Choosing the Right Trust Lender to Keep Your Parent’s Low Property Tax Base When Inheriting A Home

How to Choosing the Right Trust Lender to Keep Your Parent’s Low Property Tax Base When Inheriting A Home

Choosing the Right Trust Lender to Keep Your Parent’s Low Property Tax Base When Inheriting A Home is Critical.

It would be best, in choosing a trust lender, to pick a firm that is a self-funded private lender, offers a fast approval process, has flexible underwriting terms, has no prepayment penalties, has no minimum monthly interest, and can fund a trust within a 7-10 day period.

This process may look simple when discussing from behind a desk, however it is not as simple as it appears. By leveraging cash from a private loan in conjunction with an agreement between the heirs, executors and trustees can provide a valuable service to families who otherwise would have to forfeit their valuable real estate in the course of estate administration.

Parental property is typically an older home with a little land, and a host of memories and emotional attachments… Beneficiaries of this type of middle class inheritance that don’t execute a personal loan to a trust in conjunction with Proposition 19 to equalize that trust would be viewed as beneficiaries looking to sell their shares in that property simply taking a payment from siblings looking to keep their inherited property.

The outcome of this would be a “transfer between beneficiaries”, without the ability to keep inherited property at a low base rate, that is to say, your parents’ low property tax base, as opposed to a “transfer from parent to child”, the type of transfers between parent and child that enable exclusion from reappraisal. Side-stepping this process would disqualify the transfer from operating under the parent-to-child exclusion. As the BOE interprets it.  And this involves benefits all the way down the line.

Avoiding a loan to an irrevocable trust will disqualify new homeowners and beneficiaries inheriting property from being able to keep parents property taxes when inheriting property taxes  during property tax transfers – more specifically being able to keep parents property taxes.  Not utilizing a trust loan with a trust lender will make it impossible to keep inherited property at a low base rate as would be possible through a parent-to-child transfer and parent-to-child exclusion (from paying current property tax rates).

The same goes for the right to transfer parents property taxes alongside inheriting parents property and inheriting parents property taxes to avoid property tax reassessment.  Obviously, a trust loan is well worth not ignoring, when your inheritance calls for it, in concert with Prop 19, formerly Proposition 58.

Middle class and even upper middle class estates and trusts with limited funds, or “liquidity” would lose these critical tax benefits if the estate or trust has no resources available which would allow heirs or beneficiaries to retain the old family home. Hence, the California Board of Equalization has sanctioned third-party real estate loans to trusts to “equalize” the value of beneficiaries’ interests in the trust assets while keeping the allowed property tax exclusion from tax reassessment (at current updated rates).

In a recent interview, noted property tax and trust expert, Michael Wyatt, CEO of Michael Wyatt Consulting, whose expertise includes helping families ensure legal property tax assessment avoidance – summed it up like this:

California was pretty bad before 1978, when Proposition 13 tax relief went into affect. California was raising taxes more than any other state, before 1978. Most seniors – before Prop 13 – were reassessed at present-day rates. And many, many were forced out of their home. They simply could not afford the property tax hikes descending on them. Period. People, especially older people, were being impacted with higher property taxes year after year. And in many cases – with catastrophic results, obviously.

Commercial Loan Corporation reachable at (877)756-4454, 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 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.

The speed of their trust loans is much faster, typically five to seven days instead of two or three weeks. And if you sold a property outright, without using a trust loan, you have closing costs, legal fees; a commission; etc. It gets very expensive. Going with a firm like Commercial Loan Corp – costs are offset.

When Mr. Wyatt and the CEO of Commercial Loan Corp, Mr. Kerry Smith, speak… people listen.

 

New CA Parent-Child and Grandparent-Grandchild Property Transfer Rules Under Proposition 19

California Prop 19 Rules for Transferring Property Taxes

California Prop 19 Rules for Transferring Property Taxes

As an updated review of sorts, we would like to revisit certain Proposition 19 issues governing California property taxes. These issues have become particularly important to beneficiaries and new homeowners in particular throughout the state. The following updates address measures that are especially popular with homeowners…

In terms of basics, it’s important to reiterate that under Proposition 19 an inherited home can be transferred from a parent to their child/heir without triggering property tax reassessment, with the right to keep parents CA property taxes. However it’s essential these days to pay more attention to deadlines and filing stipulations — whereas previously this was not as necessary.

Beneficiaries frequently want to know if a parent died prior to Feb 16, 2021, but the change in ownership forms were not filed with the assessor until after Feb 16, 2021 — if the parent-to-child exclusion (from current property tax rates) is applied under former Proposition 58 measures, or if it is applied under current Proposition 19 tax measures, with the ability to keep parents CA property taxes…. The confirmed answer is that an inherited property transfer is calculated by date-of-death to determine the official date of change of ownership.

A good number of trust beneficiaries inheriting real property from a parent, considering their option to buyout siblings’ inherited property shares, often ask trust lenders if a parent is leaving a family home to three siblings/heirs, will that family home be the primary family home of all three heirs — or just the one heir.  And it turns out that only one sibling/heir is expected, under California tax law, to take over that family home as a primary residence. Yet all three siblings still have to be valid heirs.

