Tag Archives: CA Proposition 13 transfer of property

How Has Prop 19 Changed Inheriting California Property and Home Ownership?

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How Has Prop 19 Changed Inheriting California Property and Home Ownership?

How Has Prop 19 Changed Inheriting California Property and Home Ownership?

Proposition 19’s supporters would like to reduce Prop 13’s less attractive elements and implement what they would call, “freeing-up long-term homeowners.” 

Prop 19 is expected to generate increased house sales, as well as realtor and broker commissions, which is why Prop 19’s largest supporter, the California Realtors Association spent $40,400,341 to get Prop 19 passed, and the National Association of Realtors kicked in $4,800,000 to promote such a hard-to-sell property tax measure.  The $100,000 donated by the California Professional Firefighters union to Proposition 19 pales in comparison.

Proposition 13, which passed in a landslide way back in 1978, was a unique amendment to the California Constitution which capped residential property taxes on a primary residence to 1970s levels, capping them at 1% of assessed value (plus local additions, by county).  Assessments were allowed to rise at a maximum rate of 2% per year — even though prices on real estate in California continued to increase in most of the state’s 58 counties.

Properties would be reassessed at current market rates when a total change of ownership occurred, either by death, gift, or sale — when the property in question is “transferred”.  What the CA State Board of Equalization calls a “change in ownership.”  Deceptively simple terminology for a rather complex process; made even more complex these days by varying state taxes and Coronavirus issues, verified at property tax relief websites and niche blogs like Property Tax News or Loan To A Trust.

 Inheriting California real estate and home ownership in general is different now as far as property taxes are concerned.  If a homeowner in any county bought a $2,000,000 home today, without any property tax breaks, they might pay roughly $25,000+ per year in property taxes.  A family in a nearby $2,000,000 home that’s been there for let’s say 30 years may owe merely $2,500 per year.  But it’s all relative.  Certain politicians complain about this type of inequity… however  if you bought property 30 years ago, would the same property cost the same last week?  Of course not.  So why should taxes be any different.  

Under Proposition 19, the only low Proposition 13 tax base that can be transferred to your children is that of your principal residence to your heirs (offspring).  Subsequently,  your heirs have to reside in that home also as   their primary residence.  And if that inherited home is valued at more than $1,000,000 it may be partly or completely reassessed by the local  tax  assessor, with a partial or total loss of their Proposition 13 parent-to-child exclusion property tax break.  It is not entirely clear yet how all of this will shake out once the dust settles on this. 

However the entire concept of installing a property tax hike in the midst of a flagging Pandemic economy with growing unemployment and under-employment; or even the decision by the Legislature to  promote a Proposition 19 tax hike in 2021 — to water down middle class homeowners’ ability to avoid property tax reassessment is under a spotlight and being seriously questioned in light of basic survival, and even retirement, by respected economists, academics and analytical websites.   

In most cases, Proposition 19 will effectively eliminate a parent’s right to transfer a low property tax assessment to heirs, since it is unclear at this point how  many heirs or beneficiaries inheriting their parents’ home will be all that excited about  moving into that inherited home as a primary residence — and within 12 months at that. It may be too small for a large family.  Work places may be too far away to be convenient.  School districts could b e a major issue.  And so on. 

Moreover,  many homes are worth far more than $1,000,000 in California. That makes Proposition 19, despite it’s many positive benefits, a liability for many inheritors… with challenging  outcomes for certain taxpaying residents who have inherited California real estate.

The folks who benefit from Proposition 19 are embraced clearly in its’ promotional title: “Home Protection for Seniors, Severely Disabled and Victims of Wildfire or Natural Disasters Act.”  Exactly what the definition and application of  “severely disabled” is, remains to be seen.  As mostly everything with this particular Legislature, it would be safe to say that there are a lot more assumptions in play here than specific, concrete projections that are backed up by well researched data and factual analysis. 

We can assume that homeowners who are over the age of 55, disabled or supposedly “severely” disabled, who have been harmed by a forest fire or  some other natural disaster of some kind,  will be able to transfer the assessed value of their primary California residence to a new home anywhere within the state’s 58 counties. 

