San Clemente, CA asked in Estate Planning, Real Estate Law and Tax Law for California

Q: Can a husband leave real estate to an adult child instead of his spouse so it can be sold without capital gains taxes?

2 Lawyer Answers
Jeffrey Louis Gaffney
Jeffrey Louis Gaffney
PREMIUM
Answered
  • Estate Planning Lawyer
  • Carlsbad, CA
  • Licensed in California

A: The husband can leave his half of the community property and all of his separate property to whomever he wants.

It won't matter for capital gains who he leaves it to though. That person, spouse or stranger, will inherit the property at a stepped up basis (erasing the capital gain tax due upon sale).

James Edward Berge , Yelena Gurevich and Zaher Fallahi agree with this answer

Ernest Charles Payne Jr
Ernest Charles Payne Jr
Answered
  • Estate Planning Lawyer
  • San Clemente, CA
  • Licensed in California

A: If the husband owns the house as his sole and separate property, he can leave it to whomever he chooses. If the house is community property with his wife, then he can leave his half to whomever he wants. The wife can leave her half to the son or whomever else she chooses.

As my colleague stated, the house will be reassessed at the market value at the time it is passed through inheritance, otherwise known as a step-up in basis. So capital gains tax will not be an issue.

James Edward Berge , Yelena Gurevich and Zaher Fallahi agree with this answer

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