Maintaining prop 13 (Ca.) on a Reverse Mortgage buyback

My aunt's home which is in trust to me is valued at about 700K, she has about a 350K balance on a reverse mortgage, I want to make her balance my first and payoff the RM, do I have to wait for her to past to get Prop 13 (Tax) savings, or can I keep tax same if she gifts it to me now ??  She was given 6 months, I believe I have 1 year to either sell or assume the house by paying back the RM, I currently also reside in said home with her. OR, is it smarter to just live in house after she passes, wait until the 11th month and then get a loan to pay back RM..Interest on RM is 1.5% 
  • May 28 2014 - North Hollywood
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Answers (1)

Profile picture for wetdawgs
Exclusions from reappraisal to maintain prop 13 tax are for inheritance or gifts from parent to child or grandparent to grandchild.   Here's a link to the CA government website on the subject.     As you've not described either of those relationships, you need to dig into this further as you may not be eligible.

In addition, if she gifts you the house before she dies, she may be responsible for gift taxes as the value is greater than the annual gift exclusion.  Please see a CPA to review the options.
  • May 28 2014
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