Legal Question in Real Estate Law in California

Re: Process to give real property as a gift

You will have a problem if it is viewed as a sham sale for inadequate value. Also, if it is a gift, you may have a tax issue for a gift tax to you and or your parents. If they leave you the property in their estate plan you would probably avoid taxes providing the estate is small.

Re: Process to give real property as a gift

You have a few issues. It is no problem for them to "gift" you the home, however, current IRS and State tax codes make that gift taxable over a certain amount. As such, you would have a huge tax bill for receipt of a home having paid no consideration. Alternatively, Attorney Russakow is correct - if you sell the home for less-than legitimate consideration ($1), you will be subjected to imputed income - the IRS will never believe that you only paid $1 for a home, and could hit you with gift income for the fair market value of the home less what you actually paid. You would also have the issue of the Tax Assessor re-assessing the property (potentially - there are some exclusions available for parent-to-children transfers). I suggest that you meet with an estate planning attorney to review how best to accomplish your plan. Good luck.

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