to a trust ASAP
Talk to a real estate attorney and discuss putting the home in a trust, this can in most situations help avoid massive inheritance taxes which exist in California.
My mom was the executor for her parents $2M house, but she only got $30K. She spent $20K and 3 months with my sister just cleaning it out 7 days a week, 8 hours a day. They didn't remodel or anything. The reason why she only got an executor fee was because my aunt was to inherit the estate. Grandma decided the aunt deserved the inheritance since my mom was already financially secure. She is, but not rich. And the aunt just sat back and collected the rest.
Hopefully in your case, you also get to keep the estate.
I guess I lucked out with having grandma who was a compulsive cleaner so aside from the garage it’s really clean. The garage has random stuff but like organized stuff. Like fully chronological order lee child books my grandpa owns. He’s openly told me in Spanish “when he dies to throw it all away it’s just shit I like to look at that’s not worth anything” he spends all his time reading books and napping after now. He is obsessed with the jack reacher book series owns like all of them and even copies of ones he already owns and re reads them all the time 😂 I recently got him into the American assassin book series says jack reachers back stories were a more fun read.
You could rent it out, but keep in mind, renting is not "passive income" even if you hire a property management firm. If they own the house free and clear (no mortgage), you're in good shape, but it still costs money to own a home.
Home repairs average 1-2% of the home value ($10K to $20K per year). Plus taxes.
Become involved now. My mom was to inherit a house from my uncle in Colorado. But in his last years, he didn't pay his insurance, he didn't pay his mortgage, he didn't pay his utility bills. He was living alone and no one was helping him. Eventually a pipe froze and broke and essentially ruined the house. My mother inherited absolutely nothing, because of neglect, a very expensive house became worth zero, by the time you looked at the expenses and mortgage due. Absolutely zero.
Unless you really want to get up and move to live in sunny California, it seems the option that will require the least amount of time and energy is to sell it.
Renting it may be another option, but you’ve got to consider the upkeep and headaches that go along with all that. Also, it’s out of your peripheral in a completely different state, which can multiply the headaches (Unless you have some trustworthy friends or family nearby to help).
I previously lived in California for 25 years before I left to grad school in idaho. My pops would be open to keep an eye on it if I keep it or rent it out to someone. He has a condo he bought in 2008 for 90k he now rents to people for passive income and if kinda want to do the same if I can inherit the house without too many issues. I don’t miss Cali. I live in Boise idaho now, which means I’m 2 miles from downtown and 7 miles from the river I go fishing at with my friends. Work life balance is life changing. I went t from working crazy hours to paying $1,100 a month for a bed room apartment where I can crank some tunes and have a margarita after work with a dog and not have to worry about someone stealing my packages off my patio. Honestly after living in California for all those years aside from family they don’t have much going for them aside from pick up stix. I’d rather stay in idaho long term. Plus my wife got into the BSU nursing program so there’s no leaving here any time soon.
You have hit the jackpot. A paid off house in California, in one of the richest counties in the US. I live in Idaho and used to live in SoCal, I'd move back to SoCal in a second if I had a paid-off property there.
The freedom you get in life when you have no housing expense is huge. You could be set to retire early. Move to SoCal, if the house is big enough get a fun roommate or two, and pick a hobby job you love. You literally have life freedom in your 20s, don't waste it in Idaho.
Had a similar situation back in 2008 in Camarillo, CA. House transferred into an estate and was reassessed from the day of the death until the day it sold for taxes by the county.
At the sale, the taxes came out of the proceeds from the sale. I don’t remember how much taxes were but the house sold for about 900k.
Check with the county to see what will happen, as usually property is reassessed (notice I didn’t say re-appraised) and taxes will be based on the new assessed value.
My advice, unless you want to keep it long term would be to sell it and pay the taxes out of the sale. Also, get an attorney since you are out of state.
I’d keep it and move there. But if you can’t move when it’s ready, hire a management company to rent it for you. By the time you’re their age it’ll be worth 5 mill or more.
I’m sorry for the news. They care about you and for many people, a house is the largest and most valuable asset they have. 1. They paid $30k for it, but when the house transfers to you, you gain a tremendous benefit: the “basis” of the house will reset to current market price. If you were to sell immediately, there would be no taxable gain since you’d gain $0. Since the house never re-appraised, the residential property taxes will also remain set at theoretical last appraisal done on the house. Likely the property taxes owed on the house are substantially less than what would be owed if you bought the house new. 2. If you rent the house out, you can sell the house in a “1031 Exchange” and transfer the built-up equity and basis into another house (or multiple properties) of “like kind and value” to keep renting out. Simply put, the money you’d make from the sale of their house could be applied toward 1 or more rental houses elsewhere (even in Idaho or other states) so you could have a nice income stream. Note: 1031 exchanges are only for rental properties, not for a place you live in. You cannot commingle the gains in 1031 into a house you live in without paying capital gains / taxes. VERY importantly — you need to find out if the instrument that transfers the property WILL NOT be subject to probate. Probate is a court process to determine the deceased assets and liabilities and square them up before executing the last will and testament instructions. The proceeds of probate are TAXED in most places and it can eat a lot of your inheritance up. Skipping this mess can usually be accomplished by having a TOD (“Transfer On Death”) document witnessed and signed by all parties, usually recorded with the County Recorder’s Office. This lets you skip probate (and costly probate taxes). Check with the County Recorder’s Office where the house is located to inquire about a TOD. You can do the same with bank accounts; you can make them POD (“Payable Upon Death”) and do something similar with stocks / bonds / CDs. Brokerage accounts, if they have any, usually have a beneficiary process. Each brokerage will have different forms and a slightly different method to confirm the account owner’s wishes. All of this is a tremendous gift. I doubt your grandparents want the tax man to take half because of some simple paperwork. Talk to them about it if it turns out there’s no TOD and see if they are amenable to singing one and getting that in place else the tax burden could be quite substantial. Of course, consult with qualified professionals to make sure you’re doing all this by the book and the right way. Good luck and I’m sorry to hear your grandparents are in the years of their twilight. How wonderful that they think so highly of you.
