Repealing California’s Death Tax

Repealing California's Death Tax

Since the passage of California Proposition 19, more and more families are receiving notices that the death of a parent has triggered reassessment of a family property and sharply increased their property tax bill. In an attempt to stem this, the Howard Jarvis Taxpayers Association has filed a ballot initiative with the Attorney General’s office to repeal California’s Death Tax.

In November of 2020, many voters were unaware that California Proposition 19 included a provision that affected inter-generational transfers of homes. Prior to California Proposition 19’s passage, a parent could transfer a home of any value plus up to $1 million of assessed value of other property to their children, without reassessment to market value. However, effective February 16, 2021, this is no longer the case.

The Howard Jarvis Taxpayers Association is fighting to modify Prop 19 and restore the ability of parents to pass property to their children without any change to their tax bill. Commercial Loan Corporation is working with them to gather the signatures required to get it on the ballot. The new initiative is titled the Repeal the Death Tax Act. It would reverse the Proposition 19 changes to the rules affecting inter-generational transfers. To further protect California families, the measure includes an inflation adjustment for properties in addition to the primary residence. Up to $2.4 million of assessed value would be excluded from reassessment upon transfer, offering significant tax benefits to families that own small business properties or rental units for income. A primary residence of any value would be excluded from reassessment.

If you are interested in helping collect signatures and think that you can collect several, you can have a petition mailed to you along with complete instructions on how to do so. The deadline to collect the necessary signatures is April 29, 2022 so the time to act is now to repeal California’s Death Tax!

You can request a petition online here, or call Commercial Loan Corporation at 877-464-1066 for more details.

Transferring Low Property Taxes to Heirs & Replacement Homes

California Property Taxes

California Property Taxes

For Californians that are still confused by  complex tax breaks, or changes to property tax relief measures such as the right to buyout siblings’ share of inherited property – a high-level summary, boiled down to its’ essential key elements, might help…

Expansion of Property Tax Base Transfers

There have been unexpected limitations to former Proposition 58 tax breaks (now under Proposition 19) such as the parent-child transfer, or parent-to-child exclusion from paying current property tax rates, for beneficiaries inheriting their parents’ home, property tax transfer, the right to transfer parents property taxes and keep parents property taxes, when inheriting property, hence inheriting property taxes, to keep parents property taxes, or the right to buyout  siblings’ share of inherited property with a loan to an irrevocable trust in conjunction with Prop 19.

Some limitations now exist where there were none previously, however these benefits are all still intact as genuine property tax relief for beneficiaries inheriting a home from parents, or homeowners transferring a low property tax base from an old home to a new replacement home.  

Surprisingly progressive property tax relief measures  provided by Proposition 19 allow homeowners who are over 55 years of age, or disabled, or victims of a wildfire or natural disasters such as an earthquake or flood… to transfer the lower assessed property value of their original primary home – to a recently purchased or recently built primary replacement residence. Up to three times (or once per disaster).

And, increased from the previous property tax measure which limited portability only to certain approved counties, ones’ tax base may be transferred to a property located anywhere in the state.  Besides being able to transfer the taxable value of their existing primary residence to a new replacement primary residence of any value, anywhere across all 58 counties in the state of California. The exclusion can be filed up to three times by property owners over age 55, or severely disabled.

However. The opportunity to use a natural disaster such as an earthquake or flood, or wildfire, for the same tax break turns out to be a rather dubious benefit for eligible homeowners.  Because  it’s highly unlikely that one family or single homeowner will be hit by a natural disaster or wildfire more than once, even though severe damage from a forest fire or wildfire could very easily occur, residing in Southern California.

Although, when getting on in years, or being disabled, knowing you can transfer your low property tax base three times is a nice benefit to have in your back pocket, knowing you can use it if you need to. It’s just not a terribly realistic tax break, that’s all.

Prop 19 dramatically changed two property tax measures, administered by County Tax Assessors for years:

a) Parent-Child Transfers & Grandparent-Grandchild Property Transfers, effective February 16, 2021;

b) Senior Citizen and Disaster Relief Tax Base Property Transfers, effective April 1, 2021.

