Tag Archives: 13 transfer of property

Part One: Proposition 19 Forces Changes to Prop 58 While Proposition 13 Remains Intact

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California Proposition 19

California Proposition 19

What does the passage of Proposition 19 mean for the general housing market in California, one of the nation’s most expensive states to live in?  Although the state will run into an increase in revenue due to a property tax hike, some residents who reside in inherited properties might discover that living in California is becoming more and more difficult  and unaffordable.

Nick Solis, a well known real estate professional, and president of One80 Reality said recently in an interview, “California is a state where blue collar working class folks generally pass down their home to their children or other family members.”

Of course this is where trust lenders, for example like Commercial Loan Corp, are going to get busier, helping beneficiaries to get approved for Proposition 58 and California Proposition 19.  Naturally, Prop 58, Prop 19 & a trust loan lets us buyout siblings, or co-beneficiaries.  Trust lenders are going to become more popular as this type of transaction becomes even more in demand than it already is now.  Siblings who are looking to sell out, and often leave the state, will actually walk off with more money from a trust loan than they would if they sold out to a third party that is not a family member.

Mr. Solis explained, “Not everyone who inherits a home form their parents is wealthy.  Many blue collar workers and working class families bought property in previous decades when homes were affordable, and are passing them down to their kids…”

It took a quasi civil war to get property taxes to this point. The overzealous, fanatical opponents of property tax relief in California never gave up, despite 42 years of trying and failing to remove property tax relief from the California tax system. They gritted their teeth and attempted to push through proposition after tax measure after tax bill to accomplish that. For 42 years, Proposition 13, which successfully limited property tax increases, helping beneficiaries, homeowners and commercial property owners avoid property tax reassessment. Hence, Prop 13 remained untouchable. A political third rail.

Proposition 13 weathered and rebuffed numerous legislative and legal attacks… Even including one at the Supreme Court.  And nothing stuck. Prop 13, and subsequently the 1986 Amendment, Prop 58 & a trust loan lets us buyout siblings, with it’s sacrosanct Parent–to-Child Exclusion (or Parent-to-Child Exemption), this all seemed to be more or less indestructible. 

As far as Proposition 19  is concerned, the forces behind it steered clear of  disabling the right to transfer parents property taxes or inheriting property taxes from parents with the ability to keep parents property taxes. Beneficiaries still had confidence in the fact that Prop 58 & a trust loan lets us buyout siblings and lock in a low Proposition 13 tax base.  Property tax transfer, parent to child transfer, parent to child exclusion and  the transfer of property between siblings all remained safe…     

>> Click Here to Continue to Part Two…

Will California Prop 58 Tax Breaks Survive Proposition 19?

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Will CA Prop 58 Trust Loans and Tax Breaks Survive Proposition 19?

Will CA Prop 58 Trust Loans and Tax Breaks Survive Proposition 19?

California can thank her lucky stars that Proposition 15 was defeated by a thin margin of “No!” votes… But these motivated opponents of property tax relief in California managed to raise  and spend, thanks to the CA Realtor’s Association and others, $47,568,642.14 to push  through a certain cleverly worded, deceptive little tax measure called Proposition 19; as the state’s first serious property tax in 43 years. 

Opponents to the Prop 19 tax measure  managed to raise a paltry $238,521. Had they been able to raise equivalent amounts of cash for PR and promotional efforts, to properly inform voters as to what Proposition 19 was actually looking to accomplish — it is unlikely that the tax measure would have passed.  As it is, the winning margin was only a few hundred thousand votes. 

Proposition 19 was a Christmas present in 2020 for certain special interests  in California, supported by the CA Legislature – the  CA Association of Realtors PAC, the National Association of Realtors,  the California Democratic Party,  California Professional Firefighters Ballot Issues Committee, and others…  designed to be presented as a pro middle class, pro-senior, pro-firefighter, pro-education property tax relief package – when in fact no one really knows how much all of that anticipated extra property tax revenue is actually going to seniors and the California school system, and firefighters. 

Certainly, the folks behind Prop 19, the California Legislature will  throw a few dollars at the Firefighters’ Union… and make things, at least on the surface, appear to be easier for homeowners over 55, for awhile…. and the schools system will receive some of that revenue no doubt.  However, according to well connected real estate lawyers,  as well as the folks at the Jarvis Taxpayer’s Association,  most of the extra revenue will be used to pay for massive, unfunded government employee pensions and related items.  How this unfolds remains to be seen.

What also remains to be seen is the next Proposition 15 type of anti property tax relief tax measure, that will be looking to strip away certain established Proposition 13 tax breaks.  And no doubt with a more clever and convincing marketing effort next time around.  And   having learned a thing or two from their success with Proposition 19, how to sell new property taxes to residential and commercial property owners in California. The Howard Jarvis Taxpayer’s Association and others will simply have to learn how to debunk and expose new property tax hikes, of any kind, more rapidly and more convincingly.  

