Why does my mom need a home appraisal?

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rebellovw
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Why does my mom need a home appraisal?

Post by rebellovw » Mon Sep 16, 2019 11:19 am

My brothers are playing dumb here - they sent me an email with a home appraisal for my mom - I asked - what is this about - they said - "something about taxes - transfer of ownership..."

My mom and dad were married for over 70 years - they lived only in the SF east bay - they own their house outright - bought it in 1975 for something like 69K. My dad died about 3-4 years back - 94 years old. My mom is in here 90's - and should of inherited everything - which is my understanding she did.

Her house now - is clearly worth a million plus (appraisal shows 1.2M - the house is a dump - but it is in CA.) I'm concerned this would reset her property tax rate - which has been hugely low thanks to Prop 13 (which by the way didn't help me at all)

Does this make sense? Does an elderly widower in this case - have to transfer ownership and reset the property tax house value?

Was this because my dad perhaps didn't have the title in joint tenants like me and my wife have our current house title?

This seems bad to me.

Thanks,

NotWhoYouThink
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Re: Why does my mom need a home appraisal?

Post by NotWhoYouThink » Mon Sep 16, 2019 11:38 am

She may have received a step up in basis after your father died that would not affect California property tax, but would affect federal capital gains tax if she sells. Many people her age find it beneficial or necessary to sell their homes and move to retirement communities or assisted living. Understanding the tax consequences of a move would be part of the decision process.

HomeStretch
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Re: Why does my mom need a home appraisal?

Post by HomeStretch » Mon Sep 16, 2019 11:46 am

I think you need to get more information from your mom or your brothers about the situation as the information provided seems too vague.

It isn’t clear if they are cleaning up the house title to remove your dad’s name, if they are trying to get a reverse mortgage, if they are trying to transfer house title to themselves, etc.

CurlyDave
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Re: Why does my mom need a home appraisal?

Post by CurlyDave » Mon Sep 16, 2019 11:56 am

rebellovw wrote:
Mon Sep 16, 2019 11:19 am
... My mom is in here 90's - and should of inherited everything - which is my understanding she did...

Thanks,
You might want to consult an attorney.

One big question would revolve around whether your dad had a will when he passed. If he did not, it can get complicated very quickly.

In many states a surviving spouse gets 50% of an estate and children split the other 50 equally if there is no will. I do not know about CA specifically.

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rebellovw
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Re: Why does my mom need a home appraisal?

Post by rebellovw » Mon Sep 16, 2019 12:14 pm

Thanks everyone - very much appreciated.

He did have a will when he past - he setup a trust - myself and my two brothers are on it as administrators.

I'll try to see what is going on.

Thanks.

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dm200
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Re: Why does my mom need a home appraisal?

Post by dm200 » Mon Sep 16, 2019 12:18 pm

rebellovw wrote:
Mon Sep 16, 2019 12:14 pm
Thanks everyone - very much appreciated.
He did have a will when he past - he setup a trust - myself and my two brothers are on it as administrators.
I'll try to see what is going on.
Thanks.
Perhaps loan ownership/title not transferred/recorded fully after will was settled.

TropikThunder
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Re: Why does my mom need a home appraisal?

Post by TropikThunder » Mon Sep 16, 2019 12:21 pm

rebellovw wrote:
Mon Sep 16, 2019 12:14 pm
Thanks everyone - very much appreciated.

He did have a will when he past - he setup a trust - myself and my two brothers are on it as administrators.

I'll try to see what is going on.

Thanks.
If the three of you are joint administrators of the trust (did you mean trustee?) then the other two shouldn’t be doing anything without telling you - before, not after.

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rebellovw
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Re: Why does my mom need a home appraisal?

Post by rebellovw » Mon Sep 16, 2019 1:44 pm

TropikThunder wrote:
Mon Sep 16, 2019 12:21 pm
rebellovw wrote:
Mon Sep 16, 2019 12:14 pm
Thanks everyone - very much appreciated.

He did have a will when he past - he setup a trust - myself and my two brothers are on it as administrators.

I'll try to see what is going on.

Thanks.
If the three of you are joint administrators of the trust (did you mean trustee?) then the other two shouldn’t be doing anything without telling you - before, not after.
Thanks - I'm a backup - I think we have a main 1 and I'm either second or third. I think I'm primary on the medical directives.

