Transfer of ownership in CA

General Real Estate Investing
1

Good evening,

I am trying to determine if there is any cost associated with transferring a trust from a seller to my name if I am doing a Sub2. I read on a different site, that certain states can charge a 3% transfer tax (Delaware). Is there any taxation associated?

Thanks,
Gus

2

I think I found the answer to my question. Based on this document, http://www.taxadmin.org/fta/rate/B-0306.pdf the state of California only charges “Local Taxes Only” however, I am not quite sure what exactly that translate to.

Thanks,

Gus

3

The tax value will be reassessed to market value and your taxes could go up.

4

thanks!

5

or down…

Are you referring to the transfer tax or property tax?

In California depending on the seller, purchase value, and P/L there could be a 3 1/3 tax pre pay.

If a transfer tax; the county typically charges a transfer tax on transfers of title, although you set the transfer value and the cost per thousand is relatively low. At least in my county. 1.10 per 1000…

I would call my county recorders office and ask them…

6

Mike,

I was referring to Transfer tax when doing a Sub2 buy.

I think you are right, county recorders would probably be my best bet if i wanted to find out about property tax, but for Title Transfer tax, it would be a tittle company, correct? Thanks.

7

County recorders handle transfer taxes county Assessor handles property tax… If you care to chat let me know.

8

If I understand your statement correctly you are trying to determine if there will be a transfer tax on a property transferred from a Trust to an individual.

California Franchise Tax Board collects 3.3% of the sales value at the time an escrow closes, with a few exceptions.

In the case of transfer from a trust to an individual the fee would be imposed; however, there is an exception. If the property is owned by the Trustee as it would in a land trust and the Trustee is a non profit corporation the fee is not collected.

Of course you would need to verify this with the Title Company handling the escrow for you.

Thomas K. Standen
Equity Holding Corporation

9

Does this apply to Sub2’ tittle transfer?

I guess what I am trying to find out is how much it would cost me to buy $450K house from a distress seller who needs to sell and where I take over the existing financing without notifying the bank.

10

Michael,

I just dropped you a line.

Gus-

11

I think you have the concept of the tax incorrect. Lets chat

12

Gus

Why in the world would you transfer a property from a land trust to your name on a sub2. Sounds like a mistake to me.

Your question regarding transfer taxes. In California the only amount subject to the state transfer tax on a sale is the amount on the equity. The amount of existing debt assumed is not subject to the tax.

Why not just leave the property in the trust and transfer the beneficial interest?

13

Brian,

I am going to backtrack a little. I think I formulated the question wrong so my apologies to those that were trying to assist here. What I was trying to find out in reality is the cost associated with doing a Sub2, i.e. Ownership transfer, closing cost , etc…not only from the buyer’s perspective, but also from a sellers as well.

Thanks.

14

assuming typical costs…
Purchase Title Insurance .60% of Purchase Price
Purchase Title Insurance Binder 10% of above number
Purchase Escrow/attorney Fees each side 0.20% of Purchase
Natural Hazard <100.00>
Purchase Notary Fee <40.00>
Purchase transfer Tax 1.10 @1000 Purchase price
Purchase Doc Prep <150.00>
Purchase Transaction Coordinator <250.00>
Home Warranty <450.00>
Purchase Recording Fees <50.00>

Here is an excel I created a few years ago that may help http://www.michaelquarles.com/calculators.xls

Good luck

15

Thanks for sharing this!