This revised property tax relief procedure may be repeated  three times in a lifetime, supposedly, and so homeowners now have two years to transfer their Prop 13 low property tax base.  And one can still expect (with more limitations now built into the process) to be able to take advantage of trust lenders with a loan to a trust if the goal is to buyout co-beneficiaries (i.e., siblings) looking to sell their inherited property shares, as a transfer of property between siblings, with a loan to an irrevocable trust. 

So no matter what, at least for the moment, Californians can still make good use of a property tax transfer from a parent, a Prop 13 low property tax base — under the CA Proposition 13 transfer of property — and transfer parents property taxes, with the sole objective to   keep parents property taxes regardless, when inheriting any kind of property more or less, and inheriting property taxes under California’s parent to child transfer, known as the  parent to child exclusion — which has been the number one target anti property tax relief parties want to  water down, or even repeal.                

Additionally,  if the homeowners’ new house is assessed at a higher value  than their previous home — their property taxes might go up, however not  as high as they would have been before Proposition 19 went into effect. So there is helpful property tax relief here if you look for it, such as being able to establish a Prop 13 low property tax base.  It is just not quite  as simple and straight-forward as it once was, before Proposition 19 more or less replaced Proposition 58 in the sunny state of California, in Nov. of 2021. 

Transferring A Parent’s Property Tax Rate & Prop 58 Loans

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Transferring A Parent's Property Tax Rate & Prop 58 Loans

Transferring A Parent’s Property Tax Rate & Prop 58 Loans

This “parent to child exemption” has saved so many  beneficiaries, homeowners and commercial property owners, thousands  of dollars;  making it possible to put a few dollars away in the bank every year, with the ability to avoid property tax assessment… and transfer parents property taxes at a reasonably low base rate — having the right to keep parents property taxes at the low tax base they were accustomed to paying; i.e., inheriting property taxes that remain low.

Otherwise — very few middle class homeowners could afford to keep an inherited home. They’d have to sell out, given that most of these estate heirs or trust beneficiaries have their own home to maintain and pay taxes on! Or, beneficiaries can still go to a blog or Website that is deeply focused on Proposition 58 and Proposition 13, trust loans and estate property tax reduction like, for example  Property Tax Transfer Trusts.

Or you can conduct research on some other sites focused on Prop 58 and unique, consistently  effective uses of intra-family trusts as  trust loans, generally to buyout property shares owned by co-beneficiaries of the same estate or trust — along with locking in a low property tax base by avoiding CA property tax reassessment at current, typically  high market values, such as https://cloanc.com/tag/california-prop-58

Exactly why many of us think other states, particularly expensive  states, should be looking into property tax relief for all property tax transfer scenarios, involving property tax breaks like the parent to child transfer of inherited property, similar to tax breaks avoiding CA property tax reassessment at current market value. 

Realistic examples of high-tax states that desperately need property tax relief are, for example, states like Massachusetts, or New York, Texas, or Pennsylvania… States like this should all have a property tax exclusion or exemption to protect middle class homeowners  from property tax evaluation at current market rates… giving residential and commercial property owners the right to avoid property tax reassessment every year.  Establishing lower property taxes for all property owners, including landlords; which would  affect  apt. building and commercial store rentals all across any major state… thereby impacting the finances of middle class residents and commercial property owners in an extremely positive fashion.

The surprising reality in California is the fact that so many homeowners do not understand property tax transfer, nor do they understand the use of trust loans and trust lenders, when inheriting a property you want to keep, and need a trust loan to pay off beneficiaries who had insisted on selling their shares in the inherited property, to equalize cash for them in the process, so they don’t need to sell, often below fair value, to a third party.

People that do not understand any of this need to do a little research, on info blogs like this one; or on Websites that delve into Proposition 58, and how property tax transfers and trust loans work, such as the  Trust and Estate Loans Website… or at one of the transaction oriented sites like Commercial Loan Corp  This gives nervous  beneficiaries a great deal of accurate information to help them avoid estate conflicts with co-beneficiaries… typically siblings.  So for once, the inheritance and estate process becomes a win-win experience for all concerned! If you need assistance with a Trust or Estate Loan, you can reach Commercial Loan Corporation at 877-464-1066. They can assist you with the process and answer any questions you might have on the topic of Parent to Child Exclusion from Reassessment and transferring the property taxes from a parent to a child when a trust is involved. 

