Time is Ripe to Become Better Acquainted With the Parent to Child Property Tax Transfer

California Parent to Child Property Tax Transfer

How to Obtain the California Parent to Child Property Tax Transfer


Avoiding Property Tax Reassessment & Property Tax Hikes


It is our consensus that normal middle class class residential owners, upper middle class home owners and working families, none of whom are generating a huge income at the moment, should most likely not be supplying the California state government with extra property tax revenue right now. 

This is especially true during a financial crisis such as the Covid predicament we find ourselves in during 2021… where revenue is tight all over the country, especially in California, with only a few exceptions here and there – where in general unemployment, as well as under-employment, is extremely high.

Regular middle class and upper middle class homeowners need to be saving money, and spending less, not spending more. Certainly not spending more on housing or standard goods and services, or on income tax or property taxes. We’re not talking about luxury goods or high-end services. That is specific to folks with disposable income, and is an entirely different matter altogether. 

As a matter of fact, property taxes are the one big-ticket item just mentioned that is easily lowered, or paused, or even deferred.   And if this never occurs, then property owners are going to have to be more cognizant of related details and new tax laws, as well as  new ways to avoid property tax reassessment – and tax specialists or real estate experts that are available in California to help with these matters.

Middle Class Property Tax Savings

When times are hard, as they are now, the state should help residents with key information on property tax breaks, helping property owners take full advantage of established property tax breaks, like the new Proposition 19 parent-to-child transfer and parent-to-child exclusion from reassessment of property taxes.

And this means not spending more on taxes when times are hard. Certainly, property owners should all be better informed about inheriting property taxes, and Prop 19 parent-to-child exclusion; about property tax breaks, and being able to transfer parents property taxes, with the right to keep parents property taxes on every property tax transfer.

Owning a Home is Part of the American Dream

Purchasing or inheriting a home is part of the classic American dream, and leaving part of that dream to heirs or beneficiaries is something most of us would be proud of.  However, fluid, ever-changing and complicated  property tax laws have to be kept up with, either by ourselves, or through specialists that make a living helping property owners with issues like property taxes.  

Getting expert property tax advice and estate planning advice can help save that dream, and help sustain good family financial practices for generations to come, where your home and other big ticket investments are concerned. 

Genuine Property Tax Relief

The property tax breaks middle class and upper middle class Californians are holding on to are the only safety-net solutions middle class residents have in this state, so the Legislature should be focusing on preserving and strengthening those tax breaks, and on educating and informing Californians about establishing a low tax base for trust beneficiaries; about Prop 19 parent-to-child exclusion and Proposition 19 – parent to child property tax transfer on an inherited home; plus Proposition 13 property tax transfers, as well as the Proposition 19 impact on CA homeowners, and avoiding property reassessment wherever possible – not on obsessively driving more tax revenue, under cloaked measures called “property tax relief” that are merely tax deferments.

Even when it means a little less property tax revenue going into their coffers, it shouldn’t matter to the state government.  In the long run, helping to preserve working families’ financial health and helping them to pay less property taxes, thereby building up more savings, will drive greater property tax revenue to the state, as more people will own homes and pay taxes!  This is what the Legislature would see if they saw long term rather than short term. 

All middle class Californians should be able to depend on secure, authentic property tax relief – like wealthy folks and corporations have in every state in America. Why should only the wealthy enjoy genuine tax cuts and real property tax breaks?

What is Involved Transferring CA Property Taxes from a Parent to an Heir?

Thad Farrell - Proposition 19 Property Tax Specialist

Thad Farrell – Proposition 19 Property Tax Specialist

Mr. Thaddeus Farrell is an Account Manager at Commercial Loan Corporation at Newport Beach, California.  He arrives from a long, successful  career in  mortgage sales, and is considered a rising star in Trust & Estate Lending.  We were fortunate to have Mr. Farrell agree to share his views on property tax relief, Proposition 19, and irrevocable trust loans for new homeowners and beneficiaries in California…
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Property Tax News:  As an account manager with Commercial Loan Corp who do you generally communicate with, on a daily basis?

Thaddeus Farrell:  I usually talk to attorneys, licensed fiduciaries, trust or estate administrators, Conservators, trustees, beneficiaries and executors.  Mostly attorneys however, regarding their clients’ need for lower property taxes. Frequently, I follow up with attorneys… getting them on the same page.  Part of my job is to help them help their clients.  In terms of driving interest from lawyers or CPAs I may be talking to.  It’s case by case, and timing, as to what an existing client is in need of at this or that very moment.

Property Tax News:  In your opinion sir – what is the most  important  way Proposition 19 helps families inheriting property in California?

Thaddeus Farrell:  Overall, to assist families with their property taxes, transferring property taxes through Proposition 19 as well as helping with buying out co-beneficiaries’ inherited property shares.

Property Tax News:  What is it precisely that these California families are trying to accomplish?

Thaddeus Farrell:  Simply put, to transfer their parents’ low property tax base.  Look at it this way – property reassessment can cripple a family financially.  I look at it like this – expenses are a part of life, and when you inherit a family home, if the property is reassessed at current rates, those expenses will usually go sky high.  Most middle class people can’t afford to pay that type of tax hike.  They want to take advantage of Proposition 19 and a trust loan, transferring CA Property Taxes from a Parent to an Heir tax break, to avoid property tax reassessment, and move into an inherited home within a year as a principle residence, which was their parents’ principle residence formerly protected by Proposition 58 and Prop 13. 

Property Tax News:  How does Commercial Loan Corp fit in, put very simply?

