Hugh Hefner, Daren Metropoulos and the Playboy Mansion at 10236 Charing Cross Road
The elderly owners of some of L.A.’s most storied estates aren’t waiting until death to part with their homes.
Instead, they’re selling them early to reap the tax benefits and signing till-death-do-us-part covenants with the new owners that still allow them to remain there until the end.
In some cases, property owners are passing their properties on months or even years before they expect to die, the Los Angeles Times reported. Each case is different, and owners can negotiate with buyers or heirs about issues of maintenance, property tax, and rental income in the interim.
The most prominent case of the practice is the Playboy Mansion, purchased by Twinkies heir Daren Metropoulos for $100 million in August under the agreement that Hugh Hefner will be permitted to live in the mansion until he dies. Hefner will pay $1 million a year to lease it.
Zsa Zsa Gabor, who died last month, sold her Bel Air compound three years ago for $11 million but remained there following the sale.
In some cases, buyers end up relocating the tenant into a nursing home as their final days near.
“It puts a bit of a cloud over the value of the house if you somebody passed away in the master bedroom,” said Dana Taschner, who runs a law firm in L.A.
Some buyers strike up a deal — known in French as viager, or “for life” — whereby they make an initial down payment and then send the owner regular payments until his or her death. Buyers gamble that the seller will die before paying the full value of the property. But, in the U.S., buyers are usually locked into the entire sum.
Another arrangement is to gift the property. Instead of selling and risking a dent in capital gains, homeowners choose to donate the property to charity and benefit from an enormous tax deduction. [LAT] — Cathaleen Chen