>Of course, consult with qualified professionals to make sure you’re doing all this by the book and the This comment was full of good advice but this is the best. Spend a few hundred dollars to consult with an attorney so you don't make a costly misstep.
A few hundred or $1000 on an attorney will be very well worth ensuring this property transfer is executed correctly. Don't want to make a mistake that's costs you cold hard value in the form or taxes or fees.
When did the IRS start collecting estate taxes on an estate as small as 1.05 million? See https://www.irs.gov/businesses/small-businesses-self-employed/estate-tax. It looks like the limit for 2023 is over $13 million. (NAL).
State law will prevail. I am unfamiliar with California law. In this situation OP may or may not have federal tax depending on total value of estate given they are not a spouse.
I read somewhere a while ago that the IRS statistically goes after people with less money
The IRS disproportionately audits people with less money. But the tax laws are still the tax laws, and they can't make you pay taxes just because you're poor, only if you have a taxable event -- and then only to the legal amount. Estate taxes are the estate taxes, and they aren't going to audit you into paying more than the legal estate taxes just because you're poor.
I've found this to be true anecdotally. I have an acquaintance that made under 100k that was audited twice in three years. Both times he owed no money.
> The proceeds of probate are TAXED in most places and it can eat a lot of your inheritance up. Be very careful in accepting this comment. This bequest would not be subject to Federal estate tax, and a quick lookup discloses that California has no inheritance taxes. There will be costs and fees involved with the probate process, of course. The phrase "it can eat a lot of your inheritance up" is not very informative.
Meanwhile in PA, it’s 5% for parents inheritance or more depending on your relationship to the person that died. Doesn’t matter if it’s $10 or $100 million. I think that’s a good caveat to be aware of, just not for this case for sure.
In 2021 our Calif estate attorney stated there were taxes if the house passed to a grandchild, but not to a child. Best ask an attorney . Estate tax has a threshold of around 11 million ish. If below that, no estate ta estate. If total estate value is above that, there are taxes.
That sounds like an issue regarding an increase in yearly property taxes, not inheritance taxes.
This comment deserves 341 upvotes votes! Spot on! I’d highly suggest keeping the property and ultimately renting it out. It could provide 3-5,000 a month in passive income for you for decades while the property taxes is roughly under 3,500 a year which is unheard of in OC and no mortgage. Or move into this home and live rent free with extremely low property taxes in the most sought after area of the country/world.
I don’t think this is true anymore on the taxes. Due to a recent law change, unless OP moves into the house and lives there full time, the tax basis will reset to market value. Still may be well worth renting out and keeping the procees but the annual taxes will likely be around $18000 per year
Yes Prop 19 changed this in California.
Thank goodness. Nobody should get a break on property taxes just because they've lived somewhere a long time. And definitely not when they pass the house on after death.
Weird how much that opinion varies based solely on personal circumstance.
I think it should, to be honest. If you're living in a house with your parents and your parents die, you shouldn't be forced to sell your actual home to pay taxes. Same if you're living in your grandparent's house. If you inherit the house and immediately move in, that's essentially the same thing. When someone dies and you inherit something major like a house, it's entirely possible that the person who died was helping support you in some way. But if you are inheriting from someone other than your parents, AND you immediately sell the house without living in it, it seems likely that this is a windfall for you. Taxing windfalls makes sense.
It’s commercial property that should be targeted. Prop 19 didn’t touch that.
They tried but the voters voted it down. The propaganda being put out was that it would wipe out residential taxes protection too, which was untrue but people were afraid.
Are you advocating for people to pay more property taxes because their homes have skyrocketed in value through no fault of their own?
They are advocating that someone that inherits a house from their grandmother pay the same property taxes as the next-door neighbor that bought their house with the money they earned from their job. Because their kids will go to the same schools and the fire department will show up at both houses just the same in an emergency. And that's what property taxes pay for.
If you and I live in similar houses near each other, with the same market value, why should one of us pay ten times as much property tax?
My 95 year old neighbor and I live in identical houses but she bought hers in 1952 and I bought mine in 2017. I pay $18k per year and she pays $3k per year. If her taxes had been raised she wouldn’t have been able to afford to stay in her home, and I think she makes or neighborhood a better, richer place. When she dies her kids will need to pay the new tax basis unless they move in, which makes sense. But I’m glad she didn’t get pushed out as he value increased.
I don’t follow your logic at all. Luckily in Canada, there is no discount on prop taxes just for having lived in thr house longer. The cost of living increases as do property taxes, this is why we need to save enough for retirement.
She doesn’t get a “discount” on her property tax, rather there is a limit of 2% on how much it can increase each year. Subtitle difference perhaps. But if the house values were flat or only slightly increased then there would be no difference. When the house is sold (and now when it is inherited) the tax rate is reset using the current value.
I totally agree! I was reading about an elderly man in Washington State that is being forced out of his home because the property taxes are based on the current value. He is paying almost $20k a year now. I grew up with the goal being paying off your home so you can afford to stay there in your golden years. Now this guy is looking for an apartment to rent instead of being comfortable in his life long home.
You get to keep the same property taxes as when you bought the house. When your house value goes up 3x, you will be glad you had prop 13 protecting you.
Everyone is happy when a rule benefits them more than someone else. That goes without saying.
The good thing about this law is that it applies to all property owners.
