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Purchasing a life estate

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cbieschke

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What is the name of your state? CA When purchasing a property as "life estate" which returns to the original upon your death, is the property said to have a change of ownership, thereby allowing a revaluation of property tax basis?
 


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cbieschke said:
What is the name of your state? CA When purchasing a property as "life estate" which returns to the original upon your death, is the property said to have a change of ownership, thereby allowing a revaluation of property tax basis?


My response:

Yes. A change in ownership occurs upon the creation of a life estate in favor of a nonspouse third party. By such a transfer, the transferee receives a present interest in the property, beneficial use of the property, and the primary interest under the "value equivalency" test, which qualifies as a change in ownership under the general definition of Ca Rev & Tax § 60. [See 18 Ca Adc § 462.060(a); Leckie v. County of Orange, supra, 65 Cal.App.4th at 339, 76 Cal.Rptr.2d at 428-429--change in ownership triggering reassessment occurred upon life estate transfer from owner's revocable trust to owner's surviving nonmarital cohabitant upon owner's death]

A real property "change in ownership" for property tax reassessment purposes means a transfer of a present interest in the property, including the beneficial use thereof, the value of which is substantially equal to the value of the fee interest. [Ca Rev & Tax § 60; Leckie v. County of Orange (1998) 65 Cal.App.4th 334, 337, 76 Cal.Rptr.2d 426, 427; Empire Properties v. County of Los Angeles (1996) 44 Cal.App.4th 781, 785, 52 Cal.Rptr.2d 69, 72]

IAAL
 

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