This post is for general informational purposes only and does not constitute legal, tax, or financial advice. Consult a qualified real estate attorney, CPA, and estate planning advisor before making decisions about your property.
When Your Home Is Your Largest Asset
If you’ve owned a home in Los Gatos or Monte Sereno for 15 to 30 years, you may be sitting on $3 million to $10 million or more in equity — often more than your investment portfolio and retirement accounts combined. At that scale, the decision of when and how to sell is not simply a real estate question. It’s a wealth transfer question, and the answer depends heavily on your estate plan, your tax position, and the advice of your legal and financial team.
Holding Property in a Trust
Many Los Gatos and Monte Sereno homeowners in this equity tier hold property in a revocable living trust. If your home is already in trust, the sale mechanics are straightforward — the trustee executes the transaction. If it’s still in your personal name, your estate attorney may recommend transferring into trust first, depending on your circumstances.
Properties held in irrevocable trusts involve more complexity. The trustee’s authority to sell, timing considerations, and tax treatment should all be confirmed with your trust attorney before any real estate transaction is initiated.
Stepped-Up Basis: The Case for Holding (or Not)
This is the most consequential tax consideration for long-term homeowners with very low cost basis. If you purchased a Los Gatos home in 1995 for $600,000 and it’s now worth $4.5 million, your capital gain on a sale today is approximately $3.9 million, subject to the Section 121 exclusion of up to $500,000 for married couples filing jointly. The taxable gain above that exclusion is subject to federal and California capital gains taxes.
At death, heirs receive a stepped-up basis to fair market value at the date of death — a subsequent sale then generates no capital gain. For homeowners who don’t need the proceeds and whose primary goal is wealth transfer, this is a significant consideration. Your CPA should model the specific numbers for your situation.
Proposition 19 for Sellers Over 55
California’s Proposition 19 allows homeowners 55 or older to transfer their existing property tax base year value to a replacement primary residence anywhere in California — up to three times in a lifetime. In practical terms: if you’ve owned a Monte Sereno home assessed at $800,000 for property tax purposes but now worth $4.5 million, you can purchase a new home anywhere in California and carry that $800,000 assessment forward, adjusted for any price difference between properties.
For Monte Sereno sellers downsizing to a smaller property in Los Gatos, the Peninsula, or a coastal community, Prop 19 can produce annual property tax savings of $30,000 to $80,000 or more — a permanent benefit. If you’re over 55 and haven’t modeled this with your CPA, do so before you list.
Gifting, 1031 Exchanges, and Year-End Timing
Gifting property to adult children as part of wealth transfer planning has different tax consequences than the stepped-up basis path — coordinate carefully with your estate attorney and CPA. For investment properties, a 1031 exchange lets you defer capital gains tax by reinvesting proceeds into a like-kind replacement property within IRS timelines. Primary residences don’t qualify, though former-primary-turned-rental properties may have partial eligibility. Engage a qualified intermediary and your CPA early.
Finally, year-end timing matters. Closing in December versus January determines which tax year your gain lands in — which can matter significantly if your income is lumpy or you’re managing AMT exposure. Your CPA should be part of your listing timeline conversation, not a call you make after closing.
My Role in This Process
I work regularly with Los Gatos and Monte Sereno sellers navigating these considerations — trust-held properties, estate situations, and complex tax circumstances. My job is to bring the right advisors to the table and execute the real estate side with precision. The sale should serve your financial strategy, not the other way around.
Contact Annette Seaborn →
(408) 859-5881 | aseaborn@cbnorcal.com
Coldwell Banker Realty · Los Gatos, CA · DRE 01348743