If Prop 13 didn't exist, everyone would see a 1.5x increase, on par with wage growth, instead of some seeing 0% and some seeing 3x.
This sounds like old people telling me that when I get older, I'll understand all of their conservative politics and pick them up myself. Prop 13 has been a disaster. It privileges old NIMBYs over everyone else. It creates a neo-feudal structure where people who got there in the '70s and their descendants are the only ones who can afford to live there. And it insulates people from the consequences of the housing shortage they keep voting and advocating for.
This is why gentrification happens, the original residents can’t afford the now higher property taxes and are forced to move further from the city. If they have been there long enough they may be able to cash out and refi to stay longer but it’s still a ticking clock.
I am. Two people own essentially identical houses next to each other. They would sell for the same price when sold. They are owned by people with similar net worth and income. In what world is it ok for them to be paying different property taxes? That is just utter BS. Having some adjustment for ability to pay does make sense to allow long time residents to stay in their home.
You act like having your home skyrocket in value makes you a victim.
Having a home skyrocket in value because of gentrification and that the newcomers push out long time residents makes you a victim, yes.
"push out" aka receiving hundreds of thousands of dollars in profit thru no fault of your own.
Exactly this.
Victim of what, receiving a windfall some people would kill for? Own that shit. Don't play the fucking victim.
Do you know anything about real estate? The only time that it’s a good thing that your home skyrockets in value is when you’re going to sell it. If you want to stay in your home, that’s the worst thing that can happen. I wish my house would go down in value so that my property taxes would be less, but my property taxes have doubled in the past five or six years.
And yet I'm jealous of you. And I'm poor as FUCK. Be fucking thankful
Yes. Tax skyrockets ~~even~~ when value skyrockets. You can sell the house if you can't afford living in it, and get a massive payout that will allow you to buy two equivalent homes in okay states, and even more in states that suck.
I advocate that people pay their fair share in taxes. There are million dollar homes all around me, and I’m paying significantly more in property taxes for a two bedroom condo because I’m younger? That’s nonsense, and one of the forces contributing to our housing crisis.
Yes. What's the alternative? They get rich thru no fault of their own without paying a tax on it?
Yes. If they can’t afford the new taxes they can sell to someone who can.
Yes. If the homes have skyrocketed in value, it is likely that the services the taxes pay for have as well.
It doesn’t affect the original purchaser. Only people who inherit and don’t move into the house. If you move into the house and make it your primary residence you get like a million dollar jump in basis tax free. Prop 13 fuuuuucked the property market in California. Prop 19 is a good thing.
This doesn’t change prop 13, which means you do have lower property taxes after a long ownership. It just rightly takes care of heirs also getting that tax break if they don’t live in the home
Which is 3-6 months of profit, and you'd still bring in $3-6k in passive income. However you'd probably do better converting it to multiple rentals in Idaho, as Boise is growing fast and the cost to maintain a home in OC will be much higher than elsewhere, which limits rental upside. Plus with climate change, wildfires and other issues in OC may make insurance increasingly expensive in the near future.
Renters laws in California are bonkers. The headache probably won't be worth the return. Best to liquidate and reinvest probably. Renters insurance, property mgmt fees, repairs..nope. not out of state and definitely not in California.
That’s the normal rate in NJ in any decent town. My suggestion for the OP is to rent out the home like AirBnb or rent it out to college students. Don’t selling, OC is a hot market for homes and why pay additional tax on the sale of the home.
>This comment deserves 341 upvotes votes! Except for the very important part that is wrong. OP needs to plan on moving to CA or start paying big property taxes.
Thats 3.6% to 6% gross before expenses. That's an awful idea when factoring in all the risks. You could earn the same amount for decades by purchasing treasuries with the proceeds. You would need at least $10k a month in rent to make this a worthwhile investment.
that factoring in all the risks can be huge - as an absentee landlord you’d have to arrange for property management, professional services for things like plumbing/etc., a tenant could destroy the house, a tenant could stop paying rent and it would take you months to years to evict. Being a landlord is not for the newby and physically remote. Far better to divest and then take the case in to much saner investments or closer if you believe firmly in real estate.
You’re 3-6% assumption comparing to bonds is flawed. You’re not factoring in the gains of increased equity in the house. It’s like having a growing stock that pays a dividend. You have to factor both the rent $ and expected gain to compare to other stocks. I’m not saying he should rent it out. Being a landlord is a lot of work and worry so it would need to be thought about way harder if it’s something to take on. Just saying it’s more nuanced.
Property manager may be worth it if you have no idea what you are doing.
Hard to manage a rental that is half a country away. I'd either move in or sell it and buy 4 properties near their current home and turn those into rentals.
If bought in 1970s and no improvements, property tax will be far less than $3500 a year. Maybe $1000
Gotta love good old prop 13 and pulling the ladder from under you
Hell if i was graduating soon in idaho i would look for any excuse to move to the OC. Help grandpa out till its his time. Move a roommate or two in and get paid to live there.