Beneficiaries and heirs of an active estate, inheriting assets, often ask their attorney about the correct time-frame to establish an inherited family property as their “primary family home”…  Estate attorneys typically confirm that beneficiaries inheriting a house from a parent who wish to keep parents CA property taxes on a property tax transfer, when inheriting property taxes, are expected to establish that house as their “principle family residence” within 12-months of the purchase or transfer of that inherited property, if they want to avoid property tax reassessment using their existing ability to transfer parents property taxes, when inheriting property taxes from a parent. 

Yet heirs are still being able to take advantage of their right to a parent to child property tax transfer on an inherited home  and a  parent-to-child exclusion; even with all these confusing and sometimes baffling new rules for property tax transfers in California  additional intra-family options are available to heirs such as buying out co-beneficiaries’ property shares on a sibling-to-sibling property share while keeping a low property tax base when inheriting a home.

If beneficiaries or heirs are inheriting a family farm, they often look to their estate lawyer, or trust lender, for answers… if they are looking to buyout co-beneficiaries to retain the inherited property for themselves – at their parent’s low property tax base – to find out if the Proposition 19 parent-to-child exclusion (from current tax rates) also applies to family farms.

In other words, does a family farm also have to be a principal or primary residence of the inheriting beneficiaries or heirs… And the answer is no, the family farm does not have to be the principal residence of the inheriting parties in order to qualify for the parent-to-child exclusion. A family farm is viewed as any real property which is under cultivation or which is being used for pasture or grazing, or that is used to produce an agricultural product.

Many Californians want to know if Proposition 19 is retroactive; if property transfers that have already benefited from Proposition 58 parent-to-child exclusion benefits are going to be reassessed… And they are informed that Proposition 58 applies to transfers that were implemented on or prior to Feb 15, 2021. The current Proposition 19 ability to keep parents CA property taxes applies only to transfers that take place happen after Feb 16, 2021.

An inherited house, when transferred from a parent to their child/heir – is expected to be the “primary family home” of an heir. Beneficiaries or heirs frequently ask their property tax consultant or attorney how long they need to reside in or maintain their inherited property as “a primary family home” to be able to retain the parent-child exclusion. The answer is unequivocally that the Prop 19 exclusion applies only as long as the heir, or beneficiaries, reside in inherited  property as their “principle family home”.

In the event that a family home is no longer used as the primary residence of a beneficiary inheriting a home, that property should receive the factored base year that applies, had the family home not qualified for exclusion at the time of purchase or transfer. The new taxable value will be the fair market value of the home on the date of inheritance, adjusted yearly for inflation. 

Hence, an updated look at certain new parent-child and grandparent-grandchild property transfer rules and regulations under Proposition 19. 

Is There Support in California to Reverse Potential Property Tax Hikes?

Are Trusts Only for the Wealthy

Are Trusts Only for the Wealthy

California Assembly Constitutional Amendment 9  

As most Californians know by now, CA Assemblyman Kevin Kiley introduced property tax measure ACA 9 to try to return long term property tax relief benefits to their original state.

Specifically, Assembly Constitutional Amendment 9 focuses on strengthening and bolstering parental property tax transfer in California, meaning the parent-child transfer and popular parent-to-child exclusion – which still gives Californians the ability to transfer parents property taxes and  keep parents property taxes when gifting or inheriting parents property.  As well as buying out co-beneficiaries’ property through Proposition 19, formerly Prop 58, in conjunction with a loan to an irrevocable trust; establishing a low property tax base upon inheriting a home… and always bearing in mind California’s long running right to avoid property tax reassessment. 

All California property tax relief rights were, and still are, hand-in-hand with the overall ability to transfer property, parental property tax transfer mainly, during inheritance from parent to child, and a tax break that is still protected by property tax measure Proposition 19 – mainly affecting middle class beneficiaries inheriting property, and mid-income homeowners residing in all 58 counties in California, and yet not fully understood by many residents.

California Proposition 19

Proposition 19 passed on Nov 3rd by a slight majority, following a very effective $40 million promotional campaign mostly paid for by the California Association of Realtors (the C.A.R.);  highlighting property tax breaks that favored residents over the age of 55, as well as sentimental favorites, such as school children and firefighters.  The campaign rivaled anything Madison Avenue could have come  up with!

Soon after Feb 2021, Californians and local media began to discuss Proposition 19 in terms that characterized Proposition 19 parental property tax transfer rights — enabling families to transfer property taxes to and from anywhere in the state — as basically replacing   Proposition 58 property tax breaks, a long-standing property tax measure that was voted into law in 1986 with a 75% voter majority; after a unanimous vote in the Legislature placed it on the ballot. Proposition 58 amended the state constitution to permit parents to transfer a home of any value and up to a $1 million of other property — such as a vacation cabin, rental property or small business – avoiding property reassessment.

Protecting Property Tax Relief & the CA American Dream

“The opportunity to own a home is central to the California Dream, but our state’s affordability crisis has put this beyond the reach of too many working families,” Kiley said. “Now, thanks to a Special Interest deal, Californians face a large and unplanned-for tax increase when they pass down property to their children. ACA 9 restores a vital protection that was in place for 35 years.”

As certain residents and activists try to change certain confusing revisions to property tax relief in California, they also acknowledge positive property tax breaks, such as benefits for property owners over 55 years old, who are eligible for tax assessment transfers; people with severe disabilities, victims of wildfires and other natural disasters; as well as sentimental favorites such as fire-fighters and school children. And who is going to deny eligible homeowners like that.