I trust my brothers - I'm just a bit troubled by an appraisal w/o any context as to why. We are moving her to a living facility and that could be the reason - but I was fairly sure she had enough money to cover that - but I could be wrong.

Thanks again folks!

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sergeant
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Re: Why does my mom need a home appraisal?

Post by sergeant » Mon Sep 16, 2019 1:54 pm

Not sure what you mean about prop13 not helping you?

Home appraisals are generally for loan purposes. Is it possible your brothers are taking a loan on the house? Reverse mortgages also require an appraisal. The appraisal will have nothing to do with changing title with the county.
Lincoln 3 EOW! AA 40/60.

RetiredArtist
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Re: Why does my mom need a home appraisal?

Post by RetiredArtist » Mon Sep 16, 2019 2:20 pm

I had a similar experience helping older relatives in CA. When first spouse passed away, remaining spouse received stepped up cost basis on the joint home. The increased cost basis did not change the CA Proposition 13 tax basis in our case.
This stepped up cost basis would reduce taxes if trustees need to sell your mom's home to pay for assisted living. It's best to get the date of death appraisal close to date of death- a retrospective appraisal is more complicated. You should indicate to appraiser why you need the appraisal, as it can skew higher or lower. If you are selling, higher is good to minimize capital gain.
The trustees/your brothers should be communicating this to you.
I was not a tax, legal or real estate expert in my previous working lifetime. Best to double check with experts. For Prop 13 tax basis questions, you can call the county assessor's office.

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rebellovw
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Re: Why does my mom need a home appraisal?

Post by rebellovw » Mon Sep 16, 2019 2:24 pm

sergeant wrote:
Mon Sep 16, 2019 1:54 pm
Not sure what you mean about prop13 not helping you?

Home appraisals are generally for loan purposes. Is it possible your brothers are taking a loan on the house? Reverse mortgages also require an appraisal. The appraisal will have nothing to do with changing title with the county.
Yeah -- Prop 13 didn't help me. It helped my father big time - we compared tax cards - he was at 84K - I was at 750K. I paid 650K for my house a few years prior - he lived in the house since around 74/75.

It didn't help me. My rate of increase way surpassed his. His grew by a couple K at most - mine grew must faster.

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rebellovw
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Re: Why does my mom need a home appraisal?

Post by rebellovw » Mon Sep 16, 2019 2:26 pm

RetiredArtist wrote:
Mon Sep 16, 2019 2:20 pm
I had a similar experience helping older relatives in CA. When first spouse passed away, remaining spouse received stepped up cost basis on the joint home. The increased cost basis did not change the CA Proposition 13 tax basis in our case.
This stepped up cost basis would reduce taxes if trustees need to sell your mom's home to pay for assisted living. It's best to get the date of death appraisal close to date of death- a retrospective appraisal is more complicated. You should indicate to appraiser why you need the appraisal, as it can skew higher or lower. If you are selling, higher is good to minimize capital gain.
The trustees/your brothers should be communicating this to you.
I was not a tax, legal or real estate expert in my previous working lifetime. Best to double check with experts. For Prop 13 tax basis questions, you can call the county assessor's office.
Thank you - you nailed it - I just spoke with the legal firm - not the lawyer but the person who answered the phone - he will be calling me back - but basically it is as you described. It will not affect taxes according to them. What a relief!

RetiredArtist
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Re: Why does my mom need a home appraisal?

Post by RetiredArtist » Mon Sep 16, 2019 2:28 pm

Absent big remodels, under Prop 13, you and your dad's CA property taxes surely increased by the same percentage.

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rebellovw
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Re: Why does my mom need a home appraisal?

Post by rebellovw » Mon Sep 16, 2019 2:50 pm

RetiredArtist wrote:
Mon Sep 16, 2019 2:28 pm
Absent big remodels, under Prop 13, you and your dad's CA property taxes surely increased by the same percentage.
Yes - my % was the same has his - but % of 650K - in a few years was 750K - so really no real win for me. My house was worth perhaps 799 at the time.

It may help now - that my old house is worth 1.3M.