This is incorrect. Property taxes do reset. Previously you could petition for a parent-child transfer. That’s is now limited to 1m if you are going to live in house. And you still have to petition, the taxes by default will reset
Pray that this property is in a TRUST. Why? Being the beneficiary of a +million-dollar real estate property held in a trust can offer several tax benefits. Here are the key advantages: 1. **Avoidance of Probate** - **Benefit:** Assets held in a trust typically bypass probate. - **Tax Impact:** Probate avoidance can save on probate fees and potentially reduce estate taxes, as the property is not subject to probate court oversight. ### 2. **Potential Estate Tax Reduction** - **Benefit:** Trusts can be structured to minimize estate taxes. - **Tax Impact:** For example, irrevocable trusts can remove the property from the grantor's estate, potentially reducing estate tax liability if the total estate exceeds the federal estate tax exemption. ### 3. **Gift Tax Advantages** - **Benefit:** Transferring property into certain types of trusts can be considered a completed gift for tax purposes. - **Tax Impact:** This can help in reducing the size of the taxable estate and may allow for leveraging the lifetime gift tax exemption. ### 4. **Generation-Skipping Transfer (GST) Tax Planning** - **Benefit:** Trusts can be designed to pass assets to grandchildren or later generations. - **Tax Impact:** This can help in avoiding or reducing the generation-skipping transfer tax, which is applied to transfers to beneficiaries who are more than one generation removed from the grantor. ### 5. **Income Tax Benefits** - **Benefit:** Depending on the type of trust, the income generated from the property can be taxed at the beneficiary's tax rate, which might be lower than the grantor's. - **Tax Impact:** This is especially beneficial if the trust distributes income to beneficiaries who are in a lower tax bracket. ### 6. **Property Tax Benefits** - **Benefit:** In some jurisdictions, property transferred to a trust might be eligible for property tax exemptions or reductions, especially if the trust is structured to benefit a spouse or other close relatives. - **Tax Impact:** This can lead to lower property taxes over time. ### 7. **Step-Up in Basis** - **Benefit:** For revocable trusts that become irrevocable upon the grantor’s death, the property typically receives a step-up in basis. - **Tax Impact:** This can reduce or eliminate capital gains taxes if the property is sold shortly after the grantor’s death. ### 8. **Creditor Protection** - **Benefit:** Trusts, particularly irrevocable trusts, can protect assets from creditors. - **Tax Impact:** While not a direct tax benefit, protecting the property from creditors can prevent loss, ensuring the property remains in the family and continues to offer its tax advantages. ### 9. **Charitable Deductions** - **Benefit:** Trusts can be used to make charitable donations. - **Tax Impact:** Contributions to charitable trusts or from a trust to a qualified charity can provide income tax deductions for the trust or reduce the taxable estate. ### 10. **Special Use Valuation for Agricultural Property** - **Benefit:** For agricultural or family business property held in a trust, special use valuation may be available. - **Tax Impact:** This can reduce estate taxes by valuing the property based its current use and not the highest or best use. ### Important Considerations - **Trust Type:** The specific tax benefits can vary depending on whether the trust is revocable or irrevocable. - **State Laws:** State laws can significantly impact the tax benefits associated with trusts, especially concerning estate, gift, and property taxes. - **Consultation with a Professional:** Given the complexity of tax laws, consulting with a tax professional or an estate planning attorney is crucial to maximize the benefits and ensure compliance with all regulations.
Yes the TRUST, this comment needs to be seen!
100%. Get this into a living trust
NAL, but have person experience in CA with one part of this. Since the house would transfer under prop 19 instead of 13, there would be a reassessment. Tha is, unless it became your primary residence. This means the property tax would increase a LOT. It is likely now based on the 30k + 5% (I think) appreciation as they were locked in under prop 13.
I think I’m in love with you.
Property taxes go up for the new owner. They’d get a million worth of value waived if it’s their residence. 1031 is moot with a step up in capital gains. That’s for after years of using as a rental. Moot for op at this point.
Make sure to have the house appraised by a professional appraiser to establish its value on the date of death. This will establish the step-up basis. When you sell, you will use this appraisal to determine any capital gain, and any taxes owed.
The 1031 here only benefits if he wants to rent it for some.time and/or hope for more appreciation ?
I'm fairly informed in terms of Real Estate but the 1031 and similar sorts of exchange mechanisms are one thing I wished I had better understood over the past decades. I would encourage agents to take the time to educate their clients on this if they think it may be applicable.
Most agents have no clue a 1031 even exists let alone how it works.
In my state it is actually multiple questions on the RE exam and most teachers give math questions on it. But most agents do not even remember it has to be "like wise" properties or "similar".
I am so happy this has so many upvotes my god someone gave a legitimate answer. Rent out the house, use a rental company they do take a percentage but now there’s less headache for you. Depending on location its realistically 3-6k/mo. Now that is constant cashflow every month coming in, and you still have an apprecating asset that can be used like a bank account (pull equity). Only thing to really check like stated above is if it’s going into probate.
You win life. Either keep it or sell it :)
You will inherit it tax free. As if you bought for its current market value. If you sell it right away you will pocket the 98% of cash, sake price less expenses of sale. However, you have a unique opportunity to live in that house and at the same tiny property tax that your grandpa paid. After a stint, you also would have the right to downsize within the state and have your property tax follow you. The tax combination above was set up to protect the elderly from being chased out of their houses. The result however was a scheme that is a massive benefit to the upper middle and lower upper classes. You have a unique opportunity. You can make California wages, 2-3x those of Idaho, and yet afford to live there with a fraction of the pressure as others. Or you can pocket a million tax free. You sit at an enviable decision node, a choice between two kinds of great. Make the right decision and you can take a long step away from the trials and tribulations of survival in 2024 America.
After belonging to the elderly grandparents, it might be a money pit with a roof, HVAC, water heater, plumbing and wiring needing updating, and 1970s carpeting, landscaping, kitchen and bathrooms needing a cumulative 100 thousand to make it an appealing place to live in or to attract renters.
I would think hard about renting. CA has among the best protections for renters. Abuse of rental contracts is nightmarish.