Positive property tax relief measures allow eligible homeowners to transfer their tax assessments anywhere within the state and allow tax assessments to be transferred to a more expensive home with an upward adjustment. The number of times that a tax assessment can be transferred increased from one to three for persons over 55 years old or with severe disabilities (disaster and contamination victims would continue to be allowed one transfer).

California Assembly Constitutional Amendment 9 focuses on parents and grandparents transferring primary residential properties to their children or grandchildren while avoiding property tax reassessment. ACA 9 also addresses issues revolving around parents and grandparents transferring vacation homes and business properties to their children and  grandchildren; with the first $1 million exempt from re-assessment when transferred.

Limitations on One Hand & Huge Benefits on the Other

Now, it’s true that there are some limitations in certain circumstances. People who want to take advantage of the parent-to-child exclusion and grandparent-grandchild exemption must move into their inherited property as a primary residence, which many residents want to do anyway, and they do have an entire year to move in. 

On the other hand, senior rights being a central issue  for middle class and upper middle class families in California, residents over the age of 55 have a whole suite of new property tax benefits, along with folks with disabilities, and victims of natural disasters such as  earthquakes and floods, as well as forest fires (which are extremely timely these days in California, especially for middle class residents).

When inherited property is used as a primary residence but is sold for $1 million more than the property’s taxable value, an upward adjustment in assessed value would occur. The ballot measure also applied these rules to certain farms. Beginning Feb. 16, 2023, the first $1 million is adjusted each year at a rate equal to the change in the California House Price Index.

Jon Coupal, president of HJTA, weighed in on the new activities designed to reverse any questionable changes to California property tax relief. Mr. Coupal stated: “The Howard Jarvis Taxpayers Association is proud to support ACA 9 to reinstate Propositions 58 and 193, reversing any stealth tax increases on California families!”

No one could have put it any clearer.

Can an Irrevocable Trust Get A Loan?

Can An Irrevocable Trust Get A Loan

Can An Irrevocable Trust Get A Loan?

As many of us who have traversed the complex trail of real estate loans and long lines of credit know – there are certain non-traditional financing options, such as loans to irrevocable trusts and probate estates, that are generally denied by virtually all lenders – with the exception of certain licensed trust lenders… or more specifically, irrevocable trust lenders.

Conventional lending organizations such a credit union or your friendly local bank, will typically deny any loan request of this kind and will rarely approve a loan like this to an irrevocable trust – until the trust has been dissolved and the home title has been converted to the financial interest of a borrower, or individual.

California trust beneficiaries and trustees find out very quickly that funding for a trust is not the type of financing your standard bank or conventional lending firm will deal with. We find that most niche financing can be accomplished for high net worth individuals, or for individuals with an extremely high credit rating… Not so in this case.

Even if you have a fabulous credit score or credit report, most lending organizations will still not fund an irrevocable trust for you.  For example, when you buyout beneficiaries that are instigating family conflicts by insisting that the family sell off inherited property  and wind up selling their inherited property shares to one or more siblings looking to keep the property in the family – and keep a parent’s low property tax base… This will make the sellers happy to do so when they find out that by avoiding a realtor to sell their inherited parental home plus other hidden costs they end up with a lot more cash in their pocket having their sibling or siblings buy them out through a trust loan.

In fact, no matter how urgent or important our situation is, we discover very quickly that the only type of firm that will fund an irrevocable trust is a trust lender, with genuine expertise in property tax relief, and in the subtle measures contained in Proposition 19, and Prop 13. As long as a loan to an irrevocable trust is structured properly by your trust lender, you should be OK buying out sibling property shares while keeping your inherited home at a low Proposition 13 tax base – what property tax professionals refer to as “equalizing the distribution of a trust…”

So, in other words, the party or parties keeping the parent’s home and low property tax base, as well as the beneficiaries selling off their shares, soon realize they are entering into a win-win transaction, where everyone walks away in better shape than when they began!

And that is the unique upside and tremendous benefit that a good trust lender brings to the table… in particular the well known trust lender, Commercial Loan Corp irrevocable trust loan financing, which focuses on helping beneficiaries to keep a parent’s low property tax base, long-term, through the parent-to-child exclusion, and ability to avoid property tax reassessment, through Prop 13 and now Proposition 19, which still protects and breathes life into property tax relief in the state of California. Commercial Loan Corporation can be reached at 877-756-4454.  They have a flawless record for assisting clients avoid property tax reassessment on an inherited home and their testimonials can be viewed on Google with this link.

Noted property tax relief consultant Michael Wyatt addresses this in his usual articulate fashion:

These property tax benefits from Proposition 13 came about in California because people didn’t want property tax increases of 25% or 30%, or whatever. It really was out of control. And property tax rates were particularly high and unpredictable and unstable in California, for whatever reason, prior to 1978 when Prop 13 passed. So, as you know, property appreciates let’s say on average 20% per year. For the sake of argument, let’s say 20%. But property tax values are only going up by 3%…

People know intuitively that they can’t rely on the Assessors evaluation. Property value goes up 10% or more let’s say, as opposed to assessed value going up by 2%. That’s a significant difference. Was California really that bad before 1978, when Proposition 13 tax relief went into affect? Yes. California was raising taxes more than any other state, before 1978.

Most seniors – before Prop 13 – were reassessed at present-day rates. And many, many were forced out of their home. They simply could not afford the property tax hikes descending on them. Period. People, especially older people, were being impacted with higher property taxes year after year. And in many cases – with catastrophic results, obviously.” Michael Wyatt can be reached at (951) 264-6152.