Thaddeus Farrell:  We guide beneficiaries  through a process that will maintain their parents’ low property tax base.  Usually siblings that want to retain inherited property from parents  come  to us first, generally after being referred to us by a law firm.  Middle class families that can’t  afford to pay reassessed taxes on an inherited home… Which pretty much sums up most families these days!

Property Tax News:  What do you discuss with these attorneys that you speak to  about Proposition 19 and a trust loan saving their clients money on property taxes?

Thaddeus Farrell:  I make it very clear right away with attorneys that siblings inheriting a home have two options.  They can sell or keep their inherited property.  In other words, your family has to make up their mind – what they want to do, sell or keep. Selling it is far more expensive. By keeping the home, each beneficiary receives approximately $15,000 extra in a cash trust distribution when compared to selling the home because they avoid costly realtor and real estate sale expenses. The child beneficiary keeping the inherited home winds up saving on average $6,200 in yearly property taxes.  

Property Tax News: Is it really true that residents save that much?

Thaddeus Farrell:  Absolutely!  A realtor typically charges 6%, there can be costs to prepare the home for sale and closing costs such as title, escrow or assistance with buyer closing costs on top of that… So do the math there, for starters. If the property is reassessed – the cost can be very high.   

Property Tax News:  And we understand you treat everyone the same, regardless of their property’s value, or their net worth.

Thaddeus Farrell: That is correct.  We extend the same commitment to everyone.  I for one treat each customer like I would treat my brother or my sister.  We have never had one unhappy customer in the last three hundred  transactions I’m aware of. Five star reviews, five-star Google ratings, no complaints!  

Property Tax News:  Thaddeus, if someone needs assistance with California Proposition 19, a bridge loan to make an equal distribution to an estate or a trust loan to an irrevocable trust, how can they contact you?

Thaddeus Farrell:  They can contact us at (877) 756-4454; we are always happy to help.

Property Tax News:  Great.  Well, thanks for talking with us today.

Thaddeus Farrell:  My pleasure.  Glad to do it. 

If you have questions regarding your options upon inheriting a home from parents – transferring their low property tax base to your new principle residence – contact Michael Wyatt  Consulting or the Commercial Loan Corp at (877) 756-4454 to speak with a Trust Fund Loan Manager or Property Tax Savings specialist. 

CA 2021: What’s Involved with Transferring Property Taxes from Parent to Child?

Transferring Property Taxes in California on an Inherited Home

California Property Tax New and Information on Transferring Property Taxes

Prop 19 Parent-Child Exclusion From Property Tax Reassessment

We’re going to take a look at 2021 property tax issues from a high-level overview perspective here – simply to provide a firmer grasp on everything involved going forward, now that changes to California property tax relief are active.

Proposition 13  property tax relief was voted into California law on the June 1978 ballot, with 64.79% of the vote, insuring that, going forward, the taxable value of California properties would be based on their assessed value (i.e., “base year value”) rather than their current, or “fair market”,  value.  Proposition 58 followed in 1986, with its’ wildly popular “parent-child exclusion”… trust loans to allow beneficiaries inheriting property to begin keeping a low property tax base when inheriting a home is another outgrowth of the popular statewide California parent-child transfer tax break exclusion from property tax reassessment. If you need assistance with a trust loan or learning more about a parent to child property tax transfer, you can call 877-756-4454 or complete this form for additional information:

Despite the fact that the new Proposition 19  property tax law has for all intensive purposes replaced Proposition 58, Proposition 13 will remain intact, as is, going forward.  Proposition 58, was passed on the Nov 1986 ballot, with 75.7% of the vote in California created an exclusion from property tax reassessment, or property transfers between parents and children, known as the parent-to-child exclusion.

Property tax transfer benefits to transfer parents’ property taxes, inheriting property taxes, are still intact under Proposition 19. The parent-child transfer tax break still allows new property owners,  i.e., beneficiaries inheriting parental property, to keep parents property taxes – thereby avoiding property tax reassessment and maintaining exclusion from property tax reassessment. These tax breaks under Proposition 19 are most helpful to Californians with real estate that has low assessed values due to still robust Proposition 13 property tax relief.

As most of us know, assessed value usually reflects the purchase price plus added cost of alterations and improvements; plus an increase of 2% per year maximum tax rate – except when there is  a change in property ownership.

Because real property in California tends to appreciate at a higher rate than 2% per year, the longer real estate is held onto the greater the difference between its’ assessed value and its’ fair market value, hence the greater the difference between property taxes a homeowner pays  versus what is paid by the owner of a property just  purchased, both properties being of similar value.

Proposition 19 allows a beneficiary inheriting parental primary  property to move into an inherited primary residence right away, inside 12-months, avoiding property tax reassessment… As long as the fair market (i.e., current) value of the new inherited home doesn’t exceed the parent’s assessed value by more than $1,000,000

Qualified Personal Residence Trusts & Irrevocable Trust Loans

With respect to irrevocable trusts, if you happen to have siblings and are of the mindset to buyout your sibling co-beneficiaries that are intent on selling off their inherited property shares to an outside buyer – plus you want to keep your parent’s low property tax base, a trust loan solution is surely worth exploring.

Moreover, as you are  inheriting property taxes on an inherited home left by your parent,  an irrevocable trust loan from a reliable trust lender, working in conjunction with Proposition 19, is certain to provide those co-beneficiaries of yours with far more cash than any outside buyer would offer…  So all around, this trust loan process is surely worth serious consideration and an in-depth discussion with your trust or estate attorney.

Transferring Your Assessed Value to a New Primary Residence if You’re 55+, Disabled, or a Victim of a Natural Disaster or Wildfire

If you are over age 55 you now have access to special property tax relief privileges, which is ironic as social bias concerning older Americans usually places seniors in a somewhat inferior, less privileged position;  yet in this case seniors are given greater tax privileges than younger residents, which is a  rather  extraordinary turnaround from the usual “ageist” social and work-place dynamic.