I’m leaning towards using it as a rental property while I remain in Idaho for the foreseeable future, I’m attending law school in idaho to become a lawyer in the future and I’m not too worried about finding good paying work after graduation. Average starting lawyer salary out here is 80k and some of my upper class men started at 120k. There’s a lot of money to be made out here in my field. I’d rather lease it out as an additional income to help pay off my college debt while I work. Figure it would be a good move if I can sort it out. Rent for my 1 bedroom apartment 2 miles from downtown is 1,100 a month so on top of a future attorney salary it would be a good way for me to make money on the side I assume.
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Use a management company. A quality one. It won’t be the cheapest process but it’s still passive income. I’m building an apartment. Ours does the advertising, showing, vetting and if needed evicting. We also have a contractor to fix the things. If he inherited the house the first month’s rent goes to the realtor plus a monthly fee then he can save a few months for the contractor as long as it’s in good shape now.
Do you know how to actually find a quality one? The only time i have used one, i went off recommendations and they were still the hottest of garbage. I’m sure there are some good ones but i bet the vast majority are shit.
Yeah, managing property is such a giant PITA. Management companies hold a ton of power to bend you right over. Right now, CA rent rates are often a way better deal than mortgage rates, which maths out to selling being a better deal for OP. VTSAX and chill instead of renting.
Yeah I’ve been in the rental game for about 9 years. Self manage to keep rents well below market rates. But it is taxing
If you had $1,000,000 cash in the bank, would you buy this house in CA and rent it out? Probably not. The caveat being if you plan to move to that area, but want to earn cash on it before you move in the house later.
So remote landlording? When a pipe bursts how will you handle it? When the hot water tank stops heating? What if your tenant stops paying rent? What if your tenant trashes the interior? Consider property management firms if that’s your intent. Also triple check that your property taxes will stay low - indications are that it would escalate to be equivalent to others in the area including you paying the share of those elderly who are taxed at artificially low rates as is appropriate.
Do not underestimate the power of selling and, regardless of the bite taxes may take out, sticking the proceeds into the stock market for the long haul. Even if you only got half that amount, $500,000, in proceeds, and stuck them in Vanguard’s low-cost S&P 500 fund (VFIAX / VOO) as Warren Buffett recommends, and you get its long-term average of 10% annual return and let it compound, you’d end up with $8,700,000 in 30 years. That’s $8.7 million for doing basically nothing. Sure it’ll pay some dividends you’d have to pay taxes on, but you can use a bit of the dividends themselves to do so! People sometimes think “retirement money” MUST be in a tax-sheltered retirement fund, but that’s just not true. You just need tax-efficient funds, like the one above. If you’re curious about this idea, look up Jim Collin’s book *The Simple Path to Wealth* or check out his talk at Google on YouTube. You can also head over to /r/bogleheads.
There won't be taxes
That’s one beautiful sentence!
Keep in mind $1M in an investment account today could go a long way over 20 - 30 years, and in many ways is less work than being a landlord. Even a very conservative 20Y treasury investment gives you approximately $45K/year, and that's pretty much "set and forget" with practically no risk.
You’ll be a millionaire
You are concerned? These days most people will never have enough assets to gain freedom
Right! I think he misspelled the words “thankful and appreciative”.
OP may know little about owning or inheriting a home. I can see why they are overwhelmed. They’ll figure out it’s a good thing.
No, you don't have to return to "deal with legal issues" of inheriting a house. What are you even talking about?? Why be concerned? You'll receive the step up in basis on the home at date of death, so no capital gain tax. Just have the home cleared out and sold as is. Congrats, you then have a million in your pocket free and clear, no tax owed. At most, you have to return for a weekend to clear out pictures and keepsakes that you want to keep and have room for. That's it. Two days tops.
OP clearly doesn’t know the situation and is overwhelmed. It’s understandable.
Do your grandparents have other assets? This might be a moot issue especially because Grandma has Alzheimer's and memory care units are very very expensive..
You are so right!! Instead of counting what they will inherit, the concern should be that grandparents have legally taken care of the issue of care, for both, if needed in the future. If not, there possible might not be any inherit (or a much smaller amout) to think/dream about. Alzheimers can turn into a 24/7 care situation very quickly. My mother, unfortunately, reached a point that we weren't able to care for her any longer at home. She was in Alzheimers care unit for approx 5yrs.
Thanks.. people don't realize how long people with alzheimers can live too.. it's not like cancer where there's an end date.
Or my mother who fell and fractured her skull and had traumatic brain injury and had to be put in a home, which broke my heart, but I could no longer care for her. I could not provide the care that she needed. There are all kinds of things that can happen to a person when they get old and nobody should ever count on an inheritance while the old person is still alive.
I know you were asking about the house in particular, but I wanted to mention as well about the care your grandmom and granddad may need. Please know that California has an exceptional Medicaid program. There's no asset test. All you need to do is be in need of the appropriate level of care and you qualify. Alzheimers will likely already qualify your grandmom for Medi-Cal (medicaid in CA). Being on Medi-cal gets her fully paid for skilled nursing care. There's also the assisted living waiver program. Look into these things and more importantly, make sure your family consults with an eldercare/estate attorney. The moves you make now will protect your grandparents and their estate. Do not let your family sell the home to pay for care! It's not needed in CA.
I do not know how Medicaid works in California, but in Washington state they attach to your house and then they basically take the house if the person you try to leave your house to can’t pay off the lien, and they tack on so much damn interest on top of the lien. Medicaid clawback (MERP) is a horrible fucking terrible thing.
California is an entirely different beast. Seriously, no asset test. Even when they still had an asset test, homes were exempt. They're really leading the way to what healthcare should be. You shouldn't have to be destitute to get healthcare.
You can sell the house.
Unless you plan on living in California, I would recommend selling it when it becomes yours. I see someone else suggested renting it, but California is very tenant-friendly and landlord-hostile, so that's not recommended unless you're willing to learn well and learn fast. For example, it can take months, if not years, to evict someone.