PART ONE: Property Tax Relief Fights for Its’ Life in California…

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Jon Coupal, articulate and persistent president of the authoritative and well respected “Howard Jarvis Taxpayer’s Association”, has been leading the charge in California to keep property tax relief safely in place.

There are a few other notable property tax reduction leaders, like Kerry Smith, courageous and visionary president of the “Commercial Loan Corp”, that furnishes trust loans tied into Proposition 58, making the transfer of property between siblings and buying out a sibling’s share of a house possible.

All of this, of course, ties into the process of inheriting property taxes, ones ability to keep parents property taxes, and property tax transfer as it pertains to the parent to child transfer (which Proposition 19 seeks to unravel) — commonly known as parent to child exclusion or a parent to child exemption.  Plus, there are high end tax reduction specialists, like noted Paramount Property Tax Appeal president Wes Nichols,  who  specialize in personal business tax reduction and property tax assessor appeals.  These folks have all been on the front lines of these issues for many years.

Not known for soft ball opinions, or for taking it easy on property tax relief opponents, Mr. Coupal was extremely candid in an interview with this Blog; and had some interesting things to say recently, in a particularly hard-hitting article in The Tahoe Daily Tribune, on Oct. 9, 2020 “Explaining the Confusing Prop 19 to Californians” and in his own column on the http://www.hjta.org Website, “Prop-15 Backers Try to Mislead Homeowners”  where Mr. Coupal stated, on Oct 21:

“Prop-15 backers try to mislead homeowners. It’s a sign of desperation. When anyone in politics starts making wild claims less than a month before an election, you know something is amiss. So it is with the proponents of Proposition 15, the “split roll” initiative which would impose the largest property tax increase in California history.

Throughout this campaign, proponents have consistently argued that the measure won’t impact homeowners because it just raises property taxes on commercial and industrial properties. But now, they claim that Prop. 15 actually saves homeowners money.

This is absurd on its face. Recent polling suggests that support for split roll is sinking fast, especially among homeowners. This might explain why proponents have, at the 11th hour, countered with the argument that, as corporations have to pay more, the tax burden for homeowners goes down. Nobody believes this.”

Mr. Coupal also brings to our attention the deliberate confusion around proposed Proposition 19; as he reiterates,

“It’s no secret that ballot initiatives can be confusing, but Proposition 19 takes obfuscation to a whole new level. Voters can’t be blamed if they can’t remember whether Prop. 19 is the initiative that is a massive property tax hike or the measure that actually has something good for homeowners or the initiative that has something to do with firefighting. The fact is, all three are at least somewhat true — especially the part about the big tax increase.

Let’s clear up the confusion: Proposition 13, passed in 1978, gave California homeowners certainty about their future property tax liability because increases in the “taxable value” of property would be limited to 2 percent per year. Property would be reassessed to market value only when it changed hands. But that tax hike even applied when property owners transferred a property to their own children.

Prop. 19 would repeal Proposition 58 and force the reassessment of inherited or transferred property within families. The only exception is if the property is used as the principal residence of the person to whom it was transferred and even that exclusion is capped…”

If you repeal Proposition 58, the uniquely Californian funding process involving trust loans tied into Proposition 58 may have to be revised. And by the way, the ‘principal residence’ ruling must take place within one year of the passing of the decedent who left behind the property in question.  This in itself creates a myriad of problems, if you have an additional mortgage thrust upon you, plus the expenses that very well may accompany  another residence if you’re also a homeowner at the time you inherit this additional property. 

You may have a large family that won’t fit into the inherited property, noo that you’re forced to move in within a year.  The inherited home may be a much longer drive from your job or your spouses’ job.  Your children may attend a school in a totally different district, causing additional problems; etc. so on and so forth.  Otherwise, you may be forced to sell your inherited property, and that can bring inconvenient and expensive issues along with it as well.  It may not be so simple.

