Monthly Archives: July 2022

What is a “BOE 19-P” California Parent-to-Child Transfer Form?

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BOE-19-P  2022 Claim for Reassessment Exclusion: for transfers  between parent & child, plus exclusions for homeowners over 55

Accessing the CA Board of Equalization BOE 19-P Form

Here, we’ll be talking about downloading and reading through the CA State Board of Equalization (BOE) form instructions – found at the end of the BOE 19-P form.  All you have to do to download the form is click on the “BOE 19-P Download” button; and carefully follow the instructions that are laid out in a simple, easy to understand format. 

First of all, make sure your personal data is correct, and well organized… and fill in the BOE 19-P form with the right info; always referring to the instructions on each page…

The instruction pages give you an explanation for:

1. Download all PDF forms to read all instructions.

2. Info required to fill out every section in each form.

3. Filing deadlines for every form – if there is a deadline.

4. Details associated with every section of each BOE form.

5. Details concerning all requirements for every form.
 
Items to Look Out For in the BOE 19-P Form

On November 3, 2020, California voters approved Proposition 19. Besides parent-to-child and grandparent-to-grandchild property tax exclusions becoming active on Feb 16, 2021 – the base year value-of- inherited-property transfer went into affect Apr 1, 2021 – enabling beneficiaries inheriting property from parents to avoid steep property tax reassessment (despite certain limitations).

Californians genuinely liked the idea of significant property tax relief from Proposition 58 being carried over to Proposition 19, including the critical parent-child exclusion from reassessment and other property tax transfer benefits such as the ability to transfer parents property taxes, inheriting property taxes to avoid property tax reassessment…  As well as new, genuinely expanded exclusions for homeowners over 55 – and/or with serious disabilities (folks that are typically ignored or taken advantage of by business people or business organizations holding power).

Eligible California homeowners are moving quickly on new CA property tax relief opportunities.  Seniors and elderly homeowners can now take advantage of genuine, meaningful property tax relief benefits – commonly known as exclusions for homeowners over 55 – along with Californians that have inherited or own a primary residence that has been destroyed or  severely damaged by forest fires or a natural disaster such as flooding from severe storms, or an earthquake. 

As part of the Proposition 19 (formerly Proposition 58) property tax relief measure, certain specific homeowners, coming from other  challenging situations, can now avoid property tax reassessment. The  CA State Board of Equalization  rules and regulations,  in conjunction with the CA Tax Assessors’ Assoc, has created seven new forms to assist County Tax Assessors –

CA Board of Equalization stipulations read as follows:

“The language of Proposition 19 for both the base year value transfer provisions and the parent-child and grandparent-grandchild exclusion provisions have specified operative dates, as follows:

• The parent-child and grandparent-grandchild exclusion provisions become operative on February 16, 2021.

• The base year value transfer provisions become operative on April 1, 2021. As part of the Proposition 19 implementation process, the State Board of Equalization (BOE), in consultation with the California Assessors’ Association, has created the following seven new forms to assist County Assessors:

• BOE-19-B, Claim for Transfer of Base Year Value to Replacement Primary Residence for Persons at Least Age 55 Years

• BOE-19-C, Certification of Value by Assessor for Base Year Value Transfer

• BOE-19-D, Claim for Transfer of Base Year Value to Replacement Primary Residence for Severely Disabled Persons

• BOE-19-DC, Certificate of Disability

• BOE-19-G, Claim for Reassessment Exclusion for Transfer Between Grandparent and Grandchild Occurring on or After February 16, 2021

• BOE-19-P, Claim for Reassessment Exclusion for Transfer Between Parent and Child Occurring on or After February 16, 2021

• BOE-19-V, Claim for Transfer of Base Year Value to Replacement Primary Residence for Victims of Wildfire or Other Natural Disaster”

If we pay close attention to the positive tax relief  benefits  Prop 19 affords us, we can end up in much better shape at the end of the property tax relief process, with regards to our property tax burden;  minimizing or eliminating the dangers of property tax reassessment!

Claim for Reassessment Exclusion

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Loans to trusts and Proposition 19

Loans to trusts and Proposition 19

As we all now know, new tax law in California, impacting the parent-to-child exclusion and grandparent-to-grandchild exclusion to legally avoid property tax reassessment, became active 2/06/21.  The “base year value transfer provision” went into affect 4/01/22. The State Board of Equalization (BOE), along with the CA Assessors’ Association, established seven new forms for County Tax Assessors…

Forms to deal with new property tax laws:

1) BOE-19P, Claim for Reassessment Exclusion for Transfer Between Parent and Child Occurring on or After Feb 16, 2021

2) BOE-19G, Claim for Reassessment Exclusion for Transfer Between Grandparent and Grandchild Occurring on or After Feb 16, 2021