Or, if you are what tax assessors refer to as “severely” disabled; or if you are a  victim of a governor-validated “natural disaster”; or an out-of-control  wildfire, such as California has been experiencing on and off for some time – you can transfer  the assessed value of your primary residence in California to a home you recently purchased, or that was constructed recently as a “replacement residence” in any one of the 58 counties in the great state of California.

Let’s step back for a moment, and take a realistic look at this process from a high-level viewpoint…

These days, the transfer of your property’s  assessed value to a primary replacement residence can take place up to 2-years after the completed sale of your original primary residence; and will remain effective even if your replacement primary residence has a higher current, or fair market, value than your original primary residence.

However, if that is indeed the case, the excess fair market value of your new house will be added to the assessed value of your original house, which will result in the new assessed value of  your new primary residence.  Not only that, speaking of special privileges for those over 55… if you are a homeowner over 55, you  can take full advantage of the assessed value transfer up to three (3) times during  your lifetime.

Additionally,  a “primary residence” under Proposition 19 also applies to family farms.  Lastly, in certain situations, when a grandchild’s parents are both deceased, assessed value can also be legally and validly transferred from grandparent to grandchild, through Proposition 193.

Inheriting CA Property & the Proposition 19 Parent-Child Exclusion in a Pandemic Economy

Keep a parents low property Tax Base on an Inherited Home

Transfer a Property Tax Base on An Inherited Home

The Need to Transfer Parents CA Property Taxes, Saving Money & Pausing Property Taxes Until a Normal Economy  Returns

Whenever America experiences an economic crisis people look for alternative solutions, and often reach “outside the box” for answers. Some activities outside the box that have been  suggested for working families, that supposedly will help families spend less and save more, are an in-home project called “homesteading”, which is apparently affording some middle class California families a little relief in the midst of a challenging pandemic.  State leaders are concerned, and are trying to achieve positive results with unconventional efforts. 

“Homesteading” has some California residents relying on creative ways to spend less and save more… reuse and get every little bit of use from all household goods. For instance, maximizing scraps of vegetables into family size batches of vegetable soup. “Making more with less” is the message from some state leaders. 

This sort of activity may help some middle class working families, but what is really required right now – as we deal with a pandemic impacted economy and unstable real estate environment, with many people concerned about the possibly of foreclosure – is lower cost of living, since increased revenue is still difficult in many quarters.

Approximately 30% of the companies impacted by shutdowns across the country are still inactive.  With many employees still working at reduced  compensation, from home, although thankfully many have returned to work under normal conditions.  The website  https://www.edd.ca.gov  tells us that the number of Californians employed in April of 2021 was 17,378,100, an increase of 36,800 jobs from March’s total of 17,341,300 and up 1,753,700 employed workers in April of 2020.  The number of unemployed Californians as of April 2021 was 1,576,100. 

The state is working its’ way back up from the severe pandemic unemployment crisis that began a year ago.  However, still severe enough to merit additional cuts in taxes, most notably property taxes as this would be the least problematic tax to pause until Covid has been completely stamped out, with everyone back at work in normal numbers and in normal fashion. 

Minimizing or actually pausing or curtailing certain taxes is something the state government can actually continheriting-ca-property-the-proposition-19-parent-child-exclusion-irol, and implement without dramatically upsetting the economy.  Therefore,  the California government would do much better to minimize property taxes, for example, or put them off completely until the pandemic lifts and normalcy has returned to the work place; rather than proposing ineffective tax deferments, as they have done, that have to be paid within a few months anyway.  

Property taxes are an example of taxation that the government can control, and survive without, for a year or two.  Intentionally pausing residential and commercial property taxes for California property owners would most likely not offset the state government in any material way, and would help many homeowners  in a major way.

However, if actually pausing property taxes is not a realistic hope as the pandemic lingers… then we can at least look to California leaders to better communicate property tax relief tools and solutions to the public.  Californians still have an intact Proposition 13 to look to, and  robust Proposition 19 property tax breaks to utilize, especially for those over 55 – as well as allowing new homeowners,  and  beneficiaries inheriting property, to be able to take advantage of parent-to-child transfer rights; to make use of a  loan  to an irrevocable trust, inheriting property while keeping a low property tax base; to transfer parents CA property taxes upon inheriting property taxes and keep parents property taxes as an outcome of a property tax transfer from dad or mom.  And, naturally, the parent-to-child exclusion from reassessment at “fair-market”, or current, property tax rates. 

State leaders must understand that California residents who are unaware of the power of property tax breaks like the ability to transfer parents CA property taxes should be made more aware of property tax savings obtained from Proposition 13 and Proposition 19 – through press releases, new media, YouTube, high-profile news sites, relevant real estate and personal finance websites, and blogs. For example like CA Assemblyman Kevin Kiley is doing, sponsoring urgent “Amendment 9” to protect property tax relief for working families in all 58 counties.

It is important that beneficiaries inheriting property from parents should also be made aware of trust lenders, and how irrevocable trust loans work with Proposition 19 to lock in a low Proposition 13 property tax base plus help to buyout siblings’ inherited property  shares, with a sibling-to-sibling property transfer.

When the pandemic lifts and the real estate market levels off along with the overall middle class and upper middle class job-based economy (the real economy, not the stock market), we shall see where we are.  However, for now this is perhaps the only way, along with other similar measures, to put more spending cash in Californians’ pockets,  and slowly get the California economy back on track for middle class and  upper middle class property owners, beneficiaries inheriting property from parents, and working families.