Parent/Child Transfers & Grandparent/Grandchild Transfers

Under Proposition 19,  to inherit a lower property assessment from parent(s) or grandparent(s), these requirements have to be completed:  

a) An inherited Property must be the primary residence of parents or grandparents

b) Inherited property must become the primary residence of the child or grandchild heir inside 12-months

c) Only the principal residence of a parent(s) or grandparent(s) qualifies for a base year value transfer. Other property, residential or commercial no longer qualify for this benefit. This provision applies to transfers starting Feb. 16, 2021

Parent-child transfer & grandparent-grandchild transfer forms

Property Transfer Tax Assessments

Proposition 19 expanded and revised rules for tax assessment transfers in California.  Eligible homeowners used to be able to transfer their tax assessments to a different home of the same or lesser market value, which allowed them to move without paying higher taxes.

Homeowners who were eligible for tax assessment transfers are persons over 55 years old, persons with severe disabilities, and victims of natural disasters and hazardous waste contamination.  Any homeowner of any age can buyout siblings’ share of inherited property through a trust loan, in conjunction with Proposition19, in California.

New property tax measures allow eligible homeowners to transfer their tax assessments to a home anywhere  in the state and allow tax assessments to be transferred to a more expensive home  bearing in mind an upward adjustment. The number of times that a tax assessment can be transferred increased from one to three times for homeowners age 55 and over, or with severe disabilities.  

These new tax breaks will impact farms as of Feb 16, 2023, the $1,000,000 amount will be adjusted each year at a rate equal to the change in the California House Price Index.

CA Property Tax Revenue

Proposition 19 introduced the California Fire Response Fund and County Revenue Protection Fund. The CA Director of Finance has to add up extra revenue and savings from the new property tax law. The State Controller has to fund the Fire Response Fund with 75% of the determined revenue, with 15% going to the County Revenue Protection Fund.

The County Revenue Protection Fund is supposedly going to be used to reimburse counties for losses in revenue associated with  changes to property taxes. The Fire Response Fund is to be used for full-time fire station staff.

Property Tax Base Transfers for Homeowners Over 55

One other component under Proposition 19 allows homeowners who are over 55 years of age, disabled, or victims of a wildfire or natural disaster, to transfer the lower assessed property value of their primary home to a newly purchased or newly constructed replacement principal residence up to three times (or once per disaster). The tax base may be transferred to a property located anywhere in the state.

A Solution For Common Inheritance Disagreements

A Solution For Common Inheritance Disagreements

A Solution For Common Inheritance Disagreements

Many of us who work with estates, heirs and beneficiaries; supplying members of estates with various financial services, loans or cash advance services mainly — frequently see a large number of estates with family problems, typically surfacing in the form of one or more heirs attempting to get more than their fair share of inherited assets, in any number of various illicit or unethical ways.

We see co-heirs insisting they should be receiving a higher percentage of inherited property, or more from a cash account than was apparently written into the will.  We frequently identify conspiracies within estates experiencing problem like this; often between brothers, to illicitly remove inherited assets from another heir, often a vulnerable, formerly trusting sister, more often than we’d like to see.

We often see siblings hiring their own lawyers to ward off siblings that are attempting to receive a larger amount of inherited assets than their fair share.  A pricey but necessary expense. In short, this is a rarely reported problem of inheritance pilfering that, if successful, can cost victimized beneficiaries or heirs a great deal.

We can assume these situations reflect families that tend to not get along very well, and yet you hear time and time again that these siblings got along very well until a parent passes away and inheritance cash became an issue. 

Beneficiaries waiting for an inheritance often claim they got along well with their siblings until a cash inheritance materialized, and then squabbling began and grew into a genuinely heated conflict; with heirs blatantly attempting to help themselves to inherited assets reportedly belonging to other heirs.

This is where a popular solution to estate problems between siblings is introduced — to simply buyout problematic siblings, for  far more than an ordinary buyer would be likely to offer.  As most of us know by now, this involves a loan to an irrevocable trust from a trust lender; used in concert with Proposition 19, formerly with Proposition 58. 

This often initiated by one heir who wishes to keep their parent’s home in the family, while buying out property shares being inherited by frequently unwanted co-beneficiaries with a large  loan to an irrevocable trust… Heirs looking to keep their parents property generally try to get in under the wire, or seek legal counsel, to take advantage of property tax transfer, their right to transfer parents property taxes, and keep parents property taxes.  Inheriting property taxes through a parent to child property tax transfer child transfer and parent-child exclusion, to avoid property tax reassessment.