3) BOE-19B, Claim for Transfer, Base Year Value to Replacement Primary Residence for Persons at Least Age 55 Years

4) BOE-19C, Certification of Value by Assessor for Base Year Value Transfer
  
5) BOE-19D, Claim for Transfer, Base Year Value to Replacement Primary Residence for Severely Disabled Persons

6) BOE-19DC, Certificate of Disability

7) BOE-19V Claim for Transfer of Base Year Value to Replacement Primary Residence for Victims of Wildfire or Other Natural Disaster

Remaining excluded from property reassessment

The transfer of what lawyers and trust lenders now call a “principal residence” or “primary residence” between a parent and child can be excluded from property reassessment… Meaning reassessment which would increase property taxes significantly – if the fair market value, meaning current valuation, of an inherited “family home” on the date of transfer – is less than the “sum of the factored base year value” plus $1,000,000.

So if the current or “fair market” value of an inherited family home (on the date it’s transferred) goes over the sum of the “factored base year value” plus $1,000,000 – the amount that is over this sum amount will always be added onto the so-called factored base year value.  Unless these new Prop 19 tax laws are repealed. But for now, that is the way things are. 

And with the help of a good trust lender and estate attorney… we can  make good use of the popular Proposition 58 property tax breaks, transferring property taxes in California under Proposition 19; taking full advantage of the useful (albeit now-limited) CA property tax transfer, in order to transfer parents property taxes to legally avoid property tax reassessment when inheriting property taxes through a parent-child transfer or parent to child property tax transfer, otherwise known as a California parent to child exclusion from property tax reassessment – to retain inherited property, and at the same time keep parents property taxes intact.                 

Deadline to Submit Documentation

The form “Claim for Reassessment Exclusion for Transfer Between Parent and Child” which occurred on or after Feb 16, 2021 has to be completed and filed as of 3-years from the purchase or transfer of an inherited property – or before the transfer of that property to a 3rd party. Or whichever is sooner.

So if the claim form hadn’t been completed and filed by or after Feb 16, 2021, it will have to be filed inside of 6-months after the date of mailing of the notice of “supplemental” or “escape assessment” for the property.

If a claim isn’t filed in this manner, the exclusion will be approved but starting with the calendar year in which the claim is filed.  We realize this is a bit daunting, perhaps confusing to some… however your attorney or trust lender will explain exactly how this all works in detail.

Proper Transfree Forms

Also, a “transferee” must complete and file a Claim for Homeowner Property Tax Exemption (BOE‐266) or Claim for Disabled Veteran’s Property Tax Exemption (BOE‐261‐G) within one year from the date of property purchase or transfer.

For transfers that were implemented before Feb 16, 2021, you have to use the Claim for Reassessment Exclusion for Transfer Between Parent and Child form (BOE‐58‐AH).

If you require assistance obtaining a loan to a trust, please complete the following form or call 877-464-1066 to speak to a qualified Trust Loan representative.

California Property Tax Consultants

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California Property Tax Consultants

California Property Tax Consultants

As we all know, real estate tax assessments are derived from  the actual value of  the property in question. And the value of assets in total are always a part of the calculation of taxable assets. 

Property Tax Consultants Are Not All Equal

Naturally, property taxes are always in compliance with the tax rates that have been established in the jurisdiction where property is located.  Tax assessments of personal property, such as equipment or vehicles of transport, are typically based on the value of these assets.  Property tax consultants focus mainly on management of property taxes and personal property taxes.

There are different types of property tax consultants.   Some are “valuation consultants” who are seasoned in the art of property appraisal; whose expertise includes dolling out invaluable opinions on company property. 

On the other hand, “strategy consultants” provide various ways to  work with a trust lender when buying out siblings’ property shares through Prop 19 (formerly Prop 58) in concert with an irrevocable trust loan, to reduce property taxes… Providing advice to families on how to keep parents property taxes when beneficiaries are inheriting through a CA property tax transfer – in other words inheriting a home and thus inheriting property taxes without triggering crippling property reassessment. Tax breaks under Proposition 19, left over from the wildly popular Proposition 58 & Prop 193, still enable heirs or beneficiaries to keep a low property tax base through a parent-to-child property tax transfer or parent-to-child exclusion.

Certainly, all property tax consultants provide accurate advice on inheriting through a CA property tax transfer; on compliance matters; and on crucial document filings.  They compile research and data; prep document filings for appropriate jurisdictions;  and take care of negotiations and appeals with County Property Tax Assessors,  plus verify and conclude payments for clients. 

