Mark Cooper and his commercial real estate team work with landlords and trusts to determine values and strategies with estates of five or more properties. Keep in mind, Mark Cooper is commercial real estate agent in San Francisco and Marin counties. He specializes in leasing for office, industrial, retail, luxury homes and condos in Sausalito, Mill Valley, and Corte Madera. Mark can't give tax advice, but the following are things to ask about with your tax advisers.
1) If the date of death for an estate is this year (2009), the first 3.5m is excluded from inheritance taxes.
2) you can prevent property tax reassessment by using "parent to child" and "grandparent to grandchild" exclusions. There are limits to the amount not being reassessed, but the limit is not the total of the fair market value of the property in an estate, but the total of the assessed values of all properties from property taxes, A building may be worth 5 mil today, but the property tax bill is used for value, (which is a very good thing for properties that have been in the family for years, thank you prop 13).
3) If heirs opt to buy each other out of properties, be careful of capital gains and property tax reassesment. The selling partner will either be required to pay capital gains on the difference between the basis and the sale price, or do a 1031 exchange.
4) keep in mind a 50% or greater transfer of ownership will trigger reassessment on the fair market value of the portion transferred, If an heir intens to purchase a trust property, rather then buying a partner out of a property, consider deeding it directly when it comes out of an estate and paying the other beneficiary with cash or another property. Another choice would be to leave the partner on title for 5% and only buy him out of 45%, (avoiding reassessment).
5) when multiple heirs inherit a property, it can be appraised, then a "fractional ownership deduction" may be taken from the value, this can be a reduction of up to 25%. The theory is, if the property were to be sold, its less likely that multiple owners could agree on sale terms, price, and a time frame. This reduces the likely hood of the property selling.
call or email markcooper@kw.com 415-608-1036 for a valuation of your commercial and investment properties. Mark Cooper works closely with real estate attorneys and tax advisers allowing him to step back and look at the big picture when determining a game plan to buy, sell, lease, or refinance.
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