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.

2 thoughts on “Keeping Your Parent’s Low Property Tax Base When Inheriting a Home

  1. Pingback: Inheriting Property Taxes in California - California Property Tax NewsCalifornia Property Tax News

  2. Pingback: Keeping Parents' Low Property Tax Base - California Property Tax NewsCalifornia Property Tax News

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