Trust Loans: Keeping a Low Property Tax Base
California trust loans are commonly used to establish a low property tax base for beneficiaries inheriting a parent’s home, working in conjunction with California tax break Proposition 58 and California Proposition 19.
This process, often involving a loan to an irrevocable trust, also sometimes resolves inherited property conflicts between siblings by providing needed cash for a trust distribution. In case you didn’t know, after Feb 2021 the popular Proposition 58 parent to child exclusion (from property tax reassessment at high, current market tax rates) is now essentially the Proposition 19 parent to child exclusion. It has basically morphed into the new Proposition 19 property tax measure – yet still enabling most beneficiaries to buyout their co-beneficiaries’ shares of inherited property and avoiding property tax reassessment for themselves, retaining a parents low property tax base going forward.
In other words, it’s still possible to buyout a siblings portion of an inherited home and keep a parents low property tax base using California Proposition 19. The process is sometimes refer to as “a transfer of property between siblings” or “sibling to sibling property transfer” – funded by an irrevocable trust loan – from a trust lender specializing in the trust loan and CA Proposition 58, Prop 19, and Prop 13, process.
Moreover, it’s still possible, thankfully, to transfer parents property taxes when inheriting property. The ability to continue inheriting property taxes, to keep parents property taxes basically forever on any property tax transfer through the parent to child transfer and parent-child exclusion, is still intact and protected by Proposition 13 and to a more limited degree by Proposition 58 and now Proposition 19. Exactly for how long, we’re not sure — which is why voters must keep a close watch on critics of property tax relief in California, on the realtor community, and on the CA Legislature.
If you are interested in taking advantage of your California Proposition 19 property tax benefit and avoiding property tax reassessment on an inherited home, we suggest calling Commercial Loan Corporation at 877-756-4454 when a third party loan might be needed to provide the funds needed to equalize a trust distribution and buyout siblings. You may also complete the online California Proposition 19 Parent to Child information request form located here.
When a child is inheriting a home from a parent and would like to use Prop 58, or Prop 19 to keep a parents low property tax base it is still entirely possible to do so! You may be inheriting a home from a parent, in trust, yet if there are not sufficient cash assets in the trust to make an equal distribution, then a loan against real estate in the trust will be needed to qualify for the parent to child transfer to avoid property tax reassessment – and this can still easily be done, with the right property consultant or trust lender, such as Commercial Loan Corp in Newport Beach, CA or Michael Wyatt Consulting in Corona, CA; despite some imposed limitations from California Proposition 19.