Legal Question in Real Estate Law in California

I don't think there is a gift. It would be helpful if you have an agreement linking the two transactions, showing an exchange for value rather than two isolated gifts. It will also be helpful if the recording of the deeds showed a valuable consideration and that you paid transfer tax, rather than relying upon gift deeds to avoid transfer tax (or the like).

There is only a gift if you do not give or receive equivalent market value. Unless there was a large AND unequal gain in the values of the two properties, there was no gain on either of them. I have no idea what Mr. Whipple is talking about about "two isolated gifts." Two deeds of properties with the purchase prices you stated, coupled with your check for $10,000 is a perfectly clear paper trail of a like-kind property exchange with equalizing payment. If these had been properties you had held for a long time that had significantly appreciated, that $10,000 payment to her probably would have messed up a 1031 exchange for her, though not for you. Since there was no material gain between the purchases and the exchange, however, that is irrelevant anyway. I cannot see anything in the facts you provide that would raise any tax issues whatsoever.