At any rate, Mr. Coupal added, “The non-partisan Legislative Analyst’s Office estimates that the repeal of the “inter-generational transfer protections” will result in tens of thousands of California families getting hit with higher property taxes every year. The LAO acknowledges that Prop. 19 imposes an additional tax burden in the “hundreds of millions of dollars”.

>> Click Here to go to Part Two…

The Trust Loan Proposition 58 Process – Interview with Account Rep Abe Ordaz, Rising Star at Commercial Loan Corp.

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California Proposition 58 Parent to Child Property Tax Transfer Trust Loan Specialist

California Proposition 58 Parent to Child Property Tax Transfer Trust Loan Specialist

On Oct. 2nd, 2020, Property Tax Transfer Trusts sat down with Account Representative Abe Ordaz from Commercial Loan Corp, in Newport Beach, California; to discuss his routine with trust and estate attorneys, trust administrator and beneficiaries, explaining the trust loan / Proposition 58 funding process…

Property Tax Transfer:  Abe, thank you so much for sitting down with me today to chat about your work at Commercial Loan Corp and how you assist clients when it comes to using California Proposition 58 to transfer a parents low property tax base to a child who is inheriting a home.

Abraham Ordaz: Sure, my pleasure.

Property Tax Transfer:  Abe, who do you generally speak to when it comes to taking calls from prospects?

Abraham Ordaz: I speak to a variety of involved parties when it comes to helping a client transfer a parents low Prop 13 property tax base from a parent to a child. Often times the conversation begins with a Trust Administrator or a Trust Beneficiary who is interested in using Prop 58 to transfer a property tax base from a parent to a child on an inherited property. After that initial conversation it is common for me to also have a conversation with the Trust & Estate Attorney who is assisting them with the distribution of the trust or estate.

On occasion beneficiaries do not have an attorney who is currently working with them and I am able to refer them to one in their area who is familiar with the Proposition 58 Parent to Child Property Tax Transfer process and who can help them secure their property tax transfer benefit. At Commercial Loan Corporation we have helped hundreds of clients by providing them with a loan to an irrevocable trust so that an equal distribution can be made and they can meet the requirements set by the California Board of Equalization to qualify for the Proposition 58 property tax transfer benefit.

Property Tax Transfer: Are your clients and attorneys usually familiar with trust loans, and how they work with the California Proposition 58 process?

Abraham Ordaz: Many of the Attorneys that I work with are familiar with the Proposition 58 process, as well as Proposition 13 and the need for a trust loan to equalize a distribution when a trust or estate does not have sufficient liquid assets. In fact, many of my clients are referred to me by their trust and estate Attorney.

We are one of the only California Trust and Estate Lenders who will lend directly to an Irrevocable Trust with no personal guarantee from the acquiring beneficiary and we are the only California lender that I am aware of that specializes in these types of transactions, specifically to help our clients secure every single Proposition 58 property tax benefit.

That’s the reason I get so many Attorney referrals.  Attorneys want to make sure their clients are in good hands, when it comes to something this important – and that the process is done 100% correctly so that the client will qualify for the Proposition 58 parent to child exclusion, or the parent to child exemption, from property tax reassessment.  Attorneys are well aware that we typically help clients save more than $6,000 per year in property taxes on an inherited home.  Without exception, that’s the bottom line critical issue for them!

Property Tax Transfer: Abe, that is fantastic that you have developed such great relationships with Trust & Estate Attorneys.  Do you usually provide them with an estimate on how much you would be able to save their clients when it comes to property taxes?

Abraham Ordaz: Yes, we provide a free cost benefit analysis for each client. It tells them exactly how much we expect their client to save in property taxes each year as opposed to if their property were to be reassessed. At that time we also provide them with a free quote for the trust loan so that we can make sure it is in their best interest. In most cases it is of great benefit and we generally save our clients over $6,000 per year in property taxes by helping them keep a parents low Prop 13 property tax base.

Property Tax Transfer:  That’s significant. Do you get into the various particulars with Proposition 58, and  how that works in concert with loans to trusts?