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sergeant
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Re: Why does my mom need a home appraisal?

Post by sergeant » Mon Sep 16, 2019 3:23 pm

rebellovw wrote:
Mon Sep 16, 2019 2:50 pm
RetiredArtist wrote:
Mon Sep 16, 2019 2:28 pm
Absent big remodels, under Prop 13, you and your dad's CA property taxes surely increased by the same percentage.
Yes - my % was the same has his - but % of 650K - in a few years was 750K - so really no real win for me. My house was worth perhaps 799 at the time.

It may help now - that my old house is worth 1.3M.
This isn't possible. Prop 13 only allows a maximum increase of assessed value of 2% a year. There is no way assessed value went from 650k to 750k in a "few" years. Let's say a few is three, your assessed value could have only gone up to about 690k, unless you added rooms or a pool or some other major improvement. Prop 13 absolutely keeps a lid on increases to assessed value.
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Topic Author
rebellovw
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Re: Why does my mom need a home appraisal?

Post by rebellovw » Mon Sep 16, 2019 3:43 pm

So the stepped up basis - seems like a win win? Is there any downside to this?

Say the house basis under my father was 69K (I'm pretty sure that is what they paid - something under 100K) - and now under my mother is 1.2M - the purpose of the step basis - is so that when the person inheriting the house goes to sell - it will be gains on anything over 1.2M (the new basis) - which could be '0' if sold for 1.2M.

I never knew about this - this seems pretty awesome - I always thought it would be the basis of which they both bought the house which would be extremely costly.

Gill
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Re: Why does my mom need a home appraisal?

Post by Gill » Mon Sep 16, 2019 3:56 pm

rebellovw wrote:
Mon Sep 16, 2019 3:43 pm
So the stepped up basis - seems like a win win? Is there any downside to this?

Say the house basis under my father was 69K (I'm pretty sure that is what they paid - something under 100K) - and now under my mother is 1.2M - the purpose of the step basis - is so that when the person inheriting the house goes to sell - it will be gains on anything over 1.2M (the new basis) - which could be '0' if sold for 1.2M.

I never knew about this - this seems pretty awesome - I always thought it would be the basis of which they both bought the house which would be extremely costly.
You've got it. Her basis become $1.2M as the result of it being included in your father's estate.
Gill
Cost basis is redundant. One has a basis in an investment | One advises and gives advice | One should follow the principle of investing one's principal

NotWhoYouThink
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Re: Why does my mom need a home appraisal?

Post by NotWhoYouThink » Mon Sep 16, 2019 3:57 pm

Your mother may be planning to sell it if she is moving into an assisted living facility. She should get a stepped up basis as of the date of your father's death. No reason to keep it if she's not living there.

But yes, if she still owns it when she dies, her heirs will get the basis stepped up to the value at the time of her death.

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rebellovw
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Re: Why does my mom need a home appraisal?

Post by rebellovw » Mon Sep 16, 2019 4:09 pm

Gill wrote:
Mon Sep 16, 2019 3:56 pm
rebellovw wrote:
Mon Sep 16, 2019 3:43 pm
So the stepped up basis - seems like a win win? Is there any downside to this?

Say the house basis under my father was 69K (I'm pretty sure that is what they paid - something under 100K) - and now under my mother is 1.2M - the purpose of the step basis - is so that when the person inheriting the house goes to sell - it will be gains on anything over 1.2M (the new basis) - which could be '0' if sold for 1.2M.

I never knew about this - this seems pretty awesome - I always thought it would be the basis of which they both bought the house which would be extremely costly.
You've got it. Her basis become $1.2M as the result of it being included in your father's estate.
Gill
Thanks Gill - that is great.

Thanks Boogleheads - new concept stored into memory banks, next to Tax Lost Harvesting, Roth Conversion.

EdNorton
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Re: Why does my mom need a home appraisal?

Post by EdNorton » Mon Sep 16, 2019 4:25 pm

Gill wrote:
Mon Sep 16, 2019 3:56 pm
rebellovw wrote:
Mon Sep 16, 2019 3:43 pm
So the stepped up basis - seems like a win win? Is there any downside to this?

