Loans for homes in an irrevocable trust

According to financial leaders who own firms that provide loans for irrevocable trusts and property tax relief programs, in concert with Proposition 58, Prop 193, and Proposition 13 – typically saving  homeowners over $8,500 in extra taxes every year – the news is that property owners in California should consider accomplishing any property transfers to heirs, that may be planned either as a sale, a gift or an inheritance, or a hybrid – prior to or by Feb. 15, 2021…

Feb. 15th being the final day one can access original Proposition 58 or Prop 193 property tax break benefits – to save money on the initial transfer, plus thousands of dollars on yearly property taxes, as the tax assessor comes around to collect, so to speak.  

To reiterate, as you probably already know, Proposition 58 allows parents in California to transfer property to their children without triggering a property tax reassessment. And as you most likely are aware, you must be the son or daughter of a parent that resides, and owns property, in California – in order to qualify for a “parent to child exclusion” (also referred to as a parent to child exemption) – from reassessment, in terms of the current market value of family owned real property.

Conversely, Proposition 193 allows grandparents to transfer property to their grandchildren, with a “grandparent to grandchild exemption” – without having to worry about current market property tax reassessment.  It’s worth noting that the Proposition 193 exclusion is workable only if the Proposition 58 exemption cannot be used.  In other words, to put it bluntly, parents of the grandchildren in question must be deceased.  That may sound harsh, however it is important to know the facts.

To be safe and secure, experts are telling us right now to be aware of certain changes to the Proposition 58 “parent to child exclusion” tax break – and to remain aware of time as a serious factor. We are told that we should view Feb. 15, 2021 as a formal deadline for completing a family property transfer or intra-family trust for a trust loan – not for paperwork signatures, or a postmark date. With potential county closures mounting up, the completion of this sort of transaction in person could very well continue to be a challenge, and backlogs affecting paperwork sent through the mail could be an issue at some point.  

As of February 16, 2021, family property transfers must be used as a primary residence, to avoid property tax reassessment at current market value; maintaining the invaluable right to avoid property tax reassessment.  Fortunately, Californians will still be able to take advantage of a property tax break as long as they are using inherited property as a primary residence, within a year of the passing of the decedent who is leaving the property to his or her children; typically as an inheritance.    

However, we do need to be aware that it is the next generation of property owners, in the future, that may incur higher property taxes due to new tax laws, or shall we say a revised version of the same   property tax break protected by CA Proposition 58.  The point being, with new changes to property tax law in California, with the right to avoid property tax reassessment being challenged and even partially unraveled, it has  become more important than ever to consult or work with Prop 58 and property tax relief experts that are knowledgeable in all trust loan, Proposition 58 and Proposition 13 matters… who maintain a grasp of property tax law changes, and how those shifts impact beneficiaries and property owners in the state of California.    

Home ownership for middle class Americans has mushroomed and developed at a breakneck pace, as the gold centerpiece that represents The American Dream…. Yet it is property tax breaks, and property tax relief for the middle class in the state of California – that has kept that dream alive.