Legal Question in Real Estate Law in California
Capital gain tax grant deed title
I want to grant the title of my 2nd home to my sister without going thru a sale transaction (I owned the house free and clear). My question is ''Do I have to pay for the capital tax gain at the time of the grant deed transfered?''
There is no money involved with this transaction, I just want to grant the title of the house to my sister legally.
What is the best way to transfer title without worry about who will pay for the capital tax gain later?
I heard that I just need to sign the grant deed and then my sister will have to pay for the capital tax gain when she sell the house later. Is this correct?
I just want to do thing right at the time of transfer title.
Thank you for your help.
2 Answers from Attorneys
Re: Capital gain tax grant deed title
I'm not a tax expert, but I do know that making gifts of appreciated property is a tax minefield.
There are probably better ways to transfer ultimate ownership to your sister. Consider a living trust, or giving her a remainder interest with you keeping a life tenancy.
The tax and other financial consequences are so large in relation to the cost of getting good advice that I believe it's foolish not to ask a tax accountant or estate-planning attorney what can be done to accomplish your purposes without triggering a premature step-up in tax basis or a gift tax liability.
Also think about avoiding a re-assessment for property tax purposes by using a trust or life estate to delay the transfer and re-appraisal.
Re: Capital gain tax grant deed title
I recommend you contact a tax specialist regarding this. This may be totally capital gain for her, though I cannot confirm that since my practice involves real estate but not tax. Do not do it until you seek such help.
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