Author Topic: Quit Claim Deed in California- anybody done one?  (Read 2879 times)

Exprezchef

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Quit Claim Deed in California- anybody done one?
« on: January 03, 2015, 11:12:03 AM »
I have the opportunity to take over a residential property in the Orange County, CA area as a property transfer from my father-in-law using a quick claim deed. The plan would be to sell our existing home in the San Diego area and then move into this property which has in effect been a rental property since it was built in the late 1970's when he purchased it. This offer has been on the table since my wife and I married 20 years ago but have never thought about it since we never needed to. As I near retirement and my in-laws are getting older, we are thinking of now taking advantage of this opportunity to be closer to them. Due to school issues with my daughter, this summer would be the best time to do it or we would wait for another 4 years when my daughter graduates high school. I can transfer my job to an office in the area and my income would stay the same. I have seen the house a few times and been inside once. It definitely needs a major remodel to bring it out of the 1970's. It's in a fairly safe neighborhood and only a few blocks from my in-laws. Anyway, before my wife and I decide if it will be a smart financial decision, we are trying to come up with questions we need answered before we make a decision as well as come up with a pro and con list. I am trying to come up with a list of questions we should ask before we make a final decision.

Here is what I have come up with so far: I know there is still a balance on the loan as my father in law has taken out at least one equity loan over the years (I don't know what the balance is), by using the quit claim method, does the loan transfer to me using the current lender or do I need to find a new lender?, based on Zillow results, the property taxes are much lower than my current house due to Proposition 13 (will I need to have the taxable value reassesed if I take over the property?), the utilities are slightly lower than my current housing costs which is good, I currently have no commute since I in essence work from home and am provided a company vehicle. If we move to OC, that perk will no longer be available and will have a 20-30 minute commute.

I don't want to put myself into a financial nightmare that prevents me from my goal of retirement in the next few years and want to ensure I have all of the bases covered.

What advice can you in the MMM community, that may have dealt with this issue provide?     

Another Reader

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Re: Quit Claim Deed in California- anybody done one?
« Reply #1 on: January 03, 2015, 11:34:34 AM »
If the deed is from parent to child you may be able to avoid property tax reassessment under Prop 58, the parent to child exclusion.  Your wife can add you as a joint tenant after the gift.  Consult with the Prop 58 specialist in the Orange County Assessor's Office.

It sounds like the equity will be gifted. I believe your FIL will need to file a gift tax return.  If the sum of the gift and the remaining estate is under the estate tax limit, you would likely be safe from inheritance tax.  An estate planning attorney and/or a CPA should verify this for you.

The lender will regard the transfer as triggering the "due on sale" clause of the mortgage.  Although they may not notice at first, you could end up having to refinance in a hurry.  The cleanest way to handle this is to do it at the time of transfer.  Your FIL is off the loan and no longer responsible. 

If the expectation is you will care for the in-laws as a result of this gift, you, your wife, and her parents should have a clear understanding of what is expected of you and your wife.  You might want to discuss other alternatives before you decide to accept the gift if this is the case.

SpicyMcHaggus

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Re: Quit Claim Deed in California- anybody done one?
« Reply #2 on: January 06, 2015, 12:57:08 PM »
needs more $ info:

cost/monthly on current home?
current home market value?
cost/monthly on proposed home?
proposed home market value?
proposed home renovation estimate?
cost to commute 30 min?
are you a handyman?
can you do the updating yourself ?
are you proposing to rent your current residence or sell it ?

Poorman

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Re: Quit Claim Deed in California- anybody done one?
« Reply #3 on: January 07, 2015, 11:32:58 AM »
Looks like non-owner occupied properties still qualify under Prop 58 up to a limit of $1 million.

https://www.sccassessor.org/index.php/tax-savings/transferring-your-assessed-value/parent-to-child