Abraham Ordaz: Yes, we break everything down into very simple terms so that the Proposition 58 property tax transfer and trust loan process are all easy to understand. That is one of the reasons why so many Trust and Estate Attorneys who deal with California Proposition 58 love to work with us. 

Property Tax Transfer:  Got it. Abe, how do you help your clients who are interested in keeping a parents low property tax base on an inherited home understand how the trust loan and Proposition 58 parent to child transfer benefits work, keeping the initial inheritance property transfer taxes down, buying out siblings’ property ownership shares, and so on?  Yet keeping it very simple.

Abraham Ordaz: I start with the basics of Proposition 58 and the California Board of Equalization requirements for a Parent to Child Property Tax Transfer. I then help them determine how much their trust or estate will need in order to make an equal distribution. After that we review all the numbers together and I answer any questions they may have on the process. Next we get their Attorney involved so that they can handle all of the legal aspects of the Proposition 58 parent to child exclusion and provide us with all of the required information for the trust or estate.

Lastly, we provide them with the funds needed so that an equal distribution can be made in order for them to meet that qualification requirement for Prop 58. The Attorney or Property Tax Consultant then helps them submit their property tax transfer request to the County Assessors office so that they can secure their parents low property tax base.  

Property Tax Transfer:  At the end of the day it’s really just all about saving money on property taxes for clients, isn’t it. It’s a complex process, but the motivations remains very simple, doesn’t it?

Abraham Ordaz: Yes, bottom line, it’s a simple matter for these clients and lawyers.  It’s all about how we can help clients save money on property taxes – to keep their family home. I help explain all this clearly to the heirs that want to keep their inherited property. 

Property Tax Transfer: Yes I see.  Abe, how do you explain why the trust is so crucial to this entire process?

Abraham Ordaz: Typically when attorneys ask about the trust loan process – I tell them our loan goes directly to the trust… and follows the property.  Conventional lenders want to take to take the property out of the trust – but once the property is taken out of the trust, this often triggers a reassessment…  So if you took a cash loan from a traditional bank for example – you’d end up putting the property in the beneficiary’s name and thus get reassessed at current property value. Which in most cases raises the property tax rate significantly. If  the property was purchased say 20 years ago, the property tax would be significantly higher today. 

Property Tax Transfer:  Got it.  Abe, do you get into the customer service aspect at all?  I understand that a very special kind of customer service is critical to this process, to be successful, so to speak, with each family.  

Abraham Ordaz: Yes… Customer service is the most important aspect to our business and we try to be our best version of ourselves for every client regardless of the size of the loan. Everyone is treated equally and respectfully.  Everyone that joins the Commercial Loan Corp family, as it were, is a V.I.P. client!

Property Tax Transfer: That’s very interesting and a rare thing to find these days in this business climate. Well, we want to thank you so much for sitting and chatting with us today.  We really appreciate it.

Abraham Ordaz:  It’s my pleasure. Thanks for having me.

PART THREE: If Every State in America Had Property Tax Relief Similar to California…

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California Property Taxes

California Property Taxes

Property Tax Relief for Residential & Commercial Property Owners in Every State ~ Regardless of Net Worth and Property Evaluation

It’s crystal clear to many of us that every state in the United States could propose, and pass into law, a property tax system with property tax relief measures resembling California’s Proposition 13 and Proposition 58.

As in California, states with governors that actually care about the citizens in their state; or, more specifically, residential and commercial property owners in their state – could also make use of loans to irrevocable trusts from licensed trust lenders, to provide a unique, effective way to deal with property-based sibling conflicts – or simply to mitigate crippling property tax hikes.

Again, as in all 58 counties in the state of California, with the advent of these property tax breaks, middle class family members in all states could walk through life happier, feeling a tiny bit wealthier perhaps, with a first-time sense that there is, in their state, a fair-minded property tax system in place; that regular working families can benefit from, similar to property tax relief in California — and not just V.I.P. tax breaks for wealthy property owners. 

So middle class property owners, estate heirs and trust beneficiaries would end up with a win-win inheritance or estate experience… Regardless what state they are in, what their net-worth is, or how much their inherited real estate is valued at.  As in California, property tax relief would exist in an even playing field, in all states for all property owners, for all heirs and beneficiaries who are inheriting real property.

