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Thinking of Transferring a Real Property Into a Legal Entity? Not So Fast . . .

The bay area is home to many savvy real property investors who will often transfer their real properties into legal entities for liability protection. However, doing so has property tax implications for you and your heirs.

Proposition 58 provides that property taxes will not be reassessed higher where principal residences are transferred between parents and children or relative to the first $1 million of value of all other real property (other than principal residences) transferred between parents and children. The $1 million dollar exclusion does not apply to transfers between parents and children of ownership interests in legal entities, which means that by transferring real property interests into an LLC your children will not be able to take advantage of the parent child exclusion for property tax reassessment.

Since properties held in legal entities do not receive the benefits of Prop 58, it is important for investors to evaluate the reasons behind transferring investment properties into a legal entity and decide if that is the best decision. Here at Chauvel & Glatt we know that your real estate assets are important to you. You want to be protected during your lifetime but also want to make decisions that do not harm your heirs. We can assist to determine the best course of action so your assets are protected. To learn how our attorneys can assist you with your estate planning or other legal needs, contact us today.


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