Inheriting a Home in California & Trust Loan Property Tax Savings in 2021

Trust Loan Property Tax Savings

Trust Loan Property Tax Savings

2021 Property Tax Relief & Using an Irrevocable Trust Loan for Homeowners and Beneficiaries Inheriting Property in California

As many Californians that are seeking lower property taxes know by now, current property tax relief measures open up new opportunities for you to take advantage of, if a parent is leaving property to you and your siblings – and you’re looking to keep a low property tax base. 

You can now look forward to new property tax relief opportunities, some that are difficult to understand – that allow you to move into inherited property quickly, within 12-months as a principal residence; in order to take full advantage of the Proposition 19 parent-to-child exclusion (from current property tax rates) to avoid property tax reassessment.

What you may not know a great deal about, however, or what may be difficult to understand, are certain highly effective property tax breaks that are now available to you, if you’re a beneficiary inheriting property from a parent – using an irrevocable trust loan, in conjunction with a Proposition 19 parent-child transfer, with the help of a trust lender.  This is frequently taken advantage of by beneficiaries, perhaps like yourself, who intend to keep a home inherited from parents at the original low property tax base – also making it possible to buyout inherited property shares from co-beneficiaries, using an irrevocable trust loan.

Avoiding property reassessment is a property tax relief benefit available to all Californians, as long as all new requirements are followed. So beneficiaries, new homeowners, can  transfer parents property taxes when inheriting property and inheriting property taxes; with the right to keep parents property taxes for as long as they want, as long as they reside in their inherited residence.                        

Hands On Experience, Establishing a Low Property Tax Base

If it were your siblings selling their property shares – you’d be providing them with a good deal more money than an outside buyer would offer, for the same property; plus locking in a low property tax base for yourself – from a trust lender like Commercial Loan Corp.  And, speaking of which, certain benefits are aptly summarized by a client, who said:

“…just closed my first loan (refinance) with Commercial Loan Corp with a very low 30 year fixed rate (honestly a lot less than we ever anticipated)… This firm was very knowledgeable about [using an irrevocable trust loan] process and trust legal issues involved.  We have been trying to get a refinance for this property for over 5 years! So happy that we found a trust lender like this!(1)  

New 2021 Property Tax Relief Advantages in California

Many California residents are not aware of certain new property tax breaks that provide tax relief for homeowners over 55.  Moreover, residents that are considered to be “severely disabled” can now also transfer taxable value from their current house to a new home – as long as the value of the new house is less than or equal to the value of the previous home.

Other improvements for certain segments of the population in California are, surprisingly, not well known throughout the state – most likely due to unintentionally poor communications from folks in state leadership roles;  plus  confusing coverage by the media.  Improvements, for example, as of April 2021 when Proposition 19 gave victims of wildfires and other natural disasters – regardless of age or disabilities – the right to transfer lower taxable value to a new home.

If this pertains to you, it would definitely be worthwhile to investigate, and discuss with well known property tax relief  experts such as, for example, attorney Rachelle Lee-Warner, Esq., a senior partner at estate, trust and tax planning law firm Cunningham Legal in Oakland Hills, CA with many other offices throughout California, specializing in Trust Administration; or Michael Wyatt Consulting in Corona,CA, specializing in real estate transactions, using an irrevocable trust loan, and property tax relief in general.  Or any firm with similar focus and equivalent experience.  

Having a seasoned specialist  like that to help guide you through some of the new advantages Proposition 19 offers  ends up saving you a lot of money on property taxes, if you meet the requirements.

For example, if you’re a  homeowner over 55 or are “severely disabled”, you won’t be limited to buying a new house and transferring your lower tax base only within the same county that your previous home was situated in. Now, you can  relocate to any of the 58 counties in California and still retain your previous, low property tax rate.  

CA Property Tax Relief Improvements Reported in the Media

ABC-10 News, in addressing property tax relief changes, confirms that: “…this law benefits seniors, the disabled, and victims of wildfires and disasters. California property owners are paying the same taxes based on the price they originally paid after California enacted a law to keep property taxes down in 1978. Proposition 19 lets people keep their tax base when they move anywhere in California up to three times and only pay higher property taxes on the difference. This would allow wildfire victims to move anywhere in the state without facing massive tax hikes.”  (2)

Interviewed on KPBS News, Jordan Marks, a taxpayer advocate for the San Diego County Assessor’s Office also offers his opinions.  Mr. Marks tells us: “Seniors are gonna get the benefit to transfer their replacement property. So they sell their primary home and they can get a second one, and they can do it three times now versus the one time allowed under the former tax law.” (3)

Members of the state Board of Equalization are eager to address the type of confusion we mentioned earlier, that is often associated with the Proposition 19 tax law.  Mr. Gary Gartner at the CA Board of Equalization tells us: “We have a lot of constituents calling in expressing [mixed] opinions of the new law. The board is trying to work out ambiguities in the law with assessors around the state and legislators in Sacramento. To that end, the board is holding virtual town hall meetings just to give people the opportunity to better understand the complexity of this law, which is really challenging…” (4)

The value of any new house can be larger than the value of a previous home – although the increase in value naturally has to be added to the previous home’s transferred assessed value. If this seems confusing, you can always enlist help from a property tax consultant or trust lender.

