Selling a House In Palo Alto With A Lot Of Equity And Deferring Taxes

By
Real Estate Agent with eXp Realty of California Silicon Valley Probate, Trust, and Investment Sales B.R.E. 01191194

selling a palo alto home

Selling a House In Palo Alto With A Lot Of Equity And Deferring Taxes

 

Many owners of homes in higher priced areas like Palo Alto are living in homes that are larger than they need or just have so much equity in them that if they sell there would be a huge tax bite. At this moment in time, if the Palo Alto home is kept until the owners pass then the heirs can inherit the Palo Alto house tax free in many cases.

 

Many retired couples are faced with this dilemma and are at a loss as to what is the best thing to do, keep or sell their Palo Alto home. Right now there are 5 main choices.

 

  1.      Sell your Palo Alto home outright and pay the tax about 47.1% in federal and state taxes for 2106.
  2.      Wait to sell your Palo Alto home see what tax changes the next administration brings to long term capital gains tax and the add on tax for the ACA. There are no changes expected to the state 13.3% top tax rate for over 1.05288 million earners. This would include most homes in Palo Alto owned by long time owners.
  3.      Take out a reverse mortgage and stay in your Palo Alto home. You will have to stay in the home with less than 3 months breaks or the bank will force you to sell.
  4.      Rent out your Palo Alto  home and use the net income to live somewhere else. Depending on the size, location, and condition of your home you can expect to bring in $4,000 to $8,000 a month. You still have to pay property taxes, insurance, gardening, and repairs. If you are renting in another part of the country it may be enough, but if you need assisted living or nursing care you will need additional income.
  5.      Do a deferred trust sale. This a complicated subject that I will explain in detail in a future blog, but the executive summary is you sell your Palo Alto home to a trust who then sells to a third party you have found. You are paid back over time with a note and you pay taxes based on the income you get over time rather than all at once.

 

Your individual circumstances will determine what makes the most sense for you and your family. There is no one right way to deal with a Palo Alto home that is highly appreciated. You should speak to your financial planner &/or accountant, as well as an estate planner and then make the decision that makes you the most comfortable.

If you have any questions about your options for selling or renting a home in Palo Alto please feel free to contact me.

Marcy Moyer

Keller Williams Realty

Specializing in Probate and Trust Sales

650-619-9285

marcy@marcymoyer.com

www.marcymoyer.com

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Marcy Moyer eXp Realty of California  Specializing in Probate and Trust Sales, and Rental Investment Properties

 

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Rainmaker
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Will Nesbitt
Nesbitt Realty at Condo Alexandria - Alexandria, VA
Nesbitt Realty is a family-run brokerage.

Contact Marcy Moyer (650) 619-9285 to speak to an Real Estate Agent with Keller Williams Realty Palo Alto Probate & Trust Specialist B.R.E. to Palo Alto, CA.

Jan 19, 2017 08:37 AM #1
Rainmaker
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Marcy Moyer
eXp Realty of California Silicon Valley Probate, Trust, and Investment Sales - Mountain View, CA
Probate, Trust, and Investment Specialist

Thanks so much Will!

Jan 19, 2017 09:13 AM #2
Rainmaker
491,810
John Juarez
The Medford Real Estate Team - Fremont, CA
ePRO, SRES, GRI, PMN

Hi, Marcy,

I know this is an old post but the subject is still interesting and pertinent and I just now read it.

 

Selling a highly appreciated home owned by a long-term owner is a challenge everywhere, of course, not only in Palo Alto. You have laid out some good suggestions to start a conversation by the owner and/or owner’s family as to a course of action. Estate planning at this stage is an important element that will not only affect the homeowner but the homeowner’s family. While tax impact must be considered the real questions are why is the sale being contemplated and where are the sellers going after the sale closes. Big issues and big decisions!

Jun 05, 2017 09:10 AM #3
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Marcy Moyer

Probate, Trust, and Investment Specialist
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