While at the same time providing the beneficiaries selling off their inherited property shares with more cash than any outside buyer would want to offer them. A definite upside of working with a trust lender, in conjunction with Proposition 19. Obviously, beneficiaries in this sort of equation would have their own attorney or law firm looking over their shoulder, and advising them on the paperwork.

Trust and estate needs are varied and sometimes complex, but taking an experienced view toward the real estate component can offer superior results. One common situation occurs when one heir wants to keep the “old family home,” but the trust entity does not have enough cash or investments to “even the equities” among the beneficiaries. That same heir may want to eventually live in the home, or convert it to a rental property in the future and hold it as a  long-term investment. Either way it is a profitable return.  

New Rules For Property Tax Transfers In California

Rules for California Property Tax Transfer

The new rules for California Property Tax Transfer in 2021

To Transfer Property Taxes: New Rules & Regulations 

When Proposition 19 was voted into law in Nov 2020, taking affect in Feb of 2021 – a learning curve was suddenly in effect for new homeowners and beneficiaries inheriting property from parents. It became essential, especially for middle class and upper middle class families, to quickly learn about changes to tax relief laws that would impact both existing trusts and inherited real estate.

For example, a “qualified personal residence trust” (QPRT), which is a trust that is established with the intent of allowing parents to continue to live in a house; and once that period of time has ended the balance of the interest is transferred to beneficiaries.

Put simply, a QPRT is a special kind of irrevocable trust that allows the person who created it to remove a primary residence from his, or her, estate so gift taxes can be reduced when transferring assets to a beneficiary.

Buying Out Sibling Property Shares While Keeping Your Inherited Home at a Low Proposition 13 Tax Base

As many Californians know, a loan to an irrevocable trust can also be used to buyout siblings’ property shares, inherited from a parent… while allowing beneficiaries who wish to retain that property, to transfer property taxes and keep that home at their parents’ low Proposition 13 protected tax base. It’s essentially a home equity loan on inherited property, made to the trust.

What a lot of people don’t know is the fact that the trustee and beneficiaries who are intent on keeping their inherited property will frequently borrow money to have their trust funded by a qualified trust lender licensed in the state of California so that an equal distribution of the trust can be made in order to meet California Proposition 19 Board of Equalization requirements.

Typically, beneficiaries enlist funding from a trust lender when a trust does not have sufficient cash to make an equal distribution to all the beneficiaries who are looking to sell their inherited property. Hence, the ability to transfer property taxes, mainly to transfer parents’ property taxes; and avoid property tax reassessment of an inherited home. Usually a savings of over $6,200 per year in property taxes. 

Avoiding ‘Fair Market Rates’ with Proposition 19 Trust Loan Exclusion from Property Reassessment

Changes to California property tax relief in 2021 are a challenge to  understand.  Trusts, Californians have discovered, are now used for more purposes than merely deferring property taxes for a few months. Californians have also discovered that they can avoid being reassessed at fair market rates by moving into inherited property as their principle residence  – bearing in mind a $1,000,000 cap on an exclusion from existing property tax rates.

The benefits of making a lifetime transfer of inherited property has to be compared to a transfer at the passing of a parent, which may cause you, as an heir, to inherit a “stepped-up basis” in transferred property. In other words, when you inherit assets that increased in value from when your deceased parent owned it, the asset’s “basis” is increased to the property’s current or “fair market” value on the date of the parent’s passing.  Unless you take steps to avoid this increase, to be able to transfer property taxes successfully, and avoid property tax reassessment altogether!

Saving Money on Property Taxes With Help From Experts!

When purchasing a new home or inheriting your parents’ residence
it makes sense to call a specialist experienced in the use of irrevocable trust loans to maintain your parent’s low property tax base, for example like the Michael Wyatt Consulting firm out in Corona, CA.  If you are inheriting a home, or expect to inherit a home and plan to transfer the low property tax base to a new home down the road, through an irrevocable trust loan in conjunction with Proposition 19, or Prop 58.

If you’re inheriting a home from a parent and wish to avoid property tax reassessment you still have all the tools to do so, as long as all new requirements are met.  If you’re a beneficiary, a brand new homeowners, you can  transfer parents property taxes when inheriting property and thus inheriting property taxes; with the ability  to keep parents low property tax base, as long as you live in your inherited home. 

Michael Wyatt, an Expert on CA Tax Savings for Homeowners Shares His Viewpoint on  Keeping a Low Property Tax Base

As Michael Wyatt of Michael Wyatt Consulting, tells us: 

When it comes to keeping a low property tax base, with Prop 58 [or now Prop 19] and a trust loan, I always bring my clients to Commercial Loan Corp.  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.  They’re self funded, and that’s why they can extend easier terms to clients…

When your parents die, and your trust agreement says ‘equal shares’  –  That means equal shares!  People basically just get the overall concept of getting money from a trust loan even if it doesn’t sell. It makes more sense all around to get a trust loan; and everyone gets more money.

Regarding the ever-present issue concerning families deciding to either sell inherited property; Or opting to keep property inherited from their parents – Mr. Wyatt  weighs in, telling us: 

More heirs and beneficiaries end up not wanting to sell their inherited property. And  if they did want to sell, a lot of people can be easily convinced, with more cash from a trust loan and trust lender than an outside buyer would come up with, ‘equalizing’ things for them…

You have to look at it this way: there are always  one or two, minimum, who  insist on selling their shares in an inherited property. And there is our initial client contact, with those who want to sell.  And that is where these family estate or trust conflicts begin.  If they sell their property, capital gains tax always hits them. That’s where a trust loan comes in, to avoid that.