Trust Loans & Estate Lending in Concert With New Property Tax Breaks

Beneficiaries that are selling their inherited property shares actually receive more money through a trust loan than if they were to sell their inherited property to an outside buyer – by avoiding realtor fees and other costs,  each of those co-beneficiaries receives, on average, an extra $15,000+. While the heir or beneficiaries retaining the family house get to save $6,200 on average per year in property taxes. This savings adds up. (5)

It may sound complicated, but when you speak to  a trust lender or  property tax consultant, the details become clearer after you apply your own specs in discussion with a property tax specialist.  To discuss a home you may be inheriting, as well as property tax savings – Call attorney Rachelle Lee-Warner, Esq. at Cunningham Legal, Michael Wyatt Consulting, the Trust Lender Commercial Loan Corp, or the Property Tax News at (877) 756-4454.

Lowering or Pausing CA Property Taxes to Combat Effects of the Pandemic

California Property Taxes

California Property Taxes

Removing certain taxes is something the CA Legislature can control to lessen the current financial strain on middle class  Californians. Income taxes and sales tax pose greater political obstacles at the revision stage, and payroll taxes fund Medicare and Social Security to a large extent – therefore California would do well to look carefully at decreasing or putting property taxes on hold, until the pandemic lifts and normalcy has returned to some degree.

The California Legislature proposing tax deferments for a few months will not help the state if thousands of homeowners are about to be foreclosed on and evicted – hence paying no property taxes thereafter; as an example of non-taxation that the government will survive without for a year or two.  Putting property taxes on hold  would not trouble California in any meaningful way.

Certainly, lowering or removing property taxes is a logical solution for property owners who are in trouble all over the state. Insisting on all property taxes being paid no matter what is a poor answer right now, as long as the Covid crisis continues causing shutdowns, mass unemployment, widespread under-employment, and unprecedented health issues.

If pausing property taxes is not a realistic possibility, then the state government would be wise to spend more time and energy educating the public on property tax breaks that are available to them, such as how to still take advantage of Prop 58, as well as Proposition 13 and who, as well as how, folks can make use of Proposition 19. Communications on this to educate the public in California is not nearly as robust as it could be.

Increased, easy to understand information dissemination on Proposition 13 and Proposition 58, as well as Proposition 19 and parent to child property tax transfer on an inherited home.  This would help Californians take more advantage of sibling-to-sibling CA property transfer in conjunction with Prop 19; to become more familiar with parent-child transfer rights – taking advantage of every key property tax break… establishing an exemption from paying  current, property tax rates when inheriting or transferring a primary residence, within a 12-month period.

More residents should be exposed to information about getting a trust loan, to take advantage of a sibling-to-sibling CA property transfer in concert with Proposition 19, to be able to lock in a low Proposition 13 property tax base – buying out siblings’ inherited property tax shares without issues, plus equalizing distribution, in fact for more money than an outside buyer would offer, for heirs that want to sell their inherited property shares.

. All of these decreases would help California to assist residents in spending less on taxes, if not implementing a total hold on property taxes until the pandemic is completely under control and life returns to normal in California, and throughout America as a whole.

Intra-family Loans to Purchase Real Property vs Intra-Family Trusts & Trust Loans

Family Trust Loans

Family Trust Loans

Intra-family loans, to purchase a home or other big ticket items, are sometimes confused with intra-family trusts involved with  buying out a sibling inheriting property, or several beneficiaries who have inherited property from parents yet wish to sell off their property shares to an outside buyer, keeping a low property tax base or a loan to an irrevocable trust that is also associated with exclusion from property reassessment.  

Components of these processes have been discussed on a number of high-end websites at length, such as National Review who informs us in no uncertain terms, that:

“… many clients use intra-family loans to assist a relative with the purchase of a residence, the funding of a business venture or an investment in any other asset. If properly structured, intra-family loans also provide clients with an excellent tax planning strategy. To avoid having any part of an intra-family loan considered a gift for tax purposes, a client should follow specific guidelines, including charging a minimum interest rate, documenting the loan, and requiring payment under the loan terms…”

As well as the ever popular economic bible for serious students of finance, Kiplinger – where they tell us: “Intra-family loans typically use the AFR (Applicable Federal Rate), the lowest interest rate that can be charged on a loan for it not to be considered a gift. The IRS has three rate tiers for the three different “terms” of loans: a short-term loan (0-3 years), a mid-term loan (3-9 years) and a long-term loan (9 years or more).”

If you apply some serious thought to it, you’re bound to come to the conclusion that it makes very little senses to involve the  government in family loan matters.  In fact, it’s not logical to involve the government in any personal matters – financial or otherwise. 

Let’s say you borrow $250,000 from your wealthy Dad – and you pay it back whenever  you pay it back, usually at zero interest, if this even remotely resembles a close family.  If your Dad is going as far as to actually charge you interest it is no ones’ business but your own, between the two of you, as to what the interest might be, or if there even is interest at all, which generally there is not when it concerns internal family lending.   

Although the concept of involving the government in family relationships and intra-family lending is counter intuitive, California intra-family trusts, irrevocable trust loans and exclusion from property reassessment are processes that are unlike any other tax relief or financing anywhere else in the United States – and are extremely useful to both trust lenders and beneficiaries inheriting property from family members, with respect to establishing a low property tax base, as well as buying out co-beneficiaries’ inherited property shares. 

This process moves into some interesting yet often challenging areas when used to resolve inherited beneficiary property disputes and conflicts – typically over retaining versus selling property inherited from parents.… Along with enabling new homeowners and beneficiaries inheriting property to take advantage of  tax breaks under Proposition 19, parent-to-child property tax transfer on an inherited home; and the parent-to-child exclusion from property reassessment on every parental property tax transfer and transfer of property between siblings through trust loan funding; as well as Proposition 19 transfer of property and Proposition 13 to avoid property tax reassessment  when inheriting property taxes, always with the ability to keep your parents’ low tax base for trust beneficiaries,  basically forever. 

