Legal Question in Real Estate Law in California

Re: Purchasing a ome from my parents

You may be able to protect some or all of the grandfathered "Prop. 13" assessed value, since parent-to-child and I believe interspousal transfers do not trigger reassessment. I would have to take a look at the particulars of the proposed transaction and look up Napa's policy to give you full advice.

You don't say whether you'd be paying full market value or receiving a full or partial gift, but you should also note that two aspects of federal tax law disfavor inter vivos transfers of property below fair market value within families, as compared with transfer of the property by inheritance. The first problem is the gift tax. The second is that property inherited by trust or will receives a stepped-up basis so that when it is eventually sold as appreciated property, the capital gains bite is much less than if the property were received as a gift during the parents' lifetime. Of course, if you pay market value, that becomes your basis.

There may be other tax aspects. For example, will the home be financed, and if so, by whom, and at what rate? The home mortgage interest deduction helps make home mortgage borrowing an attractive way to leverage money, at least in most housing markets.