Legal Question in Real Estate Law in California

Re: How to remove yourself from a title.

A transfer from a parent to a child is usually exempt from a reassessment of property taxes, but the exemption must be claimed within 6 months of the date of the transfer, it is not automatic.

Usually a transfer from parent to child will not be considered a taxable event, but could be considered a gift that could ultimately be subject to gift taxes. In any case, the child takes the property at the original basis for capital gains tax purposes.

Re: How to remove yourself from a title.

There are at least two possible tax traps here.

The first is property taxes. Prop. 13 holds current assessed values well under market values in most cases, especially for properties that have been in the same ownership for a long time.

Certain intra-family transfers will not trigger a reappraisal under Prop. 13 and later implementing legislation and amendments. Each county has some peculiarities in the way it expects the transactions to be reported in order to claim the exemption without hassle, so you need either (1) to retain a real-estate lawyer who practices in the county where the property is situated, or (2) talk to someone at the local tax assessor's office to determine what is exempt and how to assure the exemption is recognized.

The second lurking problem is federal income taxation, in the form of capital gains, estate or gift taxes. Generally, whenever property changes hands, someone makes at least a paper profit on it, and Uncle Sam will be there to collect a tax. Gifts are also taxed. As a rule, it is better from a tax standpoint to inherit property than to receive it as a gift while the donor is alive (assuming the would-be donor doesn't change her mond, of course). Since you need a current ownership change to carry out the proposed refi, you may want to consult an estate-planning lawyer who can run the numbers and tell you which way you're better off. There may be a solution involving a trust, or perhaps you can refinance without changing the way title is held.

Part of the problem in givin a more explicit answer is that I don't know how long the property has been held the way it is, how it got to be held that way in the first place, or how much it has appreciated, or the tax brackets of the persons affected.

I think it's time to get local help from someone who handles estate and tax planning.