Therefore, if you reside in California and are inheriting a home and/or land from a parent who has recently passed – and you prefer to keep your parent’s low  tax rate in addition to claiming an exclusion from property reassessment, along with buying out siblings who insist on selling to an outside buyer – you can always go to a reliable trust lender to accomplish all of the above. 

Moreover, this ensures the siblings you are in conflict with, who are intent on selling out their inherited property shares, that they will  receive a good deal more cash in the transaction that any outside buyer would give them for their property shares… ending as a win-win transaction for all parties concerned.

However, let’s be clear about one thing – it is an intra-family trust that you will be transacting – not an intra-family loan.

What is the Role of CPAs in Helping Residents With Prop 19 Establish a Low Property Tax Base

Inheriting Property Taxes in California

Inheriting Property Taxes in California

Inheriting Property Taxes in California From a CPA’s Expert Point of View

Many accountants and property tax consultants these days have reinvented themselves to some degree and have become Proposition 19, 2021 revised property tax relief experts for middle class families and beneficiaries inheriting real property, and for new homeowners in both the middle and upper middle class California income brackets. 

One such noted CA property tax relief expert and CPA, Komal Kabra from Chugh.net, has a lot of interesting things to say, from her focused CPA perspective on property taxes and property tax relief in California.  She tells us:  “Property tax law  protected by Proposition 13 levies property taxes based on a home’s original purchase price, even as the home’s value appreciates over time. Additionally, the law caps property tax at 1% of sale price, with a maximum 2% increase per year.” 

Under  new Proposition 19 property tax regulations, the number of times the tax rate can be transferred to a new home is now three times, versus once under previous tax law… if you are age 55 or older.  Value of the new home compared to the previous home can be any value; and the location of any new home can be anywhere in California. 

Admittedly, this is an excellent improvement offered by Proposition 19, however it is clear that the age issue must be seriously revisited  in the near future, and opened up to embrace younger age groups.  Although it is an interesting turnabout of American age bias, which is typically going the other way around, with bias against folks in the 50 to 60 age group and older. 

CPA Kabra goes on to say:  “Proposition 19, which delivers property tax savings to eligible property owners, including residents who are age 55 or older; Folks that suffer from severe disabilities and people who have lost their house in a wildfire or officially validated natural disaster, such as a dramatic flood or extreme earthquake.” 

Proposition 19 preserves all of these new property tax breaks, while also enabling eligible middle class and upper middle class property owners in California to transfer their lower “base year” property tax rate to a new home of any value, anywhere in the state,  up to three times – affecting homes purchased on or after April 1st of 2021.

Miss Kabra concludes, with a real-world example: “If an eligible homeowner purchases a home of a greater value than their previous home now, under Proposition 19, they will pay a blended tax rate. For example –  let’s take a middle class couple in their 60s, who own  a home worth $600,000 in Los Angeles, which they purchased in 1972 for $200,000.  Let’s say they sell their L.A. home, and purchase a new home for $700,000 in San Diego.  The first $600,000 of the new San Diego home will be taxed based on their original 1972 purchase price of $200,000.  Only the next $100,000 will be taxed based on current or “fair market” value…” 

Saving Money on Property Taxes With Help From the Experts!

There are other challenging property tax issues, as well as critical property tax relief advantages and property tax breaks, for middle class and upper middle class families to address, with which to avoid property tax reassessment, when inheriting property taxes in California…

New property tax relief advantages include the right to transfer parents property taxes and then keep parents property taxes when inheriting property and inheriting property taxes in California, associated with any standard property tax transfer; leading up to and through the parent-child transfer and parent-to-child exclusion (from carrying a “fair market”, or current, property tax burden).  Leading towards Keeping Your Parent’s Low Property Tax Base When Inheriting a Home; or inheriting a new primary residence that requires a transfer of a parent’s low property tax base. 

If done properly with a trust loan from a trust lender a low property tax base can remain in place for decades, when inheriting property taxes in California, saving residential or commercial property owners hundreds of thousands of dollars in the long run.

All the more reason for you to call a property tax consultant or a trust lender experienced in Parent To Child Property Tax Transfer On An Inherited Home as well as the use of irrevocable trust loans and Proposition 19, as well as Proposition 13, to keep your parent’s low property tax base – if you are inheriting a home, or expect to inherit a home at a low property tax rate; and plan to transfer a low property tax base to a new home down the road. 

Or, if you wish to buyout existing co-beneficiaries that are looking to sell their inherited  property shares, while you are set on keeping that same inherited property in the family – plus keeping the same low property tax base your parents enjoyed.  All of these important family issues are well worth careful consideration.

To learn more about your options when inheriting a house from parents – transferring their principle residence’s low property tax base to your new primary residence – call our main line to ask to  speak with a Trust Fund Loan or Property Tax Savings specialist at Property Tax News, the Michael Wyatt Consulting firm, or the Commercial Loan Corp, at (877) 756-4454 

Keeping Your Parent’s Low Property Tax Base When Inheriting a Home

Keeping Your Parent’s Low Property Tax Base When Inheriting a Home

Keeping Your Parent’s Low Property Tax Base When Inheriting a Home

How to Keep Parents Property Taxes In 2021

What was once the parent-to-child property tax break called CA Proposition 58 has now morphed into a property tax relief measure to help avoid property reassessment, called CA Proposition 19… active as of Feb 16, 2021.  

Estate and trust lenders are accustomed to teaching beneficiaries and new homeowners freely, in unfettered fashion, how to keep parents property taxes with Proposition 13 or Proposition 58 property tax breaks. But they are still funding trusts with a loan to an irrevocable trust, and helping clients to establish a low property tax base, to avoid property reassessment… Property tax specialists like this are still helping beneficiaries buyout a sibling’s share of inherited property, through a trust loan – the transfer of property between siblings. 