In the meantime, California still has some effective property tax relief options left, thanks to Proposition 13 still being in one piece.  If we’re about to inherit property, from a trust or an estate, we can still look at getting a trust loan while establishing a low Proposition 13 property tax base… even without all of the property tax transfer options that heirs and beneficiaries are accustomed to passing on to their children as well… allowing their children to benefit from standard Proposition 13 tax breaks for California trust beneficiaries  to avoid property tax reassessment.

Families inheriting real property can still transfer parents property taxes upon inheriting property taxes; plus utilize their ability to safely keep parents property taxes during a parent to child transfer, or Parent to Child Exclusion; as well as during the transfer of property between siblings,  during a co-beneficiary buyout of inherited property shares through a loan to an irrevocable trust in conjunction with Proposition 58, and the help of a reliable trust lender who knows how to make full use of the  now-revised Parent to Child Exclusion… now restricted to a 12-month time-frame after a parent passes away; as opposed to no restrictive  time-frame, such as prior to Proposition 19.  
If California can’t take advantage of property tax relief one way – they’ll have to go down another avenue to get it done!  Inheriting parents property taxes, maintaining the right to avoid property tax reassessment, is still in place; it’s just not as simple as it once was. Thankfully, Proposition 13 still protects our right to avoid property tax reassessment, due to the fact that Proposition 13 is still intact, for the most part. But for how long? That’s the big question… before those tricky folks who gave us Proposition 15 and Prop 19 decide to try again, having learned from their “mistakes”, and come back in the near future with even more deceptive marketing capabilities.

Of course, in the bulk of the states in America, most tax breaks of any kind go the wealthiest residents who actually need tax reduction the least. However, in California the middle class, nor just the one-percenters, continues to enjoy these unique Proposition 13 and Proposition 58 or Prop 193 tax breaks.  Even after Proposition 19 imposed limitations on the right to avoid property tax reassessment. 

The longer middle class homeowners in California have lived in their house – factoring in their neighborhood, in terms of appreciation in value – the larger the tax break from Proposition 13 still is, as it always has been. And Proposition 58 remains about the same, allowing beneficiaries to get a large six or seven-figure loan to an irrevocable trust… establish a permanent low property tax base, plus buyout co-beneficiaries who have inherited the same property.

Despite Proposition 19, all property owners are protected from property tax increases, regardless of when their buildings were built or whether the owner even lives in them. Unfortunately for renters, rent control in Los Angeles and other urban areas only applies to multi-family apt. buildings that were constructed prior to 1979 — the rest of renters cannot partake, however can usually find reasonable rentals, where say in many other cities in the US this is often not possible. But it is in California.

Now, if we could get other taxation down, and make living easier for Californians in general, and stop companies from leaving the state due to high corporate tax… keeping jobs here in the state – California would be in better shape all around.  But that’s something we’ll need to take up with the Legislature!

Loans to Irrevocable Trusts

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Loans to Irrevocable Trusts

Loans to Irrevocable Trusts

How Can I Inherit a Home & Keep the Low Property Tax Base?

Perhaps a lot of regular middle class folks out there waiting for an inheritance aren’t aware of it – but since 2016 many of us in the business of dealing with middle class heirs, waiting for an inheritance in trust or in an estate, involved in an unusually large number of conflicts between heirs or beneficiaries… Frequently turning ugly and downright out of control. 

As you can guess, these conflicts typically revolve around the subject of money… Frequently, in an estate scenario, one or more siblings insist on selling the home they have inherited from Mom or Dad, to generate “fast cash” – often in heated opposition to co-beneficiaries inheriting the same home, for example, who insist on retaining that property, as the emotional or sentimental value for them far exceeds the cash value. 

Hence, this often fires up a serious conflict within the family group.  Or – one or two heirs claim they should be receiving a much larger percentage of the family inheritance, which is frequently based on the sale of inherited property, as cash assets are often very modest in middle class estates these days.

Over the past four or five years, we can clearly see a significant increase in these family squabbles… often, for example, in 17 out of 20 estate or trust situations we often see in-fighting like this, that frequently destroys sibling relationships.  Or perhaps conflicts over the issue “to sell or not to sell” inherited family property, or even conflicts over the assessed value of that property… is merely the match that ignites emotional conflicts that were there under the surface to begin with.  It’s no surprise that we often see at least one or two inheritors, per estate or trust, that want  to keep their inherited home, with one or two, or more, beneficiaries pushing to sell the house as soon as possible. 

