"There's this whole subculture, this unseen gray market of properties in Southern California, where really sophisticated sellers are selling these hugely appreciated assets or gifting them to Cedars Sinai or USC while staying in the house."
"Homeowners who don't want to sell can set up a life estate that passes the property to their heirs - family or otherwise - while reserving the right to remain until death. The future beneficiaries, known as remaindermen, hold legal interest in the home and don't have to worry about tricky probate issues."
"Rather than sell their home and risk a capital gains hit, some homeowners opt to gift it. As part of the deal, some ask to retain residency, with annuity payments for life from the charity. The income tax deduction can be hefty."
Hugh Hefner remains in the Playboy Mansion after selling it for $100 million with a stipulation allowing him to live there until death. This arrangement reflects a common practice among wealthy Southern California residents who use creative property deals to transfer valuable assets while maintaining lifetime occupancy. Life estates allow homeowners to pass property to heirs while reserving residency rights. Charitable remainder annuity trusts enable homeowners to gift properties to institutions while retaining residency and receiving annuity payments. These strategies help avoid capital gains taxes and provide substantial income tax deductions. Southern California's concentration of wealthy older residents in high-value properties has created a sophisticated gray market for such arrangements.
#life-estates #charitable-remainder-trusts #estate-planning #property-transfer-strategies #tax-deductions
Read at Los Angeles Times
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