Howard Jarvis and his team of property tax relief proponents originated California Proposition 13 property tax breaks, which later spawned Proposition 58 tax benefits, including the ability to keep parents property taxes, while avoiding property tax reassessment… However they did not realize, in their own time, was that the property tax measures they had invented, actually reflected the property ownership and fair-minded taxation controls that the founders of this country had in mind from the  very beginning.

Property Tax Relief Patriots 

Yearly uncontrolled, unpredictable, crippling property tax hikes every year – that sees elderly widows being evicted, and aging retirees and veterans living on fixed incomes foreclosed on, and thrown onto the street – was certainly NOT what the founders and rebellious patriots had in mind over two hundred years ago, when they fought their way out from under egregious taxation imposed by a certain British king.

Different, yet similarly effective measures is essentially what a certain successful patriotic landlord named Howard Jarvis accomplished when he and other supporters of property tax relief fought for Proposition 13, for the ability to avoid  property tax reassessment under present day rates; for parent to child transfer or parent to child exclusion when benefiting from parents’ property tax transfer. They won the right of CA Proposition 13 transfer of property, and won the ability to transfer parents property taxes and keep parents property taxes, when inheriting a home and/or land and when inheriting property taxes associated with their inheritance.  They managed to put authentic property tax relief in place in the great state of California, in 1978 — not just for V.I.P.s and the wealthy (as current critics falsely claim), but for the middle class, and all Californian property owners .

Therefore, if we want to benefit from a long-term, reliable system of property tax relief measures, and get out from under yearly, frequently debilitating property tax – we’re going to have to educate ourselves on what type of property tax relief system each state requires; and go about discussing these property tax relief measures with approachable government representatives, approximating what  Mr. Jarvis had accomplished, with the help of other property tax relief patriots, 42 years ago.

A New Threat Arises ~ Critics of Property Tax Relief Revise CA Proposition 58 with (2020) Prop 19

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Vote No Proposition 19

Vote No Proposition 19

A Threat to Proposition 58, Parent to Child Exclusion, Arises

If they were keeping both eyes open, most property owners in California were looking, tentatively, for signs on the horizon of any new threat to the popular property tax break known as the “parent to child exemption, or “Prop 58 parent to child exclusion”… Meaning, exclusion from having your home, or any other property, reassessed every year at current property tax rates.  Being that this exclusion is the the main foundation  that property tax relief in California is built on, if you were serious about dismantling property tax relief in this state, it would be likely that you’d go after this critical tax break in earnest.

So naturally, at the last moment, when everyone thought they might have  “dodged the bullet” in terms of efforts to dismantle Proposition 13 or Proposition 58 one more time, relentless critics of California Proposition 13 and Proposition 58 decided to add one more measure to the mix, to remove the parent to child exclusion allowed under Proposition 58, from California home owners… A measure they are calling Proposition 19.  Very short sighted! 

These measures also kill off our right, in conjunction with Proposition 58, to get a loan to an irrevocable trust and keep a low property tax base forever, from parent to child transfer, also called parent to child exclusion or parent to child exemption… with the ability to transfer  property between siblings or buyout siblings’ share of inherited property.  Proposition 15 kills off landlords’ tax breaks and so have fun watching your rent go sky high, landlords will have no choice to stay in business!  In fact everything will go up in price, all goods and services as we have said many times. 

Proposition 19 kills the exemption we just mentioned, the CA Proposition 13 protected parent to child transfer… in other words transfer of property between family members… No more ability to transfer parents property taxes (in other words, their low tax rate becomes your own low tax rate). Inheriting property taxes will be no more, and you’ll be spending over $6,000 more every year in property taxes.  No joke.  You won’t be able to keep parents property taxes any more, property tax transfer will be no more… no more ability to avoid property tax reassessment.  That’s the killer.                          