Property tax relief experts are still showing beneficiaries how to keep parents property taxes on a property tax transfer, taking advantage of the parent-to-child transfer or parent-to-child exclusion (from current property tax rates); helping families inheriting a home to transfer parents property taxes when inheriting a home, and inheriting property taxes. 

Help From Experts  

Some California firms with property tax relief expertise have been encouraged to get creative, to meet new property tax challenges and obstacles head on.  Firms such as Michael Wyatt Consulting in Corona who specializes in base year value transfers and parent-child transfer exclusion; real estate issues and property tax relief; or well known trust lender and Prop 58 / Prop19 experts Commercial Loan Corp in Newport Beach, who specializes in irrevocable trust loans and lending.  This particular trust lender is now offering heirs and beneficiaries inheriting a home from parents a free consultation for property tax savings – to help beneficiaries inheriting a home from parents to keep the parents’ low Proposition 13 property tax base; while also taking full advantage of Proposition 19 and Proposition 58.

This type of evaluation for property tax savings is designed to simplify a relatively complex process, helping heirs evaluate the benefits of a loan to an irrevocable trust, specifically for beneficiaries who want to buyout siblings’ inherited property shares, while keeping inherited property at their parents’ low property tax rate – as well as avoiding costly expenses associated with selling property through a realtor.  

The name of the game is to simplify the use of Proposition 19, as well as the transaction between trust lender and beneficiary. A process that is often difficult for families to understand.

Inside View From an Account Manager’s Perspective

One such seasoned proponent of simplification of the Proposition 58,  trust loan process is a highly experienced account manager by the name of Tanis Alonso – a particularly hard working, dedicated senior manager, who works closely with her clients, and frequently their estate lawyer or accountant.

In a recent interview with this blog Miss Alonso described her unique personal approach to planning and implementing estate & trust loans for families; how property tax saving trust loans and Proposition 58 tax breaks factor into her family undertakings and financial proceedings, Miss Alonso tells this blog:

We don’t view each trust loan scenario as simply a ‘financial transaction.’ Nor do we see the home they’ve lived in for decades as just a ‘piece of real estate’. To us, this a ‘piece of family history’ in the making. And the process a ‘family decision,’ not a ‘transaction’…

Let’s say a property value is currently one million dollars and the current tax base is $1,200. If they were to get reassessed at current value that would be around $11,000 annually. By someone keeping the property and obtaining a trust loan to properly buy out their siblings that allows the beneficiary that is keeping the property to keep parents property taxes, to retain 100% of the Proposition 13 tax base that was paid by their parents and keep that low property tax base of $1,200.

This of course creates much greater affordability than if they were to improperly buy out their siblings and have that property reassessed. The loan to trust goes hand in hand with the Proposition 58 property tax transfer system, creating enough liquidity to equalize distributions, not sell, and allow a beneficiary to keep their parents property with their low property tax base.

Feedback From A Seasoned Property Tax Consultant

The other example we mentioned, Michael Wyatt Consulting, works in conjunction with real estate attorneys and frequently a trust lender, and formally reviews clients’ real estate values. The firm studies and forms strategy for proposed real estate transactions; ensuring avoidance of property tax assessment.

Mr. Wyatt conducts comprehensive research on real property, real estate deeds, and other instruments for accuracy; and serves as a liaison between clients and the Tax Assessor’s Office – maintaining problem-free communications with Assessors and other essential local government agencies. Mr. Wyatt explains:

We let our clients know the Proposition 58 [or Proposition 19] tax benefit entitles children of parents leaving them property to preserve the low Proposition 13 maximum 2% tax base. A California property tax transfer. However, a lot of people don’t fully understand that you have to apply for the benefit. It’s not automatic. And it doesn’t apply to the principal home. explain to them that they get the assessed value tax benefit only if it’s a non principal home. You get the assessed value waved if for example it‘s a million dollar property… You get the million excluded – but the overage is reassessed… A lot of people don’t know that.

The creators of the trust get this benefit. definition of ‘a child’ or “children” is typically the adult children of a decedent…But this also refers to step-parents. Step-parents can also transfer property to a step-child… Mom can be a step parent and can still get the benefit. In-laws get the benefit as well. You don’t have to be blood relatives.

We basically introduce the trust lender, for example Commercial Loan Corporation, as a private money lender that loans to irrevocable trusts, that applies for and works in tandem with California Proposition 58 [or Proposition 19]… for beneficiaries who are looking to sell their real property shares – for the purpose of facilitating “non pro-rata distribution”… So every heir gets an equal share of the entire overall estate – however, not necessarily of every asset.

Well, if the family in question uses the Commercial Loan Corp company that we have been using for years… the loan they provide is to a trust, and not to beneficiaries; so there is no title, and no crippling 66.66% property tax reassessment.  Well, for example, there might be three siblings… beneficiaries – and a house to inherit. And this is always important to remember.

If you’re one out of the three siblings that wants to keep the inherited house, you are definitely looking at a 66.66% property value tax reassessment – if you’re operating without a loan to a trust, or you’re using your own cash; or getting money from a very pricey institutional lender – typically with multiple restrictions and extremely strict terms.”

Mr. Wyatt sums up and simplifies a process that tends to look complicated to new clients.  At the end of the day, all families need to understand is the fact that in the end, they save a great deal of money on property taxes if they aim to keep their parent’s home.  If they are looking to sell, they simply need to understand that they will be putting lot more cash in their pocket  using the trust loan approach, rather than selling to an outside buyer.  Everything else is secondary, if you are inheriting property.