A trust lender like Commercial Loan Corp, that doesn’t charge any fees up-front, that’s another great benefit.  Plus, they don’t charge 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 the borrower has to pay back the mortgage in full before the borrower can transfer the property to anyone. 

Going with a firm like that – all costs are offset, unless you plan to keep a property for 2, 3 years or less. Then it doesn’t make sense. But generally you’re looking at keeping that property for seven or more years, as a rule...”

To learn more about your options when inheriting a home from parents – transferring a low property tax base to your new primary residence – contact Michael Wyatt  Consulting, or the Commercial Loan Corp, at (877) 756-4454 to speak with a Trust Loan or Property Tax Savings specialist. Chances are the end result will be a much lower property tax bill.

For more information on California Property Tax News, visit the PropertyTaxNews.org website for all of the latest information and updates. 

Time is Ripe to Become Better Acquainted With the Parent to Child Property Tax Transfer

California Parent to Child Property Tax Transfer

How to Obtain the California Parent to Child Property Tax Transfer


Avoiding Property Tax Reassessment & Property Tax Hikes


It is our consensus that normal middle class class residential owners, upper middle class home owners and working families, none of whom are generating a huge income at the moment, should most likely not be supplying the California state government with extra property tax revenue right now. 

This is especially true during a financial crisis such as the Covid predicament we find ourselves in during 2021… where revenue is tight all over the country, especially in California, with only a few exceptions here and there – where in general unemployment, as well as under-employment, is extremely high.

Regular middle class and upper middle class homeowners need to be saving money, and spending less, not spending more. Certainly not spending more on housing or standard goods and services, or on income tax or property taxes. We’re not talking about luxury goods or high-end services. That is specific to folks with disposable income, and is an entirely different matter altogether. 

As a matter of fact, property taxes are the one big-ticket item just mentioned that is easily lowered, or paused, or even deferred.   And if this never occurs, then property owners are going to have to be more cognizant of related details and new tax laws, as well as  new ways to avoid property tax reassessment – and tax specialists or real estate experts that are available in California to help with these matters.

Middle Class Property Tax Savings

When times are hard, as they are now, the state should help residents with key information on property tax breaks, helping property owners take full advantage of established property tax breaks, like the new Proposition 19 parent-to-child transfer and parent-to-child exclusion from reassessment of property taxes.

And this means not spending more on taxes when times are hard. Certainly, property owners should all be better informed about inheriting property taxes, and Prop 19 parent-to-child exclusion; about property tax breaks, and being able to transfer parents property taxes, with the right to keep parents property taxes on every property tax transfer.

Owning a Home is Part of the American Dream

Purchasing or inheriting a home is part of the classic American dream, and leaving part of that dream to heirs or beneficiaries is something most of us would be proud of.  However, fluid, ever-changing and complicated  property tax laws have to be kept up with, either by ourselves, or through specialists that make a living helping property owners with issues like property taxes.  

Getting expert property tax advice and estate planning advice can help save that dream, and help sustain good family financial practices for generations to come, where your home and other big ticket investments are concerned. 

Genuine Property Tax Relief

The property tax breaks middle class and upper middle class Californians are holding on to are the only safety-net solutions middle class residents have in this state, so the Legislature should be focusing on preserving and strengthening those tax breaks, and on educating and informing Californians about establishing a low tax base for trust beneficiaries; about Prop 19 parent-to-child exclusion and Proposition 19 – parent to child property tax transfer on an inherited home; plus Proposition 13 property tax transfers, as well as the Proposition 19 impact on CA homeowners, and avoiding property reassessment wherever possible – not on obsessively driving more tax revenue, under cloaked measures called “property tax relief” that are merely tax deferments.

Even when it means a little less property tax revenue going into their coffers, it shouldn’t matter to the state government.  In the long run, helping to preserve working families’ financial health and helping them to pay less property taxes, thereby building up more savings, will drive greater property tax revenue to the state, as more people will own homes and pay taxes!  This is what the Legislature would see if they saw long term rather than short term. 

All middle class Californians should be able to depend on secure, authentic property tax relief – like wealthy folks and corporations have in every state in America. Why should only the wealthy enjoy genuine tax cuts and real property tax breaks?

What is Involved Transferring CA Property Taxes from a Parent to an Heir?

Thad Farrell - Proposition 19 Property Tax Specialist

Thad Farrell – Proposition 19 Property Tax Specialist

Mr. Thaddeus Farrell is an Account Manager at Commercial Loan Corporation at Newport Beach, California.  He arrives from a long, successful  career in  mortgage sales, and is considered a rising star in Trust & Estate Lending.  We were fortunate to have Mr. Farrell agree to share his views on property tax relief, Proposition 19, and irrevocable trust loans for new homeowners and beneficiaries in California…
______________________________________________________

Property Tax News:  As an account manager with Commercial Loan Corp who do you generally communicate with, on a daily basis?

Thaddeus Farrell:  I usually talk to attorneys, licensed fiduciaries, trust or estate administrators, Conservators, trustees, beneficiaries and executors.  Mostly attorneys however, regarding their clients’ need for lower property taxes. Frequently, I follow up with attorneys… getting them on the same page.  Part of my job is to help them help their clients.  In terms of driving interest from lawyers or CPAs I may be talking to.  It’s case by case, and timing, as to what an existing client is in need of at this or that very moment.