Borrowing from a Trust Lender in Conjunction with Prop 19

“We let beneficiaries, clients, know that 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…”

A California Property Tax Consultant also explains how his firm directs clients to a reliable trust lender for funding, in conjunction with Proposition 19 [formerly Proposition 58], with which to be able to buyout siblings  who are looking to sell off their property shares:

“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… 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.“

Trust Lender Solutions VS Institutional Lending

The Property Tax Consultant continues… “If there is a family that goes to a conventional, pricey lender like Wells Fargo for instance – they will always require adult children, beneficiaries that want to sell an inherited property, to ‘go off-title’, and that always triggers present-day tax reassessment. And that spells an expensive 66.66% tax hike!  If the family in question uses the Commercial Loan Corp, cLoanc.com, a company 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…

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…

Using Commercial Loan Corporation…  Their loans to trusts give my clients several invaluable benefits. Their terms can be a lot more flexible than an institutional lender like Wells Fargo or Bank of America.  Also, Commercial Loan Corp is self funded, and that’s basically why they can extend easier terms to clients.“

Compliance Issues With Trust Loans Under Prop 19

“…Compliance for both commercial and residential property owners is far less strict.  Commercial Loan Corp doesn’t charge any fees up-front, that’s another great benefit. Plus, they don’t require paying interest on their trust loan in advance…

…Not only that, there is never a “due-on-sale” clause… that requires the mortgage to be repaid in full when sold; or that all or some of the interest owed must be paid up-front to secure the mortgage. No “alienation clause”… in the event of a property transfer, stating that the borrower has to pay back the mortgage in full before the borrower can transfer the property to another person. There is none of that.”

Nothing is simple… However property tax consultants tend to make it look simple; And deliver ahead of schedule, typically under projecting results while in reality usually exceeding expectations.

Property Transfer in California Between Parent and Child

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California Parent to Child Property Tax Transfer

California Parent to Child Property Tax Transfer

Ability to Transfer Property Taxes to Children

Let’s say you’re inheriting an aging but beautiful home from your parents, with a terrific pool, and fireplaces everywhere… with a wooden deck the family has conducted so many marvelous surf & turf barbecues on – with that brand new grill, with your favorite smoked hickory-flavored charcoal… And plenty of ice-cold drinks.

Just walking around the backyard near the grill brings back wonderful emotional family memories when you and your siblings inherited the entire property from your parents and – as your lawyers referred to it – the property was “transferred” to a new owner – in this case you…. despite the fact that your siblings are determined to sell out their property shares.  While you are determined to avoid triggering crippling property tax  reassessment!  At all costs.  So you talk to your family lawyer, and call a reliable trust lender to discuss your ability to transfer property taxes to children… Like the well known Commercial Loan Corp in Newport Beach. 

In which case a parent-to-child exclusion is secure, and makes a lot of sense – working with an irrevocable  trust loan, in conjunction with Prop  19, which has basically replaced the Proposition 58 parent-child exclusion. And simply requires a careful, but determined, step-by-step process – to reach the desired outcome – to avoid current property reassessment; while buying out property shares inherited by siblings, and nailing down sole ownership of that wonderful old inherited home with all those lovely old  dreamy family memories!

How to Avoid Triggering Property Tax Reassessment

It’s terribly important to pay attention to good advice from your attorney,   and your trust lender, on mistakes to avoid when transferring a property tax base… In most cases, your inherited property is generally reassessed by your friendly neighborhood CA County Assessors Office; while the new owner pays a higher property tax. The parent-child exclusion was voted into law on Nov 6, 1986… enabling beneficiaries to inherit property from parents, smoothly and quickly – avoiding property tax reassessment and     keeping a low property tax base when inheriting a home.

Thankfully,  new rules for property tax transfers in California  are  still  giving parents the ability to transfer property taxes to children without any issues – and enables a family/parent oriented beneficiary (usually the favorite child!) to  buyout siblings’ share of inherited property and transfer parents’ property taxes through a standard property tax transfer – getting a transfer of property between siblings accomplished without a miserable property tax hike slamming you out of the blue. 

Transferring a Family Home to Beneficiaries

As most of us know by now, given the publicity Proposition 19 has received – at the root  of all this, it’s simply a matter of inheriting property taxes at a profoundly lower rate from parents… with the ability to transfer smoothly from parent to child,  and keep parents property taxes basically forever – for that inherited family home at least. And possibly more, if you have the right lawyer, and the situation  merits it.

In other words, as estate and real property attorneys used to put it, “Avoiding property tax reassessment is why people take advantage of exclusions from tax reassessment under Proposition 58 .” And as they phrase it now, “Avoiding property tax reassessment under Proposition 19 property tax exclusions ”.  C’est la vie.

Skipping a generation, if property transfer is managed from a grandparent to a grandchild, as long as the the beneficiary’s parent is not alive, inheriting or transferring property will thankfully not increase property taxes.

For a free benefit analysis on transferring a property tax base from a parent to a child on an inherited home, you can complete the following form, in just a few minutes….