This process generally involves a fairly large 6-figure to 7-figure loan to an irrevocable trust, in conjunction with a parent-to-child exclusion (from property tax reassessment at current or fair market rates) – providing enough cash to create an equal trust distribution to all beneficiaries being bought out.

New CA Property Tax Relief Transferring Low Property Tax Values

Transferring A Parents Property Tax Value In California

Transferring A Parents Property Tax Value In California

2022 Tax Relief: Inherited Properties & Replacement Homes

The 2021 CA constitutional amendment, Proposition 19, otherwise known as the “Home Protection for Seniors, Severely Disabled, Families and Victims of Wildfire or Natural Disasters Act”, expands a surprising number of tax breaks (with respect to “replacement residence” tax relief benefits) mainly for homeowners over age 55 or suffering from a severe disability… making it possible to transfer a low property tax base from an original home to a new residence, or “replacement home”.

Californians also able to take advantage of expanded property tax breaks are homeowners with a damaged or completely destroyed home, caused by a natural disaster such as a flood, earthquake, or wildfire, can now move to a replacement residence, up to three time – in any of California’s 58 counties, expanded from previous limits of only ten counties allowing the transfer of a low property tax base to a new residence. This is actually quite ironic, as senior and elderly Americans, and folks with disabilities, generally find themselves either ignored or on the short end of the stick, so to speak. So this represents a societal shift, for the better.

However, it is important to point out that Proposition 19 also imposes new limits on property tax benefits for inherited family property, limiting uses of the popular 1986 Proposition 58 “parent-to-child exclusion” from reassessed (i.e., increased) property taxes; limiting parent-to-child transfers of property by narrowing usage in various ways.

This necessitates primary or principal residence (as opposed to owning and renting out investment properties) for both parents and beneficiaries, along with some other, minor, limitations.  On the other hand, beneficiaries do have a full year to move into an inherited primary home, only requiring a minimum of one heir to move in.

Buying Out Siblings & Keeping a Low Property Tax Base

Moreover, beneficiaries still have the ability to keep their parents’ family home, with their parents’ low property tax base, while taking advantage of Prop 19’s parent-to-child exclusion;  always staying focused on inheriting property taxes from parents during a typical  property tax transfer. Avoiding property tax reassessment being a top priority at all times.  For many beneficiaries getting a loan to a trust is critical, generally to buyout problematic co-beneficiaries insisting on selling their inherited property shares.

This typically involves a 6-figure or 7-figure loan to an irrevocable trust from a trust & estate lender, for example like industry leader Commercial Loan Corp, working in conjunction with Proposition 19 – supplying beneficiaries who are selling their inherited property shares with more money than a conventional buyer is likely to offer.

Avoiding a realtor, bypassing their standard 6% commission, and side-stepping the usual legal fees and transaction charges, leaves a good deal more cash, from a trust loan, to equalize beneficiaries selling their share of inherited property.  Basically, a win-win transaction all the way around.

Property Tax Relief Forms

  1. BOE-19-B, Claim for Transfer of Base Year Value to Replacement Primary Residence for Persons at Least Age 55 Years[External PDF]
  2. BOE-19-C, Certification of Value by Assessor for Base Year Value Transfer[External PDF]
  3. BOE-19-D, Claim for Transfer of Base Year Value to Replacement Primary Residence for Severely Disabled Persons[External PDF]
  4. BOE-19-DC, Certificate of Disability[External PDF]
  5. BOE-19-V, Claim for Transfer of Base Year Value to Replacement Primary Residence for Victims of Wildfire or Other Natural Disaster[External PDF]
  6. BOE-60-NR, Notice of Rescission of Claim to Transfer Base Year Value to Replacement Dwelling Under Revenue and Taxation Code Section 69.5 (Propositions 60/90/110)[External PDF]
  7. BOE-502-A Preliminary Change in Ownership Report[External PDF]
  8. BOE-502-AH Change in Ownership Statement[External PDF]
  9. BOE-502-D Change in Ownership Statement Death of Real Property Owner[External PDF]

Base Year Value Transfers for Homeowners 55+ or Disabled

Proposition 60/90 and 110 allowed persons over 55 or severely and permanently disabled persons to transfer the taxable value of their existing home to their new replacement home, so long as the market value of the new home is equal to or less than the existing home’s value and located in one of ten tax relief portability approved counties in California.