No longer being able to avoid property tax reassessment would be a truly devastating event for home owners who depend on extra spendable cash freed up by the money they save from the lack of property tax reassessment.  Losing the parent to child exclusion, in an already hyper-expensive state, would devastate millions of Californians.  Not to mention the possibility of the so-called Split-Roll or “Proposition 15” commercial property tax, which would certainly add to the devastation by raising industrial and commercial property taxes, including apt. building landlords, forcing landlords to raise rents on residential and business tenants…

Or we could talk about trust beneficiaries or estate heirs losing their ability to get  a loan for hundreds of thousands of dollars to an irrevocable trust to buyout siblings who are intent on selling their share of a beloved inherited home, along with establishing a low property tax base made possible by Proposition 13, working in tandem with Proposition 58.  And the list goes on. 

Without being partisan or subjective – it’s fairly clear to any reasonable person that would herald in grave economic disturbance, and even disaster, for the entire state, where middle class  and working class people are concerned.   Obviously, many residents in Malibu or  Beverly Hills or Santa Barbara would not be feeling the pinch.  However, we’re not talking about the 1%.   

This brainchild of C.A.R. and the CA Legislature is, if you step back and think about it, not only brazen but also short-sighted, as they are actually looking  to fund special interests with revenue from property taxes — right smack in the middle of a Pandemic.  With over 6.7 million Californians having signed up for unemployment checks, these critics of property tax relief want to remove these universally popular property tax breaks protected by  Proposition 13 and Proposition 58.  Benefits that middle class and working class California families have become  accustomed to, and depend on. 

Proposition 58 Particulars

Most Californians are familiar with Proposition 58 and the Prop 58 parent to child exclusion. As you know, California Proposition 58 serves to protect folks who owe $8,500 or more in additional property taxes, while they settle their affairs. Prop 58 also allows beneficiaries who wish to keep inherited property in their family to buyout co-beneficiaries’ property shares, through a trust loan, and helps those looking to keep their inherited home also keep a low Proposition 13 protected property tax base their parents paid. And everyone goes away happy, win-win, all the way around.

In 1986, to protect families from massive property tax hikes, voters passed Proposition 58, revising the California constitution to ensure transfers of property between parents and children could be executed with the right to avoid property tax reassessment. Under Proposition 58 property of any value, plus additional property with up to a million dollars of assessed value, can be transferred between parents and children without reassessment.

However, the chief sponsor of ACA-11 (Proposition 19) the California Association of Realtors (C.A.R.) came along and decided to spoil all these critical win-win protections. C.A.R. assembled enough signatures to get their initiative on the ballot. Apparently, C.A.R. is motivated by their monetary interest in drumming up new home sales, regardless of the fact that the measure creates a multi-billion-dollar tax increase statewide, will throw the entire middle class California economy into chaos, already in turmoil due to the Covid-19 health and unemployment crisis…

The 2020 Proposition 19 would look to repeal the 1986 Proposition 58 parent to child transfer (property tax break) and impose reassessment of inherited or transferred property within families. The one exception being if the property was used as the principal residence of the beneficiary to whom it was transferred, and that exclusion is even capped.

Unintended or Intended Consequences?

The Legislative Analyst’s Office (LAO) estimated that the repeal of the “inter-generational transfer protections” guaranteed by the Prop 58 parent to child exclusion, and Proposition 193 grandparent to grandchild exemption would, if passed, cause somewhere between 40,000 to 60,000 families in California to be crippled economically by higher yearly property taxes.

Obviously, most middle class families would be forced to immediately sell an inherited home left to them by a surviving parent. Thus, a serious imposition has been placed on the “right to choose” for countless middle class families… simply so realtors can sell a few more homes on the market.  The trade off does seem to be rather uneven.  If Proposition 19 passes, all those beneficiaries in California will be expected to move in to their parent’s home and make it their primary residence within one year of their surviving parent’s death. 

The basis for this measure is unrealistic on its’ face, for a number of reasons… Many beneficiaries are already home owners, and pay out a fair amount of cash every month already to maintain their own mortgage and/or property upkeep. Moreover, if a beneficiary has a large family, and his or her parent’s home is not spacious enough – what alternatives are left for these folks?

