Legal Question in Real Estate Law in California

Re: Deed

You would deed it to yourself and her as joint tenants, but, CAUTION, there are many negatives to doing so, including higher potential taxes, and liability problems.

Re: Deed

You should see an estate planning attorney to discuss the potential tax conseequences of what you proposed to to. You should be probably set up a revocable living trust that will let your daugther inherit the house upon your death.

Re: Deed

If the property has gone up in value, or is likely to go up in the future so that it will be worth more when inherited than when purchased, there is a severe tax consequence of placing the property in joint tenancy so the intended heir gets it outside probate. It is the capital gains tax, and it makes the long-term profit from when you bought the house 'way back in 1985 or whenever up to the time your heir eventually sells taxable on the seller's 1040 return at that time. The rate is currently 15% for most taxpayers, so if you paid $100,000 for the house and your daughter sooner or later sells it for $300,000, that's a $200,000 taxable gain, and the tax is $30,000

Inheriting a house gives the heir a so-called "stepped-up basis," meaning that her future gain is measured based on the value of the house at the time she inherits it, not the value at the time you bought it. Let's complete the example by assuming it is worth $275,000 on the date you pass away, and she still sells it for $300,000 a year or two later....her taxable gain is now only $25,000, and her tax is only $3,750 instead of $30,000 - quite a difference!

Soooo, I as many lawyers do advise using a trust, or even a will, in preference to the joint-tenancy tax trap.

Giving away a half interest has other problems as well, including gift tax, reassessment of the gift portion (although usually not in a father-to-daughter situation), breaching terms of your loans, loss of flexibility, and maybe others.