That left 48 counties not participating with tax breaks allowing the transfer of a low property tax base from an original home to a new replacement residence. When dealing with damage from a natural disaster like the wildfires California has been contending with lately… Or simply because you’re over the age of 55,  or suffering from a serious physical disability.

Of course the good news is that Proposition 19 now allows eligible homeowners to transfer the taxable value of their existing home to their new replace, and wish to move to a replacement home, or to new residence – of any value, anywhere within the state, up to three times (rather than once, with limited county choices and limited assessed dollar values – as it used to be until 2021).

Age 55+ and Disability Tax Relief Forms

  1. Claim for Transfer of Base Year Value to Replacement Primary Residence for Persons at Least Age 55 Years: BOE 19-D[External PDF]
  2. Claim for Transfer of Base Year Value to Replacement Primary Residence for Severely Disabled Persons: BOE 19V[External PDF]
  3. Certificate of Disability: BOE 19DC[External PDF]

Disaster Relief

Proposition 50 stipulated that a base year value of a home or property that is legitimately destroyed, or damaged beyond the point of residing there, by a disaster or wildfire verified as legitimate by the Governor may be transferred to comparable property within the same county.

Proposition 171 stated that the transfer of the base year value of a principal residence to one of 10 counties that has adopted these tax breaks. However, Proposition 19 now permits homeowners to move to a “replacement home” of higher assessed value than a previous primary residence – and transfer the lower tax base with an adjustment for the value difference when a home is damaged or destroyed by a wildfire or some other natural disaster.

Proposition 19 is covered at California State Board of Equalization  
Natural Disaster and Replacement Residence Form



Property Ownership that is Excluded from Reassessment

Inheriting Property Taxes in California

Inheriting Property Taxes in California

California residents voted Proposition 19 (Assembly Constitutional Amendment No. 11), into law on Nov 3, 2020 – and became active on Feb 16, 2021; changing the parent-to-child exclusion and adding other tax relief exemptions involved with inheriting property taxes in California.

Reassessment Exclusions and Property Tax Exemptions

Regardless of revisions of any kind, an exclusion from property  reassessment at current property tax rates still allows parents to transfer their primary residence or in certain cases a “family farm” – to their children, as heirs avoiding full reassessment; as long as they move into their home as a primary residence once the property transfer is complete, or if it’s a farm, as long as they continue to use that property legitimately as a functional farm.

If a home is being transferred, heirs have to claim a “homeowner’s exemption” to prove that that the home is being used as a primary or principal residence. As most people know by now, this exclusion is now under limitations as to the assessed value of the home, plus $1,000,000. Even if all the “i’s” are dotted and the “t’s” are crossed the home will be reassessed at current market value if it exceeds the existing assessed value plus $1,000,000. Moreover, the “Claim for Reassessment Exclusion” and “Claim for Homeowners’ Property Tax Exemption” must be completed and filed.

Pro Rata & Non Pro Rata Distribution

Even though the parent-to-child exclusion (i.e., parent-child exemption) applies to non pro rata trust distributions from a parent to their children (heirs) – this never applies to transfers between siblings… So many think it’s better to give the trustee managing the trust the power to distribute equal cash assets to the heirs as pro rata distribution, rather than allow a trustee to give the children different values… 

Of course, when a trust loan is applied to the process in conjunction with Proposition 19 (formerly Prop 58, passed in 1986), it is as pro rata distribution, so all beneficiaries selling off their inherited property shares will receive equal revenues from the sale, typically from one heir, or multiple beneficiaries, looking to keep their inherited parental property, while keeping their parent’s low property tax base, as stipulated and protected by CA Proposition 13. 

Avoiding Property Tax Reassessment & Property Tax Hikes

As long as a beneficiary moves into an inherited home as a primary residence within 12-months of the passing of the parent, the beneficiary can transfer parents property taxes and keep parents property taxes when inheriting parental property and subsequently inheriting property taxes in California. A  property tax transfer (inheriting property taxes in California) still goes hand in hand in California with a parent-child transfer, namely a parent-to-child exclusion, to avoid property tax reassessment or fair market property tax rates. 