Say the house basis under my father was 69K (I'm pretty sure that is what they paid - something under 100K) - and now under my mother is 1.2M - the purpose of the step basis - is so that when the person inheriting the house goes to sell - it will be gains on anything over 1.2M (the new basis) - which could be '0' if sold for 1.2M.

I never knew about this - this seems pretty awesome - I always thought it would be the basis of which they both bought the house which would be extremely costly.
You've got it. Her basis become $1.2M as the result of it being included in your father's estate.
Gill

Assuming the OP owned the house jointly with her husband, she would get the stepped up basis on half the house, so her new basis would be $634,5000, (50% of $1.2M and 50% of $69k).
Outside a dog, a book is man's best friend, inside a dog, it's too dark to read - Groucho

Topic Author
rebellovw
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Re: Why does my mom need a home appraisal?

Post by rebellovw » Mon Sep 16, 2019 4:59 pm

EdNorton wrote:
Mon Sep 16, 2019 4:25 pm
Gill wrote:
Mon Sep 16, 2019 3:56 pm
rebellovw wrote:
Mon Sep 16, 2019 3:43 pm
So the stepped up basis - seems like a win win? Is there any downside to this?

Say the house basis under my father was 69K (I'm pretty sure that is what they paid - something under 100K) - and now under my mother is 1.2M - the purpose of the step basis - is so that when the person inheriting the house goes to sell - it will be gains on anything over 1.2M (the new basis) - which could be '0' if sold for 1.2M.

I never knew about this - this seems pretty awesome - I always thought it would be the basis of which they both bought the house which would be extremely costly.
You've got it. Her basis become $1.2M as the result of it being included in your father's estate.
Gill

Assuming the OP owned the house jointly with her husband, she would get the stepped up basis on half the house, so her new basis would be $634,5000, (50% of $1.2M and 50% of $69k).
Oh man - thought it was too good to be true. Still 634 base is better than I'd thought it would be.

Loved you in Fight Club!

Gill
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Re: Why does my mom need a home appraisal?

Post by Gill » Mon Sep 16, 2019 5:31 pm

rebellovw wrote:
Mon Sep 16, 2019 4:59 pm
EdNorton wrote:
Mon Sep 16, 2019 4:25 pm
Gill wrote:
Mon Sep 16, 2019 3:56 pm
rebellovw wrote:
Mon Sep 16, 2019 3:43 pm
So the stepped up basis - seems like a win win? Is there any downside to this?

Say the house basis under my father was 69K (I'm pretty sure that is what they paid - something under 100K) - and now under my mother is 1.2M - the purpose of the step basis - is so that when the person inheriting the house goes to sell - it will be gains on anything over 1.2M (the new basis) - which could be '0' if sold for 1.2M.

I never knew about this - this seems pretty awesome - I always thought it would be the basis of which they both bought the house which would be extremely costly.
You've got it. Her basis become $1.2M as the result of it being included in your father's estate.
Gill

Assuming the OP owned the house jointly with her husband, she would get the stepped up basis on half the house, so her new basis would be $634,5000, (50% of $1.2M and 50% of $69k).
Oh man - thought it was too good to be true. Still 634 base is better than I'd thought it would be.

Loved you in Fight Club!
Ignore that post about a half stepup. You are in California, a community property state and will receive a full stepup.
Gill
Cost basis is redundant. One has a basis in an investment | One advises and gives advice | One should follow the principle of investing one's principal

jackets320
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Re: Why does my mom need a home appraisal?

Post by jackets320 » Mon Sep 16, 2019 5:55 pm

Per Intuit since CA is a community property state the entire basis is stepped up to fmv as of date of death of the deceased spouse. Che k with a CPA

Topic Author
rebellovw
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Re: Why does my mom need a home appraisal?

Post by rebellovw » Mon Sep 16, 2019 6:03 pm

Gill wrote:
Mon Sep 16, 2019 5:31 pm
rebellovw wrote:
Mon Sep 16, 2019 4:59 pm
EdNorton wrote:
Mon Sep 16, 2019 4:25 pm
Gill wrote:
Mon Sep 16, 2019 3:56 pm
rebellovw wrote:
Mon Sep 16, 2019 3:43 pm
So the stepped up basis - seems like a win win? Is there any downside to this?

