I'm trying to get some guidance on what steps are necessary and sufficient in order for me and my wife in order to obtain legal ownership of a property which is currently owned by a parent.

We are currently living in the home and have a high level interest in owning the home in order to make major renovations. Renovating the home is the primary motivation for considering all of this. Parents do not necessarily want to spend any time and energy on renovations. We would like some pointers on how we can make this happen technically speaking. The owners of the home, parents of one of us, have also an interest in making this happen as well.

Parents are okay if we somehow pay them 50% of the market value of the home, or less. The parents also are interested in minimizing the tax burden on both parties.

The market value of the home is around $650,000 and located in Los Angeles County, California.

Any insight is appreciated. Thank you in advance for the help.

  • Thank you so much @SSpring. So it my interpretation is that there are 3 options. Transfer the home, change the home to have "co-owners", or dont do anything with the property ownership until death (will). Is this correct?
    – Judy007
    Commented Nov 21, 2020 at 4:07
  • Considering that renovating the home is our PRIMARY motivator for all of this, which of the 3 options allows for this? It sounds like option A or B. I assumed that option A was our only option for making executive renovation decisions.
    – Judy007
    Commented Nov 21, 2020 at 4:19

2 Answers 2


The deed to the house can be transferred and the value transferred can be accounted against the estate-tax-threshold. Or the deed can be changed to co-owners with right-of-survivorship. Or the property can be listed in a will.

Of course a will can be changed at any time or even legally challenged. A transfer of the deed can be reversed within 3 years or so, according to state law, if the value is needed for something like nursing home care. Co-ownership might be considered to be 50% ownership for each party until transfer.

  • If the deed is changed to have me and my wife as co-owners, are me and my wife able to make executive decisions regarding major home renovations without any consent from parents? Also, how might this impact taking out a loan in order to make the renovations? I assumed that transferring the deed would be the most strait forward option considering that renovations are our primary motivator for all of this, and that parents are ultimately disinterested in renovation decisions. (which is why the idea of "gift" first came about: to absolve them entirely of any renovation responsibility)
    – Judy007
    Commented Nov 21, 2020 at 4:22
  • Its worth stating again, the only reason for considering this entire transaction is to remove the parents from having to think about renovations. Thats it.
    – Judy007
    Commented Nov 21, 2020 at 4:26
  • 1
    I don't know if a bank would make a home-equity loan on half of the property. If not then all owners would need to apply for the loan.
    – S Spring
    Commented Nov 21, 2020 at 4:32
  • Thank you so much for this great information. So this rules out co-ownership then. What strategy can be implemented in order to transfer the home and minimize the tax burden on both parties?
    – Judy007
    Commented Nov 21, 2020 at 4:37
  • The grantor would transfer the deed to the house to the grantee and the grantor would account the transfer as an estate-transfer on their tax forms.
    – S Spring
    Commented Nov 21, 2020 at 4:54

To reinforce @S Springs's answer: "When you sell your home for significantly less than its fair market value, the IRS considers the value of that reduction as a taxable gift to your relative—even if no actual cash changes hands."

Thus, that "value of that reduction" would be subtracted from the (currently) $22.36M Estate Tax exemption. Your parents will have to file IRS Form 709 (and retain it for estate tax calculations).

Bottom line: the can sell it to you for below market value, but it's classified as a gift, so must tell the IRS that it reduces their estate tax exemption, and by how much.

Of course, since this is the Internet and thus we might be dogs, best to speak to a tax accountant.


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