Property Tax News:  In your opinion sir – what is the most  important  way Proposition 19 helps families inheriting property in California?

Thaddeus Farrell:  Overall, to assist families with their property taxes, transferring property taxes through Proposition 19 as well as helping with buying out co-beneficiaries’ inherited property shares.

Property Tax News:  What is it precisely that these California families are trying to accomplish?

Thaddeus Farrell:  Simply put, to transfer their parents’ low property tax base.  Look at it this way – property reassessment can cripple a family financially.  I look at it like this – expenses are a part of life, and when you inherit a family home, if the property is reassessed at current rates, those expenses will usually go sky high.  Most middle class people can’t afford to pay that type of tax hike.  They want to take advantage of Proposition 19 and a trust loan, transferring CA Property Taxes from a Parent to an Heir tax break, to avoid property tax reassessment, and move into an inherited home within a year as a principle residence, which was their parents’ principle residence formerly protected by Proposition 58 and Prop 13. 

Property Tax News:  How does Commercial Loan Corp fit in, put very simply?

Thaddeus Farrell:  We guide beneficiaries  through a process that will maintain their parents’ low property tax base.  Usually siblings that want to retain inherited property from parents  come  to us first, generally after being referred to us by a law firm.  Middle class families that can’t  afford to pay reassessed taxes on an inherited home… Which pretty much sums up most families these days!

Property Tax News:  What do you discuss with these attorneys that you speak to  about Proposition 19 and a trust loan saving their clients money on property taxes?

Thaddeus Farrell:  I make it very clear right away with attorneys that siblings inheriting a home have two options.  They can sell or keep their inherited property.  In other words, your family has to make up their mind – what they want to do, sell or keep. Selling it is far more expensive. By keeping the home, each beneficiary receives approximately $15,000 extra in a cash trust distribution when compared to selling the home because they avoid costly realtor and real estate sale expenses. The child beneficiary keeping the inherited home winds up saving on average $6,200 in yearly property taxes.  

Property Tax News: Is it really true that residents save that much?

Thaddeus Farrell:  Absolutely!  A realtor typically charges 6%, there can be costs to prepare the home for sale and closing costs such as title, escrow or assistance with buyer closing costs on top of that… So do the math there, for starters. If the property is reassessed – the cost can be very high.   

Property Tax News:  And we understand you treat everyone the same, regardless of their property’s value, or their net worth.

Thaddeus Farrell: That is correct.  We extend the same commitment to everyone.  I for one treat each customer like I would treat my brother or my sister.  We have never had one unhappy customer in the last three hundred  transactions I’m aware of. Five star reviews, five-star Google ratings, no complaints!  

Property Tax News:  Thaddeus, if someone needs assistance with California Proposition 19, a bridge loan to make an equal distribution to an estate or a trust loan to an irrevocable trust, how can they contact you?

Thaddeus Farrell:  They can contact us at (877) 756-4454; we are always happy to help.

Property Tax News:  Great.  Well, thanks for talking with us today.

Thaddeus Farrell:  My pleasure.  Glad to do it. 

If you have questions regarding your options upon inheriting a home from parents – transferring their low property tax base to your new principle residence – contact Michael Wyatt  Consulting or the Commercial Loan Corp at (877) 756-4454 to speak with a Trust Fund Loan Manager or Property Tax Savings specialist. 

Inheriting a Home in California & Trust Loan Property Tax Savings in 2021

Trust Loan Property Tax Savings

Trust Loan Property Tax Savings

2021 Property Tax Relief & Using an Irrevocable Trust Loan for Homeowners and Beneficiaries Inheriting Property in California

As many Californians that are seeking lower property taxes know by now, current property tax relief measures open up new opportunities for you to take advantage of, if a parent is leaving property to you and your siblings – and you’re looking to keep a low property tax base. 

You can now look forward to new property tax relief opportunities, some that are difficult to understand – that allow you to move into inherited property quickly, within 12-months as a principal residence; in order to take full advantage of the Proposition 19 parent-to-child exclusion (from current property tax rates) to avoid property tax reassessment.

What you may not know a great deal about, however, or what may be difficult to understand, are certain highly effective property tax breaks that are now available to you, if you’re a beneficiary inheriting property from a parent – using an irrevocable trust loan, in conjunction with a Proposition 19 parent-child transfer, with the help of a trust lender.  This is frequently taken advantage of by beneficiaries, perhaps like yourself, who intend to keep a home inherited from parents at the original low property tax base – also making it possible to buyout inherited property shares from co-beneficiaries, using an irrevocable trust loan.

Avoiding property reassessment is a property tax relief benefit available to all Californians, as long as all new requirements are followed. So beneficiaries, new homeowners, can  transfer parents property taxes when inheriting property and inheriting property taxes; with the right to keep parents property taxes for as long as they want, as long as they reside in their inherited residence.                        

Hands On Experience, Establishing a Low Property Tax Base

If it were your siblings selling their property shares – you’d be providing them with a good deal more money than an outside buyer would offer, for the same property; plus locking in a low property tax base for yourself – from a trust lender like Commercial Loan Corp.  And, speaking of which, certain benefits are aptly summarized by a client, who said:

“…just closed my first loan (refinance) with Commercial Loan Corp with a very low 30 year fixed rate (honestly a lot less than we ever anticipated)… This firm was very knowledgeable about [using an irrevocable trust loan] process and trust legal issues involved.  We have been trying to get a refinance for this property for over 5 years! So happy that we found a trust lender like this!(1)  

New 2021 Property Tax Relief Advantages in California

Many California residents are not aware of certain new property tax breaks that provide tax relief for homeowners over 55.  Moreover, residents that are considered to be “severely disabled” can now also transfer taxable value from their current house to a new home – as long as the value of the new house is less than or equal to the value of the previous home.

