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7 Common Ways to Hold Title to Real Estate in San Diego, CA

Should I put my house in a trust or LLC? This is a question we hear a lot from rental property owners, and today we’re discussing the seven common ways to hold title. We’ll also tell you why it matters.

Sole Ownership

With sole ownership, you’re just an individual who owns a property. It’s pretty common. If and when you die, the property will go to probate, and the court will decide how your property is split up or sold.

Transfer on Death

Transfer on Death, or TOD, is relatively new. It started in January of 2016, and it’s known as a beneficiary deed. In this case, your property must be a single family home, a condo, or a building with two to four units. It can’t be an apartment building. You spell out in the deed who the property goes to when you die, and your beneficiary gets it upon your death.

Tenants in Common

Tenants in Common means you have several owners with unequal ownership. For example, I could have three tenants in common, or partners, and maybe I own 20 percent of the property and the other two own 40 percent each. The good thing about this is that you can will your share to anyone. But, if you’re an owner, you could own the property with strangers one day. There could be a partition lawsuit, in which a court may force one of the partners to share their part of the property, giving you a new partner without your say. It’s good to have a solid partnership agreement if you’re doing Tenants in Common.

Joint Tenancy with Rider Survivorship

This path provides equal ownership with rider survivorship. So, if there are two joint tenants and one dies, the property automatically goes to the other joint tenant and avoids probate. This is good because probate is costly, and we want to avoid it.

Community Property

California is a community property state with rider survivorship. When your spouse dies, you get a stepped up basis. This means the taxable gain on your property is the selling price minus that basis. The basis is often much higher than the before death cost basis. So, when the spouse dies, the stepped up basis is used, making your net taxable gain much smaller. It’s one of the benefits of community property.

LLC Option

LLC has pass through taxation, and your liability is limited to what the LLC owns. If you have a lot of assets, it’s a good idea to put your properties in LLCs or multiple properties in one LLC. It protects you from lawsuits.

Living Trust

A living trust also helps you avoid probate. In this case, your property transfers to the trustee upon death. This keeps your assets private. It’s harder for people to find out what you own. This will cost around $1,000 to $1,500 to set up.

If we can help you with any of this or you have any questions, let us know. It’s important to know how you hold title because if you die or a partner dies, you need to be informed about what would happen.

If you would like to discuss ways to hold title to real estate further, please contact us at Good Life Property Management. Remember that this is general information, please check with your attorney regarding your specific circumstance.

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Steve Welty

CEO at Good Life Property Management DRE #01744610

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Hi there, Steve Welty here, broker and owner at Good Life Property Management, here to discuss 7 common ways to hold title and why that matters. So the first is sole ownership. You’re just an individual, you own a property, pretty common. And if and when you die, the property will go to probate and court will decide how the property is split up or sold or whatever. The second is a relatively new one, it’s called TOD or Transfer On Death. It started in January 2016, and it’s also known as a beneficiary deed, and it must be a single family home, condo, or two to four unit. It can’t be an apartment building. And so, when you die, you spell out in the deed who the property goes to and it goes to that beneficiary upon your death. The third is Tenants in Common, and this is where you can have unequal ownership. So i could have three tenants in common, three partners in a property, I own 20%, maybe the other two own 40% each. Good thing with this is you can sell or will your share to anyone, but the bad thing is if you are one of those owners, you can own the property with a stranger someday. Also, a partition lawsuit- a court could force one of the partners to sell their share of the property, giving you a brand new partner without your say. So it’s always good to have a really solid partnership agreement if you’re doing Tenants in Common. Joint Tenancy with Rider Survivorship- so that’s equal ownership with the rider survivorship, so there’s two joint tenants, one dies, it automatically just goes to the other joint tenant and avoids probate, which is very, probate is very costly and you want to avoid it. The next is community property. So, California is a community property state with rider survivorship. And so one of the interesting things with this is you know, when your spouse dies, God forbid, you get a stepped up basis. So what that means is that the taxable gain on your property is the selling price minus the basis. So the basis is often much higher than the before death cost basis. So when your spouse dies, the stepped up basis is used so that makes your net taxable gain much smaller, so one of the benefits of community property. Then there’s the LLC, has passed through taxation, your liability is limited to whatever the LLC owns. So if you have lots of assets, it’s a good idea to put your properties in LLC’s or multiple properties in one LLC to protect yourself from lawsuits. And the last one is a living trust, this helps you avoid probate, transfers to the trustee upon death, also helps keep things private, your assets private, it’s harder for people to find out what you own. And it usually costs about a thousand/1500 bucks to set up. If we can help you with any of this or if you have any questions, let us know. Know how you hold title, it’s important because if you ever had a partner die or you died, it’s important to understand what happens in these major life changing situations so that you can be best informed to make the right decision for you. Make it a great day guys!