It’s very common these days to see siblings lock horns almost immediately, when the subject of selling their inherited home is raised. With additional battles flaring up over who should be receiving the larger share of cash assets – or “who” gets “what”  percentage of the home the family is inheriting.  home left by a beloved parent.  We see this pattern repeated over and over again; the same words, similar disputes and similar claims.

A Trust Loan Solution to Family Conflicts

In California, Prop 58 loans to irrevocable trusts often act as a solution to many family conflicts revolving around sibling disagreements over whether or not the family should  retain or sell inherited property from parents.  With a trust loan working in conjunction with Proposition 58 – a process referred to as Prop 58 loans to irrevocable trusts – you can then buyout  beneficiaries    and  end up owning  your inherited property by yourself.

Interestingly enough, siblings who insisted on selling out actually end up receiving more cash then if there had been no trust loan funded and outside buyers had become involved; so those siblings can move forward with their lives, leaving you in peace. Interestingly enough, most families that call  a trust lender to get this type of funding started and accomplished, know next to nothing about the process of Prop 58 loans to irrevocable trusts. 

Residential and commercial property owners should research and learn all about the benefits provided by trust lenders furnishing loans to irrevocable trusts to enable the buyout of property shares from sibling co-beneficiaries; along with CA Proposition 13 transfer of property, plus locking in a low property tax base rate in conjunction with Proposition 58 – all associated with a transfer of parents’ property and transfer of parents property taxes.

Homeowners in every state should understand what inheriting property taxes is all about, how to keep parents property taxes with property tax transfer of all sorts – and why parent to child transfer, or parent to child exclusion, is so profoundly important at the base root of property tax relief in California… and hopefully in other states as well, if motivated folks begin sending letters and emails to their representatives in Washington, and if, by a miracle, this catches on and actually sprouts results. 

Living in a state with low property taxes can provide a major benefit, rather than a liability, to your life. Even if many homes are pricey perhaps to begin with… lowering property taxes on them, to a number you can really feel, can have a profound affect on your lifestyle, and maintain the quality of your life, to where you need it to be.

Goods and services and real estate can be pricey in states like Connecticut, Texas, California, New York, New Jersey, Massachusetts… these are all expensive states, in terms of day to day living… However, getting a “life-toll” such as property taxes down to a manageable level can change your entire outlook on your life, eliminating that particular financial struggle.

Moreover, the concept of paying yearly taxes on something you purchase and then keep for many years, might be flawed to begin with. What other large purchase you may make continues to charge you fees such as taxes, after the initial [large] purchase? A boat? Plane? Car? Motorcycle? None. Only real property. Perhaps the whole concept of taxing real estate after the initial purchase could use some fresh, new examination.

Speaking of trust liquidation, California is still the only state in America where you can avoid property tax reassessment at current rates; capped at 2% taxation basically as long as you own property inherited from parents initially… thanks to the 1978 CA Proposition 13.  Plus, the component involving Prop 58 and  “trust liquidity” is particularly  popular with middle class beneficiaries who want to sell the property shares they have inherited from a parent, and walk off with even more cash than if they had sold out to an outside buyer.  Conversely,  Proposition 58 trust loans are just as popular with members of families inheriting property from parents, who wish to buyout their siblings, co-beneficiaries, that are looking to sell their inherited shares.

California business and residential property owners, in addition to having the right to keep parents property taxes, and transfer parents property taxes upon inheriting property, and then inheriting property taxes at the low Prop 13 two-percent tax rate maximum – can maintain a parental property tax transfer basically forever, as a Parent-to-Child Transfer, or Parent-to-Child Exclusion, as long as all requirements for Proposition 58 have been met. Californians can even apply for the same tax break on a secondary property inherited from parents.

If you’re a California property owner who is looking to buyout siblings who insist on selling their inherited property, while retaining the same inherited property from parents with a trust loan, avoiding property tax reassessment from that point on – you can find content that covers this in-depth, along with information on how to get approved for Proposition 58, on a state government Website like the California State Board of Equalization, which is found at  https://www.boe.ca.gov/proptaxes/faqs/propositions58.htm  

A lot of folks research these issues and delve more deeply into California property tax relief, on multiple levels, at established niche  Websites such as Commercial Loan Corp…  or a free resource blog like this one, Property Tax Transfer.  Trust loans working in accord with Proposition 58 or Prop 193 make it possible for heirs and beneficiaries to sell shares of inherited property, a beneficiary buyout of sibling property shares, or as realtors put it, “the transfer of property between siblings”, and “lending money to an irrevocable trust“ – typically from an irrevocable trust loan lender.

The fact is, we need to understand all about our rights, with respect to using a 6-figure loan to an irrevocable trust — not only as a way to buyout co-beneficiaries, but also as a tax break that locks in a low property tax base in line with CA Proposition 13 parental property tax transfer. 

