I bought my home for $30,000, but now it’s worth almost $3 million. How can I avoid a massive tax bill?

Dear MarketWatch,

I own a house in Palo Alto, Calif. that I bought for less than $30,000 and is now worth almost $3 million. There are two things I would like help with:
 
  1. How to retain my current tax rate under Proposition 13.
  2. How to keep the step-up basis to avoid massive capital gains taxes.
I am 80 years old and have three children. Will establishing an LLC or revocable living trust help? I still wish to retain the power to do as I wish with the property in case of need. It has a $400,000 mortgage, and it is currently has a tenant with a one-year lease. Thank you for helping me do what I need since December is the deadline for transferring deeds to relatives if I wish to retain the original tax basis.

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