Concerned is a bizarro world response to getting money given to you.
Are you inheriting 100% of the property, or are you sharing with someone? Assuming it’s 100% yours. If you sell, you get the stepped up basis, so you’ll get the home value with no taxes except on any gains between day of death and sale date. Or, you can keep it and live in it or keep it and rent it out. If there’s no mortgage on it, you can cash out refi and get cash plus the home (but not you have a mortgage, and would have to qualify for it). Legally, you’ll need a copy of the will and a copy of the death certificate, and will need to ask the lawyer how to transfer the deed to your name. With my aunt, I was the executor, but it was all in a trust, and only the trustee changed, not the deed, so… I can’t help you legally, but it should be easy, the lawyer/executor should guide you through probate.
I would suggest ensuring that the property automatically transfers to you upon both of their deaths. This way, it avoids probate – you do NOT want their ESTATE to transfer the property to you after their death, you want to instantaneously own the property when they pass away. In doing it this way, your basis in the property is “stepped up” to the fair market value on the date of death. So your basis would be ~$1,050,000 not $30k. In Florida, this is called a Lady Bird Deed. Which is just a term for a regular warranty deed that is filed with the county. There is specific legal language that must be on this warranty deed in order for it to be valid & produce the desired result. A lawyer at a title company can easily draft this up, and it shouldn’t be very expensive either.
If you do not already own the house, this is your chance to move into a free house in sunny state. Just money you will save on Non paying real estate agents.
I lived in SoCal for 25 years before I left to idaho for grad school. Nothing but smog and expensive gas over there. My life goal is to be an attorney that owns land and runs a self sustaining household and own goats. I literally have a law professor who moved from Irvine California to move to Idaho get paid 120k a year to teach law at a university and now he owns horses on a farmland outside of Boise. Like WTF.. Boise turned me into wanting to be Thorfinn when I reach my 30’s.
WTF indeed, that is a really shitty salary for a law professor.
Smog in Orange County? No. There is no smog in Orange County.
Lol Orange County is not that smoggy. You could own land and farm goats in SoCal, not deal with snow and average law prof salary at UC Irvine is $190k. Not saying there aren't many other great reasons to stay in Idaho including much lower cost of living, but inheriting $1m+ can lead to doing what you want in much better weather.
Or sell the house and take the million dollar (tax free) proceeds and buy the dream house in Idaho and get some goats - then live on the rest as a million dollars would buy a HUGE place in Idaho.
I wonder if it’s in the forest fire region, the falling into the ocean region, the flood region, the mudslide region, or just the “200 foot well went dry” region.
More to California than that but okay
You get a stepped up tax basis. So you can sell it and there won’t be much in the way of capital gains taxes. Usually if you sell within about 6 months of inheriting it, the sales price is considered your basis. Note- Idaho is one of the few states that will tax capital gains on property sold in another state. So if you hold the home and sell it in a few years and have a gain, Idaho WILL collect capital gains tax, and you will have to pay California capital gains tax.
I'm not an expert on Idaho or California taxes, but that doesn't sound right about the capital gains tax. Typically, you'll receive a tax credit for taxes paid to another state. That way, you won't be taxed twice for the same gain.
You’re getting a lot of really bad advice here. Call your accountant and your attorney. Make sure they both understand California tax and real estate laws. CA is a completely different animal when it comes to taxes and inheritance. If you don’t have one or both, get them.
Talk to a lawyer about putting it in a trust, I don't know the exact process but I believe you can skip a lot of taxes on the gain of the house that way
There wouldn't be gains, inheritance comes with a step up in basis.
Sell the house. Buy another where you want to live. Invest the rest in dividend stocks. When you speak of your grandparents, speak well, and remember them fondly.
This. And please seek out advice from an accountant in CA and RE agent. Not Redditors all over the place.
> "...my grandma has Alzheimer’s..." Who is paying for her expensive care?
Prop 19 allows for grandchildren to inherit the property tax basis of their grandparents but one of the conditions of doing so is that your parents must already be deceased. I would have a look at this [document](https://www.boe.ca.gov/pdf/pub800-2.pdf) and find a good estate lawyer
When the time comes, a big Thank you to your Grandparents. You will need a tax attorney and the estate attorney. Prop 19 may come into play and protect your low tax basis BUT you will need to live in the home. There are many if's and but's that may exclude you from this. Get a copy of the will or trust and have it in your possession if you can. The Trustee will be the one driving the closing and disposition of the assets.
Under Prop 19, OP will have to move into the home to take advantage of the property tax transfer (up to $1M valuation). Otherwise, it gets assessed at market rates, meaning a \~$1M home in OC will probably owe something like $12K/year in property tax. As is, his grandparents are probably paying something like $1K-$1.5K/year - an absolute gold mine.
You can thank the realtors of CA for changing this law. Sucks so hard for beneficiaries in property now. All so realtors could get more sales!
I truly don’t understand this perspective. So taxes being lower for elderly makes sense to me, but for an inherited million dollar property? Why should they pay less property taxes than a working neighbor who saved and purchased?
Who says they aren’t working? Have you been to CA? A million dollars doesn’t get you much. Basically the old law keeping taxes the same was to help give beneficiary children a chance to stay in their neighborhood. So yes the gentrified neighborhoods that cost $1.5 million for a home, you cannot afford the taxes unless you are either rich or have a high-paying job.
And are supported by your neighbors paying more tax for your benefit. I agree with the elderly idea and we all pay to support it. Their kids receiving the same benefit kind of smacks of inherited privilege at some point.
Well then, thank you realtors for stopping those who inherit from living off the taxes of those who live around them. I didn’t see that coming - that I’d thank a realtor today!