Every property owner in every state in America should be more familiar with current changes to property tax relief laws in California; including the pesky little details that support the invaluable system that allows homeowners and commercial property owners to buy out co-beneficiaries’ mutually inherited property — focusing on the tax laws that makes sibling-to-sibling property transfers work in California.  Someday, perhaps in every state in America, if we want to make property taxes fair and equal to all property owners in this country.

Proposition 58’s Parent to Child Exclusion in 2021

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Proposition 58's Parent to Child Exclusion in 2021

Proposition 58’s Parent to Child Exclusion in 2021

It is both crucial and about time for homeowners and commercial property owners in California to step back and take little time to read up on property tax breaks available in all 58 counties in the state – to fully understand exactly how property tax relief works now; how it’s still possible to transfer your current tax-basis to children or grandchildren. With the Proposition 19 property tax measure having revised crucial Proposition 58 property tax relief protections; in place since 1986.

It’s critical for property owners, no matter what their total property value or net worth is, to:

a) take full advantage of property tax relief as it is in 2021 going forward;

b) make sure the changes to Prop 58 “Parent to Child Exclusion” are well understood… that property inherited from a parent is either moved into as a primary residence, within 12-months after the remaining parent passes;

c) make sure they plan on selling their inherited property at a  break-even price or at a profit, if they are not able to move in as a primary residence within 12-months;

d)  insure that, if selling out to an outside buyer is not a preferred option, they understand how to enlist the help of a seasoned trust lender, such as the Commercial Loan Corp in Newport Beach… to get approved for Proposition 58, and to be able to take full advantage of loan funding to an irrevocable trust – used in conjunction with Prop 58 – in order to buyout property ownership from a co-beneficiary, or several siblings, waiting to inherit the same inherited home.

All of this entails learning how to operate successfully under the auspices of CA Proposition 19, passed in Nov of 2020; affecting property tax relief benefits that have been taken for granted by Californians since 1986, and if you factor in key property tax breaks from Proposition 13, having the right to property tax transfer, to avoid property tax reassessment to attain and keep a low property tax  base – since 1978.

It is also important to acknowledge that the majority of “Parent to Child Property Transfers” occur after both parents are gone; and to fully understand how Proposition 58 helps regular middle class homeowners and business property owners in the state of California, and not fall prey to conspiracy theories that claim property tax relief is only for the wealthy. 

The date of passing of the last (surviving) parent is used as the date of transfer for beneficiaries (offspring, or “children”, typically grown children of decedents leaving property to their heirs or beneficiaries).

The average trust beneficiary takes roughly a year and a half to settle an estate after a lone surviving parent passes away, leaving liquid assets and/or real property to heirs or beneficiaries. It is also important to remember that during this time the children of decedents are responsible for continuing to pay the property taxes on their parent’s home and any other property in question. 

Under California law, Proposition 58, Proposition 193 and Proposition 13 (which may also be combined with Proposition 60 and Proposition 90) allows  a parent or grandparent to transfer their current tax-basis to their children or grandchildren. You can still transfer your current tax-basis to heirs in California, it’s just not as ‘free and easy’ as it has been. These benefits can still apply to a gift, a sale, an inheritance, or a hybrid of these property transfers.

More specifically, Proposition 58 and Proposition 193 allow a parent or grandparent to gift or sell their real property during their lifetime, or gift their property at death, to their child or grandchild, and concurrently transfer their Proposition 13 tax basis, and other Proposition 13 benefits, along with the property, thus saving the child or grandchild potentially thousands of dollars per year for as long as they own the property. So not only can you transfer your current tax-basis to beneficiaries,  your beneficiaries who are inheriting property  are also allowed to combine benefits provided by Proposition 58 with a loan to an irrevocable trust, to buyout inherited property shares from siblings who are co-beneficiaries.

Prop 19 was promoted as a way to: “Increase funds for firefighters and wildfire containment programs; to eliminate unfair tax loopholes used by East Coast investors, celebrities, wealthy non-California residents, and trust fund heirs…” again, citing conspiracy theories publicized by critics of property tax relief in California. 

Looking at this legislation in-depth reveals that it also eliminates property tax increase protections for many more California property owners. “East Coast Investors” is a thinly disguised euphemism suggesting that it’s not really about your right to transfer your current tax-basis — it’s about thousands of voracious outside investors “gobbling up properties” on the beach or wherever, and renting them out at egregious prices to rich visitors and vacationers.

Not so. In fact, these property tax measures would affect mostly local residents inheriting property from their parents, not families from nearby states – as critics of property tax relief are claiming – with no evidence whatsoever to back up their claims. No evidence and no proof… simply free-floating conjecture.