Which is why it is so important to keep up with correct information on any current property tax hikes…  Plus, staying current with any new releases from the Legislature regarding property tax breaks, or new rules for property tax transfers.  Moreover,  it really is critical to keep up to date on all pertinent, accurate  and timely property tax news and resources for transferring property taxes in California

Working With a CA Trust Lender or Property Tax Consultant

A pro rata distribution of the assets of an estate means that each heir receives an equal portion of each asset in the estate. A non pro rata distribution means that each heir receives an equal proportion of the entire estate but not necessarily of each asset.

Should the children of the grantor parents decide to trade properties after the distribution of the trust – any real estate will certainly be reassessed.  That’s why it’s so important to have a trust lender or a property tax consultant at your side before you plunge into all of this, if you are a middle class homeowner and can’t afford an expensive real estate attorney. That’s perfectly understandable.  Join the crowd…

CA Property Transfer Benefits Expanded by Proposition 19

Prop 19 Property Tax Breaks

Prop 19 Property Tax Breaks

As most of us know by now, yet it does merit repeating – a parent-child exclusion is not the only key tax break offered by Proposition 19.  California homeowners age 55 plus, or  who are victims of a validated natural disaster such as an earthquake or heavy flooding, or who are extremely disabled – who are looking to transfer their property taxes to a new home now have direct access to additional tax relief options. 

Proposition 19 Popular Property Tax Relief Expansion

Some previous tax benefits are now expanded. A transfer by homeowners when purchasing a new, higher priced primary residence, with adjusted numbers to update values, no longer has to be a home of equal or lower value; and a property transfer like this can be implemented up to three times, not merely once as with previous limitations.

Victims of natural disasters verified by the Governor of California no longer have any limits, as far as counties are concerned. There tax breaks can now be used in any of California’s 58 counties, no longer limited to ordinance approved counties as before – and may be utilized between any two counties, from original home to new property.

New Proposition 19 Property Tax Relief Opportunities 

As long as Californians qualify for, and file, their Homeowner’s Exemption or Disabled Veterans’ Exemption inside 12 months of transfer of ownership; plus make an inherited home their principal residence, as opposed to an investment property – they can avoid property tax reassessment.

Moreover, they have plenty of time – 12 months, to move in. Also, family farm transfers are permissible under this exclusion – without having to move in as a primary residence.

However, due to the possibility of triggering reassessment and being hit with current tax rates, it’s critical to enlist the assistance of a trust lender like the Commercial Loan Corp in Newport Beach for instance, to determine if a loan to an irrevocable trust, in conjunction with Proposition 19 tax breaks, will serve as a reliable means to keep an inherited home from parents with a low Proposition 13 protected property tax base. 

There is also a superior financing solution available to buyout siblings who wish to sell their inherited property shares… at a much higher price than an outside buyer would offer, thanks to the elimination of a realtor managing the process, and their 6% fee, plus pricey legal costs; etc.

Keeping a Low Property Tax Base With an Irrevocable Trust

It’s crucial to enlist the help of a tax attorney, or a property tax consultant, or a trust lender, to find an alternative tax avenue –     to avoid egregious tax hikes at current reassessed rates.  For example, a CA family home assessed today at $50,000 – with a yearly property tax of $600 – could actually be re-assessed today at $750,000 – with an annual tax burden of $9,000!

An experienced trust lender can help middle class families with an irrevocable trust, working in conjunction with Proposition 19 and Prop 13, to establish a low property tax base, and even buyout property shares from co-beneficiaries.  We’re talking about homeowners that have on average less than $700 in the bank at any given time; who don’t  have deep pockets… who need to avoid severe property tax increases, with the danger of possibly losing a beloved house due to an inability to pay for such yearly taxes.

Even a regular trust, like a Qualified Personal Residence Trust,  permits  a parent to transfer a primary residence to a trust that allows that residence to be occupied by that parent for a set amount of years. At the close of that set number of years, the residence transfers back to the heir and when that heir becomes the sole owner, they qualify for a parent-to-child exclusion, as a primary home owner.