Other improvements for certain segments of the population in California are, surprisingly, not well known throughout the state – most likely due to unintentionally poor communications from folks in state leadership roles;  plus  confusing coverage by the media.  Improvements, for example, as of April 2021 when Proposition 19 gave victims of wildfires and other natural disasters – regardless of age or disabilities – the right to transfer lower taxable value to a new home.

If this pertains to you, it would definitely be worthwhile to investigate, and discuss with well known property tax relief  experts such as, for example, attorney Rachelle Lee-Warner, Esq., a senior partner at estate, trust and tax planning law firm Cunningham Legal in Oakland Hills, CA with many other offices throughout California, specializing in Trust Administration; or Michael Wyatt Consulting in Corona,CA, specializing in real estate transactions, using an irrevocable trust loan, and property tax relief in general.  Or any firm with similar focus and equivalent experience.  

Having a seasoned specialist  like that to help guide you through some of the new advantages Proposition 19 offers  ends up saving you a lot of money on property taxes, if you meet the requirements.

For example, if you’re a  homeowner over 55 or are “severely disabled”, you won’t be limited to buying a new house and transferring your lower tax base only within the same county that your previous home was situated in. Now, you can  relocate to any of the 58 counties in California and still retain your previous, low property tax rate.  

CA Property Tax Relief Improvements Reported in the Media

ABC-10 News, in addressing property tax relief changes, confirms that: “…this law benefits seniors, the disabled, and victims of wildfires and disasters. California property owners are paying the same taxes based on the price they originally paid after California enacted a law to keep property taxes down in 1978. Proposition 19 lets people keep their tax base when they move anywhere in California up to three times and only pay higher property taxes on the difference. This would allow wildfire victims to move anywhere in the state without facing massive tax hikes.”  (2)

Interviewed on KPBS News, Jordan Marks, a taxpayer advocate for the San Diego County Assessor’s Office also offers his opinions.  Mr. Marks tells us: “Seniors are gonna get the benefit to transfer their replacement property. So they sell their primary home and they can get a second one, and they can do it three times now versus the one time allowed under the former tax law.” (3)

Members of the state Board of Equalization are eager to address the type of confusion we mentioned earlier, that is often associated with the Proposition 19 tax law.  Mr. Gary Gartner at the CA Board of Equalization tells us: “We have a lot of constituents calling in expressing [mixed] opinions of the new law. The board is trying to work out ambiguities in the law with assessors around the state and legislators in Sacramento. To that end, the board is holding virtual town hall meetings just to give people the opportunity to better understand the complexity of this law, which is really challenging…” (4)

The value of any new house can be larger than the value of a previous home – although the increase in value naturally has to be added to the previous home’s transferred assessed value. If this seems confusing, you can always enlist help from a property tax consultant or trust lender.

Trust Loans & Estate Lending in Concert With New Property Tax Breaks

Beneficiaries that are selling their inherited property shares actually receive more money through a trust loan than if they were to sell their inherited property to an outside buyer – by avoiding realtor fees and other costs,  each of those co-beneficiaries receives, on average, an extra $15,000+. While the heir or beneficiaries retaining the family house get to save $6,200 on average per year in property taxes. This savings adds up. (5)

It may sound complicated, but when you speak to  a trust lender or  property tax consultant, the details become clearer after you apply your own specs in discussion with a property tax specialist.  To discuss a home you may be inheriting, as well as property tax savings – Call attorney Rachelle Lee-Warner, Esq. at Cunningham Legal, Michael Wyatt Consulting, the Trust Lender Commercial Loan Corp, or the Property Tax News at (877) 756-4454.

What is the Role of CPAs in Helping Residents With Prop 19 Establish a Low Property Tax Base

Inheriting Property Taxes in California

Inheriting Property Taxes in California

Inheriting Property Taxes in California From a CPA’s Expert Point of View

Many accountants and property tax consultants these days have reinvented themselves to some degree and have become Proposition 19, 2021 revised property tax relief experts for middle class families and beneficiaries inheriting real property, and for new homeowners in both the middle and upper middle class California income brackets. 

One such noted CA property tax relief expert and CPA, Komal Kabra from Chugh.net, has a lot of interesting things to say, from her focused CPA perspective on property taxes and property tax relief in California.  She tells us:  “Property tax law  protected by Proposition 13 levies property taxes based on a home’s original purchase price, even as the home’s value appreciates over time. Additionally, the law caps property tax at 1% of sale price, with a maximum 2% increase per year.” 

Under  new Proposition 19 property tax regulations, the number of times the tax rate can be transferred to a new home is now three times, versus once under previous tax law… if you are age 55 or older.  Value of the new home compared to the previous home can be any value; and the location of any new home can be anywhere in California. 

Admittedly, this is an excellent improvement offered by Proposition 19, however it is clear that the age issue must be seriously revisited  in the near future, and opened up to embrace younger age groups.  Although it is an interesting turnabout of American age bias, which is typically going the other way around, with bias against folks in the 50 to 60 age group and older. 