Say the house basis under my father was 69K (I'm pretty sure that is what they paid - something under 100K) - and now under my mother is 1.2M - the purpose of the step basis - is so that when the person inheriting the house goes to sell - it will be gains on anything over 1.2M (the new basis) - which could be '0' if sold for 1.2M.

I never knew about this - this seems pretty awesome - I always thought it would be the basis of which they both bought the house which would be extremely costly.
You've got it. Her basis become $1.2M as the result of it being included in your father's estate.
Gill

Assuming the OP owned the house jointly with her husband, she would get the stepped up basis on half the house, so her new basis would be $634,5000, (50% of $1.2M and 50% of $69k).
Oh man - thought it was too good to be true. Still 634 base is better than I'd thought it would be.

Loved you in Fight Club!
Ignore that post about a half stepup. You are in California, a community property state and will receive a full stepup.
Gill
Thank you!

Topic Author
rebellovw
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Re: Why does my mom need a home appraisal?

Post by rebellovw » Mon Sep 16, 2019 6:03 pm

jackets320 wrote:
Mon Sep 16, 2019 5:55 pm
Per Intuit since CA is a community property state the entire basis is stepped up to fmv as of date of death of the deceased spouse. Che k with a CPA
Thank you.

boomer_techie
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Re: Why does my mom need a home appraisal?

Post by boomer_techie » Tue Sep 17, 2019 2:28 am

CurlyDave wrote:
Mon Sep 16, 2019 11:56 am
One big question would revolve around whether your dad had a will when he passed. If he did not, it can get complicated very quickly.

In many states a surviving spouse gets 50% of an estate and children split the other 50 equally if there is no will. I do not know about CA specifically.
This thread dovetails with a question from a neighbor. I presume my neighbors are joint tenants - don't see how they'd have gotten a mortgage otherwise. There is a significant age (and health) difference between the two of them.

Q: When the older spouse dies, will the younger spouse get the entire house? (This is in California.) Even if the older spouse has a will leaving "their half" to someone or something else? My understanding of joint tenancy is that the surviving spouse will get the entire house at the instant of death - thus leaving the deceased spouse's estate without an interest in a house to give away.

(I see from this thread that the younger (presumably eventually to be surviving) spouse should plan on getting an appraisal.)

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RickBoglehead
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Re: Why does my mom need a home appraisal?

Post by RickBoglehead » Tue Sep 17, 2019 6:14 am

boomer_techie wrote:
Tue Sep 17, 2019 2:28 am
CurlyDave wrote:
Mon Sep 16, 2019 11:56 am
One big question would revolve around whether your dad had a will when he passed. If he did not, it can get complicated very quickly.

In many states a surviving spouse gets 50% of an estate and children split the other 50 equally if there is no will. I do not know about CA specifically.
This thread dovetails with a question from a neighbor. I presume my neighbors are joint tenants - don't see how they'd have gotten a mortgage otherwise. There is a significant age (and health) difference between the two of them.

Q: When the older spouse dies, will the younger spouse get the entire house? (This is in California.) Even if the older spouse has a will leaving "their half" to someone or something else? My understanding of joint tenancy is that the surviving spouse will get the entire house at the instant of death - thus leaving the deceased spouse's estate without an interest in a house to give away.

(I see from this thread that the younger (presumably eventually to be surviving) spouse should plan on getting an appraisal.)
Real estate is often held as joint tenancy with right of survivorship. . If one passes, the other fully inherits regardless of what the will states. Some states may differ.

If the property is held in as joint tenancy, but does not say with rights of survivorship, then it is possibe that when one passes his or her will will determine where their share goes.

Every state has specific laws. It matters where the property is located. Some states have TOD deeds available, often called Lady Bird deeds. Washington State's TOD deed is not exactly the same from what I read.

There are at least two issues that usually need to be addressed. First, how to transfer property automatically. Second, taxation.

IANAL

A real estate lawyer should be used to buy, or sell, real estate.
An lawyer with expertise in trusts and wills should be used for those.
Avid user of forums on variety of interests-financial, home brewing, F-150, PHEV, home repair, etc. Enjoy learning & passing on knowledge. It's PRINCIPAL, not PRINCIPLE. I ADVISE you to seek ADVICE.

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