Legal Question in Real Estate Law in California

Re: Rollovers & Exemptions

First, you don't buy real property with a deed of trust; that's a kind of financing instrument. If you acquired title to real property, it would be by grant deed, quitclaim deed, or possibly a sheriff's deed or trustee's deed. I am aware that some large land subdividers do not actually deed their lots to buyers; rather, they use a contract for deed, and the buyer doesn't become legal owner until the full purchase price is paid. Naturally, since they receive no deed, they have nothing to record. Another term for the contract for deed is "land contract."

I'm also uncertain about your reference to a "bill of sale." This term is used in connection with sales of personal property, not real property. Possibly the instrument you're calling a "bill of sale" is in fact your contract for deed or land contract.

In any case, I THINK the IRS will treat you as a homeowner for purposes of the homeowner's exemption so long as whatever deal you had made YOU, and not the seller or some other party, the beneficiary of any gain in value and the potential loser from any loss in value of the property while you lived there.

However, to be certain, you should first clear up the legal nature of your ownership and possession of the residence while you lived there. Then, once you understand it and can describe it to an IRS clerk, call the IRS, describe your situation, and get their answer.

Finally, recording or not recording a deed has no effect on your eligibility for the tax break; at most, it makes it a little easier to prove your eligibility if you're audited.

Re: Rollovers & Exemptions

I am not sure what you are talking about; title would have to have been acquired via a grant deed and a deed of trust, recorded or unrecorded, is merely security for a loan owed by you. However, I am reading between the lines, and perhaps this is what you are saying: you bought your home and had title vested in the name of a corporation controlled by you; now you wish to hold it out as having been bought by you from your own corporation and that you owed a note to the corporation and made payments on that note; is this similar to what occurred? While simply having a deed of trust unrecorded would not impair you from availing yourself of the capital gains exclusion, if what I am surmising may be the case, you may have problems. This is because, ostensibly, you obtained some benefit by having your corporation hold title to the property instead of yourself and/or corporate funds may have been used to acquire the house, etc., which would need to be explained from a tax standpoint. Now, you may have further tax impact as a result of the use of that method, and I would see an accountant before I would see an attorney.