CPA Kabra goes on to say:  “Proposition 19, which delivers property tax savings to eligible property owners, including residents who are age 55 or older; Folks that suffer from severe disabilities and people who have lost their house in a wildfire or officially validated natural disaster, such as a dramatic flood or extreme earthquake.” 

Proposition 19 preserves all of these new property tax breaks, while also enabling eligible middle class and upper middle class property owners in California to transfer their lower “base year” property tax rate to a new home of any value, anywhere in the state,  up to three times – affecting homes purchased on or after April 1st of 2021.

Miss Kabra concludes, with a real-world example: “If an eligible homeowner purchases a home of a greater value than their previous home now, under Proposition 19, they will pay a blended tax rate. For example –  let’s take a middle class couple in their 60s, who own  a home worth $600,000 in Los Angeles, which they purchased in 1972 for $200,000.  Let’s say they sell their L.A. home, and purchase a new home for $700,000 in San Diego.  The first $600,000 of the new San Diego home will be taxed based on their original 1972 purchase price of $200,000.  Only the next $100,000 will be taxed based on current or “fair market” value…” 

Saving Money on Property Taxes With Help From the Experts!

There are other challenging property tax issues, as well as critical property tax relief advantages and property tax breaks, for middle class and upper middle class families to address, with which to avoid property tax reassessment, when inheriting property taxes in California…

New property tax relief advantages include the right to transfer parents property taxes and then keep parents property taxes when inheriting property and inheriting property taxes in California, associated with any standard property tax transfer; leading up to and through the parent-child transfer and parent-to-child exclusion (from carrying a “fair market”, or current, property tax burden).  Leading towards Keeping Your Parent’s Low Property Tax Base When Inheriting a Home; or inheriting a new primary residence that requires a transfer of a parent’s low property tax base. 

If done properly with a trust loan from a trust lender a low property tax base can remain in place for decades, when inheriting property taxes in California, saving residential or commercial property owners hundreds of thousands of dollars in the long run.

All the more reason for you to call a property tax consultant or a trust lender experienced in Parent To Child Property Tax Transfer On An Inherited Home as well as the use of irrevocable trust loans and Proposition 19, as well as Proposition 13, to keep your parent’s low property tax base – if you are inheriting a home, or expect to inherit a home at a low property tax rate; and plan to transfer a low property tax base to a new home down the road. 

Or, if you wish to buyout existing co-beneficiaries that are looking to sell their inherited  property shares, while you are set on keeping that same inherited property in the family – plus keeping the same low property tax base your parents enjoyed.  All of these important family issues are well worth careful consideration.

To learn more about your options when inheriting a house from parents – transferring their principle residence’s low property tax base to your new primary residence – call our main line to ask to  speak with a Trust Fund Loan or Property Tax Savings specialist at Property Tax News, the Michael Wyatt Consulting firm, or the Commercial Loan Corp, at (877) 756-4454 

Proposition 19 Impact on CA Homeowners

Proposition 19 Impact on Property Taxes in California

Proposition 19 Impact on Property Taxes in California

Proposition 19 Impact on Property Taxes in California

Now that the popular Proposition 58 tax break system has changed into tax measure Proposition 19 – these are some of the key issues specific to modern Proposition 19 property tax relief.

These changes cover real property parent-to-child transfers after Feb 16, 2021. Whether key outcomes are based on the death of a parent before Feb 16, 2021, or based on deeds filed after Feb 16, 2021, is still questionable, whether Proposition 19 would apply, or if California parent to child exclusion from property tax reassessment, derived from Proposition 58, will apply – with respect to parental property tax transfer.

We believe the bottom line is simply to continue applying political pressure on those in power in this state – to make sure the California property tax system continues to provide genuine property tax breaks for residents, with the ability to avoid property tax reassessment via  Proposition 19 (formerly Prop 58 and its’ parent-child exclusion) in concert with a loan to an irrevocable trust – keeping a low property tax base when inheriting a home, when buying out property shares from co-beneficiaries through a trust loan; with the ability to keep parents property taxes, with the right to transfer parents property taxes, getting the most out of Prop 13 and Prop 19 property tax breaks upon the transfer of a home, when inheriting property taxes. 

Positive Changes Affecting Heirs & Homeowners From Prop 19

1. One major change is that Proposition 19 eliminates the parent-child and grandparent-grandchild exclusion from reassessment for properties other than a primary residence.

2. California homeowners over the age of 55 or with severe disabilities (which is still not defined as to what the exact definition of “severe” is) will have the ability to transfer their current property tax assessed value (i.e., “base year value transfer”) of their primary residence to another primary residence anywhere in California.

This change eliminates the problem of not being able to take advantage  of Prop 58 and its’ parent-child exclusion in all 58 counties in California – in terms of being approved, or not approved, for a base year value transfer. 

In other words, Proposition 19 is strictly statewide, without obstacles blocking your ability to avoid property tax reassessment in some counties, while there is no problem avoiding property tax reassessment in other counties!  That type of bias towards homeowners and beneficiaries in some counties caused a lot of problems in California.

This change enables residents to purchase a more expensive home rather than a more inexpensive home to keep tax the relief benefits of the base year transfer.  If a more expensive primary residence is purchased, there is now a rather complex formula to  minimize the increase in base year value.  Moreover, Proposition 19 now increases the number of times the exclusion may be used, up to three times in a lifetime.