If you are the sole owner of a piece of property, you can include that property in your living trust. You will need to change the property's title to reflect the ownership change. If real property is transferred into a trust, there are several additional issues to consider, including the following:
Property tax reassessment:
If you designate yourself as the trustee, many states, including California, will NOT require a tax reassessment when you transfer property into your trust.
Transfer taxes: Transfer taxes are normally assessed on real estate transfers. When the transfer is to a living trust, these taxes are usually not imposed. However, some states do tax living trust transfers. You should check with your County Assessor or Recorder's Office to confirm that you will not need to make these payments.
Mortgage interest deductions: As the grantor, you can still deduct mortgage interest from your income taxes.
Insurance policies: If you are the trustee, you do not need to change the registration of insurance policies if those policies cover property in the revocable trust.
Tax breaks for the sale of a home: You can exclude up to $250,000 of profit from your taxable income when you sell your principal home, even if the trust owns the home . If there are co-owners, such as spouses, this exclusion is doubled to $500,000.
Homestead rights: Homestead rights, which protect a homeowner's equity interest in his or her home, generally apply to trust property.
Due-on-sale clauses: A lender cannot enforce a due-on-sale clause if you are transferring your principal residence to your trust. If you are concerned about this, you may want to get your lender's consent before making the transfer.
Partial interests: You can transfer a partial interest in real property to the trust (like a time share or an ownership percentage).