If you are interested in finding out how much you might be able to save by keeping a parents low Prop 13 property tax base on an inherited home, we suggest you contact Commercial Loan Corporation at 877-756-4454. They will provide you with a free estimate on what your annual property tax savings will be and provide you with information on the Proposition 19 process.  They can even put you in contact with a trust and estate attorney in your area if needed.

Changes to California Property Tax Relief in 2021

Changes to California Property Tax Relief in 2021

Changes to California Property Tax Relief in 2021

The Home Protection for Seniors, Severely Disabled, Families, and Victims of Wildfire or Natural Disasters Act (AKA: Prop 19)

For homeowners in California , it’s important to have a good general understanding of how property tax relief is changing. Fortunately, Californians finally do have a clearer understanding of what property tax measure Proposition 19, passed into law on Nov 3, 2020 by voters in the state of California, is really all about, as well as how Proposition 58 has changed, in terms of property tax reassessment.

A lot of property owners in California aren’t aware of the fact that Proposition 19 was also entitled, “The Home Protection for Seniors, Severely Disabled, Families, and Victims of Wildfire or Natural Disasters Act” – A peculiar, overly wordy title; indicating that seniors, severely disabled people and victims of wildfires or natural disasters will be able to transfer the taxable value of their “original residence” to a “replacement residence” up to three times during their lifetime – anywhere throughout all 58 counties within the state of California.

California State Board of Equalization Chairman Antonio Vazquez said, in regards to the new tax measure, Proposition 19: “Seniors, the severely disabled, and victims of wildfires or natural disasters can now move to a replacement home anywhere in California and avoid significant property tax increases if eligible.  Property tax relief can be beneficial for those especially on limited incomes or who have been affected by wildfires or natural disasters.”

What is the California State Board of Equalization (BOE)?

For all of us who have heard all about BOE for many years, yet have not really understood what the California State Board of Equalization was really all about – it would be a good idea to sit down for a moment and look more closely at the BOE, and see what it is that they do, and how they break down the new Proposition 19 tax measure. 

For starters, the CA State Board of Equalization is literally the only elected tax board in the United States. It contains four Equalization District Members, positioned by locale, plus the State Controller. BOE’s legal responsibilities encompass the management of 58 County Assessors to make sure assessment best practices are in order statewide, without deviating from the set rules and regulations.

Believe it or not, the State Board of Equalization also assesses the property of public utilities along with regulated railroads, and takes in revenue from private railroad car tax. BOE also manages “Alcoholic Beverage Tax” and “Tax on Insurers”; plus property tax administration, promoting “fair and equitable assessments” – protecting tax revenue that school systems, local communities, and the California Legislature depend on, year after year.

Dispelling Confusion Around Proposition 19

The BOE also clarifies some of the confusion surrounding Proposition 19 and its’ ability to help residents avoid property reassessment, in contrast to Proposition 58; confirming that middle class seniors, age 55 and older… often  living on a modest fixed income; or those severely disabled, must meet specific requirements to qualify for new property tax breaks.

Both an “original” and “replacement residence” has to meet special requirements in order to be eligible for the homeowners’ or disabled veterans’ exemption. An application has to be completed and filed with the County Assessor to enable transfer of any taxable value. Finally, a “replacement residence” must be purchased or newly constructed within two years of the sale of an original home. If the market value of a “replacement residence” is greater than the market value of the “original residence”, the difference will be added to the taxable value when transferred.

As far as victims of a wildfire or natural disaster are concerned, similar requirements apply but there are no age restrictions. In order to qualify, a residence has to be seriously damage by a wildfire or a legally verified (frequently “governor verified”) natural disaster.

Parent-Child Exclusion, Originally Under CA Proposition 58

It is true that CA Proposition 19 limits property tax relief under CA Proposition 58, most notably the parent-child exclusion.  This eliminates the $1,000,000 assessed value reassessment exclusion as in a parent-child transfer of residential property that is not a primary residence. This obviously limits the parent-child transfer exclusion from property tax reassessment to primary residences only. 

Yet as long as that criteria is met, Californians can avoid property reassessment, keeping a low property tax base when inheriting a home; as long as the parent leaving the property resided there as a principle residence as well, plus beneficiaries inheriting the property make sure they move in within that 12-month deadline, the California parent to child exclusion from property tax reassessment is protected by Proposition 19, formerly by Prop 58.  As long as this type of property tax transfer, Prop 19 property tax break, is used properly, and the move into an inherited home occurs within one year of inheriting property taxes from a parent.  To reiterate, taken over by the beneficiary, or heirs, as a primary residence; in order to avoid property reassessment.  And according to the new tax laws, as of Feb 2021,  this is the only method left to residents, after Proposition 19 limits are imposed, to be able to  successfully transfer parents property taxes – and keep parents property taxes, basically forever.                     

Transfer of Assessed Value to a New Residence

To review, the other major changes to property tax relief for California property owners, as we touched on a moment ago, is relief for homeowners age 55 and older, folks with a disability, or victims of a wildfire or natural disaster. These residents are now able to transfer assessed value of their primary residence in any county in California – to a home they have just bought, or a newly constructed “replacement residence” used as a primary home.

These new Proposition 19 measures apply to real estate anywhere in California, if you are a resident of the state or not.  Which is a positive change – plus, certain property tax breaks used be accessible only in certain counties.   Californians with vacation homes, residential homes that are for rent, or commercial properties (owned outside any corporations, partnerships, limited liability companies, etc.) may not be able to avoid property reassessment, and may have to face property tax reassessment burdens, and may want to seek legal counsel or help from a trust lender or property tax specialist or consultant.