Once you inherit that house chicks will suddenly dig you. Lol
Already married to a loyal big booty Latina LVN nurse. She’d throw hands on any woman who would hit on me or disrespect me. Together for 10 years married for 2 years. we have no kids so we both went back to school to get a higher education as of now. I plan on becoming a lawyer and she’s getting her BSN. Not terrible for First gen college graduates.
Just get a real estate attorney and a good CPA, they’ll know how to guide you through the financials and legalities. That’s what I did when I inherited my house. I found a good agent and sold it right away. One step at a time.
Prop 19
Lease it out and let the asset rise in value. Guessing you could easily lease it out for $5K+/month with minimal expenses since the tax value will be so low
You need the advice of a lawyer not a realtor.
Buy it outright from your grandpa for what he paid for it then there is no inheritance tax
Consult an attorney should be the only advice you take.
What kind of attorney?
An estate planning attorney.
Exactly. Do whatever it takes to avoid probate. Probate is a nightmare.
An estate planning attorney.
There should be a form to fill out with the county to keep their tax basis on the house so you can pay the same property tax basis they were, probably around $50/year vs the $10,000 or so it would be today. This makes the house far more valuable to you as a rental if you do t want to live in it. You sell it and it goes up to market.
Probate.....get "stuff" in a trust and SAVE$$$
This, and get a fiduciary financial advisor asap to avoid probate by putting the home into a trust and an accountant to avoid taxes. Also, remember that if you're not renting that out, you'll be on the hook for state property taxes for a million dollar home, so there will be annual costs plus insurance and maintenance. You'll want to convert this into a rental to cover the costs and make some income, use that income to help out you aging parents and grandparents.
Congrats on your generational wealth.
you don’t pay taxes. Search the key words “step up basis”.
You need a lawyer not a Reddit post 🤦🏼♂️🤦🏼♂️🤦🏼♂️
good luck. take some time and go visit your grands while you can. don't mention the will or house, just enjoy their presence because once they're gone, you will want some late life memories. even if the will doesn't turn out exactly, be a good grandkid. i don't like the right wing politics down there but you can make your own decisions.
"I'm going to win life without having to play the game, and I'm worried about it."
Congratulations. There's nothing like the dream of living rent or mortgage-free, your ability to save money will be huge. However it's very expensive to live in California, for all the other goods and services you will need, not to mention the increased risk of natural disasters caused by climate change denial such as wildfires. If you sell, be sure to look into capital gains taxes, and make sure you don't lose a big chunk of money to paperwork, policies, and stupid laws.
Without a mortgage, living in California is relatively easy because our wages are higher. Seriously, if I didn’t have a mortgage payment I’d be vacationing internationally, retiring early, eating at high end restaurants, etc. the mortgage is the hardest part about living here.
Just ask them to put it in a Thrust before they pass. Google advantages of putting real estate in a thrust. It will save you money and headaches
Trust
once they both pass away you will get a step-up basis when you inherit the property - then you can sell without gain/taxes.... but make sure you dont get title to the property until after their death - if they gift it to you before death, you will not get the step-up basis and owe a bunch of taxes upon sale.
Read up on smart investing now or you will day trade the money away. Do NOT think you can read lines on a chart like tea leaves, and just because an earnings report will show favorable profit doesn't mean the stock MUST go up. Don't run Options! Never leverage! You may be a smart law student, you aren't a seasoned financial analyst. You said you want land in Idaho, sell the house, invest most of it and pay off your debt, buy land and expect to retire early or richer than any of your colleagues. Look at the percentage on your graduate loans to consider paying that off. Other investment returns fluctate, you know what you owe. If you like prosector work, consider it, it would pay off your loans with forgiveness after 10 years and it isn't like you need the money of private sector work. Could always transition into a Judgeship later, they make good money. I wouldn't rent it when you can get the money out tax free and put it into other investments. Taxes and House Insurance in CA will only go up. Not only is home insurance going up but insurance companies are leaving CA. Mortgages require insurance and insurance rates-- both impact house values negatively. Owning a rental property in another State is annoying at best, and a potential headache. Also don't tell friends and colleagues about your money, there is no upside to that disclosure, only negatives.
when the time comes follow advice from here and sell it. i wish i could inherit a house worth a million dollars.
Look into a Lady Bird Deed!! Cost in Michigan is about $500-$600. I just sold a home where title passed automatically to 3 siblings via a Lady Bird Deed with all other possessions distributed via a will. It’s similar to a quit claim deed except it doesn’t transfer to you until your grandparents pass away. You avoid probate and you’re not on the deed until they pass so there’s no legal entanglements like a quit claim deed.
All the comments on the “property taxes should go up” to pay for services forget there are states that don’t have property taxes and still have all the services!! Property taxes are just rent to the government because the state can seize you home if you don’t pay your property taxes even if it’s paid off 🤬
Every state in the United States has property taxes.
First of all, you have not inherited yet. The equity in that house could still be taken by the government to pay for their end of life nursing home care. But if you are lucky enough to inherit it, rejoice! You inherit it at the value as of their death, no capital gains tax. There may be state inheritance tax, but you will still get a lot. Prepare to sell it upon their death.
1031 exchange would have to be another business property and you need to use an intermediary (risk?) also may not be that easy to find person interesting in exchanging. That’s way down the road an only if you want to be a landlord. Your best bet might be to sell it. Like the poster said, you would not have to pay capital gains tax. Unless you want to be a landlord. You could buy anything you want with the cash. In any case, though it’s worth having a general game plan, this is a potential outcome. The grandparents have not passed away yet, and one never knows if they may have a cash need. So I wouldn’t get too entrenched in the details until the day comes BUT. Try to get a copy of the will. You will need it when that day comes.
