Legal Question in Real Estate Law in California

This is not a question that can be answered without looking at the bigger picture. What is the purpose of the transfer, the objectives? For whom to pay the least tax, grantor, grantee, total? Least tax immediately, or immediately and in the future? If it is to give a child current income, the answer will be different than if it is to provide for the same child after you die. The variations are endless on why one family member would transfer a rental property to another family member and what will be done with it after the transfer. The tax consequences will vary with those facts, and therefore the most tax advantaged answer also varies with those facts.

I agree with Mr. McCormick. There are gift, estate and capital gains taxes at the federal and state levels, and property taxes at the county level, to consider. Often, the best way to transfer appreciated property is by inheritance, since the heir gets a step-up in cost basis to the value on the date of inheritance. Transfers between certain relatives do not trigger reappraisal for county property taxes, while other transfers will. Transfers for fair market value are different than gifts. What tax brackets are the parties in, or will they be in? How much depreciation has been taken? Is the property profitable? All these questions point to the desirability of having a sit-down discussion with a qualified tax advisor or estate-planning attorney.

Also, I might add that I am not a big fan of putting property into joint tenancy. Sure, it may avoid probate, but using a trust is usually a better deal. Joint tenants don't get a step-up in basis and the grantor gives up too much control.