Question for Professor Shays?

[frank55]

Professor I am going through a modification on a property I bought in 2005 and paid 900,000 in CA. I added a swimming pool a year later and now my assessor has my property assessed at 1,000,000. I have a prop 8 temporary tax reduction for $770,000 and it is currently under review for the 2009 tax year. My property is probably worth 650,000 and I owe $725,000. Now if Wells Fargo doesn't give me a decent modification I am going to walk. Here are the questions I have:

1. If I transfered this property to my sister's name next month with a deed of trust the assessor would have to re-assess the property to the current market value. This would be about 650,000 because there was a name change.

2. If I wait a month or 2 and switch the property back to my name then the assessor needs to re-assess the property again at current market value that will be $650,000 or less since properties are still dropping in my neighborhood. This now becomes a permanent tax assessment on my property and can only raise my taxes 2% per year. This will help me in my impounds account and I don't have to worry about it going back to the original assessment of $1,000,000.

Am I correct in attempting this process? I talked to the LA county Assessors office and they say that it does work both ways when you add or delete a name to the title of the house.

My only other question is should I wait and do this until after I find out if my modification is going to go through? Does Wells Fargo check the ownership of the property during the modification process.

I want to do this because if property values ever go up, this would save me around $3,000 a year in property tax. As the assessor said to me if the market ever came back they can go straight back to my original assessed value of my property which is 1,000,000

One last question, If I do these name changes on the property title from myself to my sister and back to my self in a few months, do I loose my original purchase price value of 900,000 + 50,000 for the pool when I sell the property in the future? Remember we are never recording a sale just a change of ownership in title?

[The Professor]

To say I'm confused would be an understatement. First you ask:

"If I transfered this property to my sister's name next month with a deed of trust ...."

You do not transfer property using a deed of trust. In California you do that with either a grant deed or a quitclaim deed.

I guess my other question is why would you want to involve your sister, thus potentially negatively impacting her, in your home which by your own admission is underwater (not really an asset)?

Playing games simply to avoid what is really just a long range potential that may or may not happen, doesn't make sense in my book. Know too that if you transfer ownership without your lender's prior approval, there is undoubtedly an alienation clause (also know as a "due on sale" clause) in your note and deed of trust allowing your lender to call all sums owed on the note all due and payable.

Daniel

[frank55]

I am sorry professor, as I made a mistake. I guess the simple question I have is weather you thought It would be a good idea to transfer title to my property for a month and transfer it right back so my property could get reassess and my temporary reduction in property could become permanent?

I do know that the lender can call the loan all due but can't I reverse that if I tell them I made a mistake and am putting the title back only in my name?

[maxx233]

Isn't it possible to just order a reassessment of the property value/taxes through the assessor directly without having to force them to do it by changing title?

The big hoopla the last couple weeks has been these fraudulant companies sending out notices that they can help you reduce your taxes for x amount if you just pay them y amount - and assessor offices are having to send out notices that this is BS because they do that for free.

[sharona]

frank55- You can have your county assessor reassesss your property taxes by going on their website and filling out a form. I did it two years ago and since then they have automatically reassessed my property taxes every year. I was paying 3600 a year and now it is down to 2800.

Sharona

[HopingtoFind]

If you transfer property to someone other then your spouse... I believe you would have to pay property transfer taxes.. I would check into that.

As others suggested the best thing is just to apply for the property to be re-assessed. Some counties do it automatically every year.

[frank55]

Thanks for the answers. I have already gotten a reduction in my property taxes, but this is only temporary. What I am trying to do is make those reductions permanent and I thought a good way to do this would be to change the home to my sisters name and then back to mine. This way they would have to reassess the property and the new property value would be permanent unlike the taxes now which are only a temporary reduction with the prop 8. I guess I am trying to fine the loophole here