CA Property Tax Relief Options With Trust Lenders

Besides assisting beneficiaries with a parent-child exclusion and a low parental property tax base, a trust lender will help sibling co-beneficiaries looking to sell inherited property with trust loan funding that will provide them with far more cash than an outside buyer would offer – otherwise known to realtors and attorneys as “buying out a sibling’s share of inherited property” or a “sibling to sibling property transfer” as well as a “transfer of property between siblings”.

A seasoned property tax consultant or a trust lender specializing In loans to trusts and estates such as Commercial Loan Corp, for example, can help families inheriting real estate in California to fully understand how to safely avoid property tax reassessment, plus how to transfer parents property taxes on a standard Proposition 19 property tax transfer when inheriting property taxes.  Likewise, how to keep parents property taxes basically forever, utilizing a parent-to-child transfer and a parent-child exclusion under Prop 19. Prior to 2021, a parent-child exclusion was strictly under the auspices of the wildly popular Proposition 58.

Again, this is where a trust lender comes in very handy (frequently referred by a property tax consultant or an estate lawyer – to insure that each critical step along the way is taken correctly, keeping a low property tax base; avoiding property reassessment.

Identifying & Accessing CA Property Tax Breaks

California Proposition 19

California Proposition 19

Californians more or less take for granted the fact that the tax breaks provided by property tax measure Proposition 13, passed by a veritable landslide by voters in 1978 – locks in a home’s “base-year value” to reflect what it was when the real estate changed ownership most recently. As we all know, this caps yearly property tax increases at a 2% tax rate – up until the time the property changes ownership again.  All property tax relief measures in California exist to allow property owners of all kind to continue avoiding property reassessment.

As most of also know by now, the portion of property that is transferred, upon changing ownership, is reappraised to current market value. Obviously, if that real property has appreciated in value since the new transfer – the outcome could be a serious increase in the new owner’s property tax bill!

On the other hand, California does allow for exceptional property tax exclusions to the rules and regulations that now govern a change in ownership for married or unmarried couples, families and property co-owners that wish to avoid property tax hikes. Naturally, there are requirements. California’s property tax exemptions are written into the California State Constitution (Article-13), unlike many other states, which utilize exclusions  from property reassessment that are controlled by state tax laws  or local rules and regulations. 

California initiatives managed by County Tax Assessors, that are based on personal, individual data, as opposed to state statutes, would be, for example:

A primary residence: of which the initial $7,000 of the full value of a home is excluded, or exempt, from property tax.

Combat Veterans: can qualify for a substantial exemption. This can be claimed by someone serving presently in the military who is no longer serving, but has been honorably discharged. The same applies, under similar requirements, to an unmarried surviving spouse or the parent of a veteran that is deceased. Although, whomever is submitting the claim cannot own real estate or personal property that exceeds more than $5,000 if the claimant is single, or $10,000 for a couple that is submitting.

Disabled veterans: can receive a larger exemption. Exactly what that number is depends on income, age, and specifics regarding the disability. BOE website explains as follows – https://www.boe.ca.gov/proptaxes/dv_exemption.htm#Description

Senior Homeowners: over the age of 55 who purchase a new primary residence in any of the 58 counties in California, and sell that residence, can transfer the base-year value to the new primary residence – if the value of that property is equal to, or lesser than, the value of the previous home… Or if it is newly constructed inside of 2-years from the sale of the original home. As the BOE discusses on their site

Family transfers: are usually described in real estate or tax literature as children leaving property to parents, and parents to their children, but we all know 99% of the time it is a parent leaving a home or business property to their children/heirs.

Proposition 19: which was Proposition 58, still allows your surviving parent to leave you their primary residence – thereby  avoiding  property reassessment as long as you’re moving in as your primary residence, with an entire year to settle in.  Upon inheriting property taxes under these requirements, property tax transfer will typically result in the ability to transfer parents property taxes successfully – to keep parents property taxes for as long as the residence is resided in by the inheritor.

Avoiding property reassessment, similar to a Parent to Child Property Tax Transfer, is also possible if you inherit a home from your grandparents – however,  only should both your parents be deceased.  If the difference between the inherited property’s assessed value and current market value is over $1,000,000 upon inheritance and property-transfer, the newly assessed value will be its final current market value, minus $1,000,000.

Disaster relief: In some counties, if your home has been substantially damaged or destroyed by a disaster, you qualify for a reduced assessment.