You shoul be. Prop 19 hope you got 20 30k lying g around for prop taxes every year forever. They are reassessing no matter what you do living there not living there trusts transfers inheritance there is no way out of it Repeal prop 19. Guess how we know
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LOL what a douche! Advertising his realtor services on a Reddit thread, I love this platform!
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trusts do nothing to prevent reassessment!
If you inherit this asset by Will or by Trust, you should get a step up in basis. I would suggest that your grandparents talk with an estate planning attorney and put the property in trust. Www.naela.org is a good place to start.
Tell them to put it an estate that why you won’t have to pay taxes
do this! Someone I knew in Seal Beach lived in a house that was worth millions and millions, and paid no taxes on it, because they were the executor to the trust, … The Trones the house, and you run the trust… Slick way to bypass this is what the wealthy do. I'm not a lawyer tax professional, but transfer it to a trust ASAP
No, you get the advantage of “step up in basis.”
Talk to a real estate attorney and discuss putting the home in a trust, this can in most situations help avoid massive inheritance taxes which exist in California.
My mom was the executor for her parents $2M house, but she only got $30K. She spent $20K and 3 months with my sister just cleaning it out 7 days a week, 8 hours a day. They didn't remodel or anything. The reason why she only got an executor fee was because my aunt was to inherit the estate. Grandma decided the aunt deserved the inheritance since my mom was already financially secure. She is, but not rich. And the aunt just sat back and collected the rest. Hopefully in your case, you also get to keep the estate.
Being the personal rep, or executor, of an estate does not equate to inheriting anything.
I guess I lucked out with having grandma who was a compulsive cleaner so aside from the garage it’s really clean. The garage has random stuff but like organized stuff. Like fully chronological order lee child books my grandpa owns. He’s openly told me in Spanish “when he dies to throw it all away it’s just shit I like to look at that’s not worth anything” he spends all his time reading books and napping after now. He is obsessed with the jack reacher book series owns like all of them and even copies of ones he already owns and re reads them all the time 😂 I recently got him into the American assassin book series says jack reachers back stories were a more fun read.
You could rent it out, but keep in mind, renting is not "passive income" even if you hire a property management firm. If they own the house free and clear (no mortgage), you're in good shape, but it still costs money to own a home. Home repairs average 1-2% of the home value ($10K to $20K per year). Plus taxes.
Become involved now. My mom was to inherit a house from my uncle in Colorado. But in his last years, he didn't pay his insurance, he didn't pay his mortgage, he didn't pay his utility bills. He was living alone and no one was helping him. Eventually a pipe froze and broke and essentially ruined the house. My mother inherited absolutely nothing, because of neglect, a very expensive house became worth zero, by the time you looked at the expenses and mortgage due. Absolutely zero.
I can’t think of any reason why you would need to physically be there. So much can be done remotely now, notarized signatures for example.
Unless you really want to get up and move to live in sunny California, it seems the option that will require the least amount of time and energy is to sell it. Renting it may be another option, but you’ve got to consider the upkeep and headaches that go along with all that. Also, it’s out of your peripheral in a completely different state, which can multiply the headaches (Unless you have some trustworthy friends or family nearby to help).
I previously lived in California for 25 years before I left to grad school in idaho. My pops would be open to keep an eye on it if I keep it or rent it out to someone. He has a condo he bought in 2008 for 90k he now rents to people for passive income and if kinda want to do the same if I can inherit the house without too many issues. I don’t miss Cali. I live in Boise idaho now, which means I’m 2 miles from downtown and 7 miles from the river I go fishing at with my friends. Work life balance is life changing. I went t from working crazy hours to paying $1,100 a month for a bed room apartment where I can crank some tunes and have a margarita after work with a dog and not have to worry about someone stealing my packages off my patio. Honestly after living in California for all those years aside from family they don’t have much going for them aside from pick up stix. I’d rather stay in idaho long term. Plus my wife got into the BSU nursing program so there’s no leaving here any time soon.
Are you worried about holding on to it or selling it for the money?
I'm curious what "issues" you're concerned about. You just hit the jackpot, friend!
You have hit the jackpot. A paid off house in California, in one of the richest counties in the US. I live in Idaho and used to live in SoCal, I'd move back to SoCal in a second if I had a paid-off property there. The freedom you get in life when you have no housing expense is huge. You could be set to retire early. Move to SoCal, if the house is big enough get a fun roommate or two, and pick a hobby job you love. You literally have life freedom in your 20s, don't waste it in Idaho.
Had a similar situation back in 2008 in Camarillo, CA. House transferred into an estate and was reassessed from the day of the death until the day it sold for taxes by the county. At the sale, the taxes came out of the proceeds from the sale. I don’t remember how much taxes were but the house sold for about 900k. Check with the county to see what will happen, as usually property is reassessed (notice I didn’t say re-appraised) and taxes will be based on the new assessed value. My advice, unless you want to keep it long term would be to sell it and pay the taxes out of the sale. Also, get an attorney since you are out of state.
I’d keep it and move there. But if you can’t move when it’s ready, hire a management company to rent it for you. By the time you’re their age it’ll be worth 5 mill or more.
Cash flow it, and hire an estate attorney!
WPP
You better go visit them and be nice. They thought of you for the biggest asset they had. Seriously. Alzeheimer’s is sad.
I’ll buy it call me 3102618428
Don't go Reddit for info. Be smart and. Seek professional guidance through a real estate attorney unless you are just showing off.
No need to be concerned. Just hire a good lawyer
Speak to an attorney asap!
Move into it for two years then rent it and you’re set for life with their tax basis. Prop 19.
why not have your grandfather set up a family trust and have you as a trustee?