If Mom or Dad’s home is situated a long distance away from a beneficiary’s place of work, and/or the spouse’s workplace – and perhaps inconveniently far away from their children’s school, adding possibly an additional 60 or 90 minutes on the freeway each way, back and forth every day… What options will these families have to look to? 

Critics of property tax relief in California are proposing somewhat unrealistic measures that, although they may look good on paper from a financial perspective,  they fail to incorporate realistic issues and scenarios that exist for regular people with regular lives. 

So vote your conscience in November.  We suggest you vote “No to Proposition 19”.

Information and Trust Loan Funding

For more details on the C.A.R. originated Proposition 19 effort to turn back the clock on property tax relief in California, you can go to CaliforniaProposition58.org

For more information on trust loans working in concert with Proposition 58, go to Commercial Loan Corp   Or to apply for a trust loan and speak to an account representative, go to “Apply for a Trust Loan”…  Simply to read up on Prop 13 and Prop 58 parent to child exclusion, as well as on critics of property tax relief in California,  plus the Covid-19 effect on real estate throughout the state – please go to the article: Coronavirus Crisis is the Last Thing the California Real Estate Market Needed!

PART THREE: The CA Proposition 15 Split-Roll “Trojan Horse” Commercial Property Tax is Coming Up for a Vote!

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California Proposition 15 2020

California Proposition 15 2020

Let’s project ahead for a moment…  In terms of the state you may live in, of the best way to avoid inherited property being a money pit (in terms of property taxes and upkeep), of it being a home you cannot afford to keep… So let’s keep it simple.  If every state in the union adopted the same sort of property tax relief that California has, with the right to keep parents property taxes, where you can avoid property tax reassessment, as with California’s 1978 Proposition 13, and Proposition 58 voted into law in 1986; we’d all be in good shape.

In a perfect world this wouldn’t be all that difficult to attain, if every state would wake up and smell the coffee, and instate property tax breaks like California has.  Frankly, if we all had representatives in  the Congress and Senate who actually cared about their job and cared about doing their job for us – this could easily be accomplished, if the will was there. 

Why shouldn’t every state offer property tax relief like California? It’s like dental care.  Why doesn’t every healthcare plan have genuine dental care?  Not $1500 owrth and then you’re on your own, but real dental.  Can with property tax relief.  Why shouldn’t every property owner in every state have property tax relief to make their life easier… While billionaires and multi-millionaires enjoy outrageous tax breaks every year.

Every  beneficiary or heir inheriting property from parents, or simply  residents or landlords or business folks owning property, would be able to afford to keep their commercial property, or an inherited home from parents.   As in California, this affects all types of property transfers… Giving every beneficiary the ability to keep parents property taxes, or benefiting from property tax transfer, inheriting property taxes – from parents’ low tax base of 2% thanks to Prop 13… This is the property tax base that helps property owners so profoundly in California.  Why not in every state?  

Without property tax breaks, as California has had since 1978, so many heirs to so many estates, or beneficiaries of so many trusts… in so many different states, inheriting property from parents, simply can’t afford the upkeep and property taxes on an  inherited home, and frequently are forced to sell their parents’ property. Often against their will.

We can simply call it “property tax relief”, the right to keep parents property taxes, similar to what you can accomplish in California; with Proposition 13, or during property tax transfer, utilizing CA Proposition 58 – keeping property taxes much lower, avoiding property tax reassessment. Beneficiaries who are inheriting property in any of the 58 counties in California, always have a low tax base not to exceed 2% from California Proposition 13, giving beneficiaries huge tax benefits from property inherited from a parent.

Plus there is always the ability to make good use of a loan to an irrevocable trust – as trust loans from trust lenders are used in conjunction with Proposition 58 to equalize cash to beneficiaries looking to sell an inherited property held up by beneficiaries of the same trust looking to keep the same inherited home and/or land… for once making scenarios like that a win-win experience for everyone in an estate or trust situation with a trust loan from a reliable trust lender. Instead of experiencing, repeatedly, problematic family conflicts revolving around property issues like this.

Just like in California, every state in America should be able to take advantage of the right to keep parents property taxes, to transfer parents property taxes, when inheriting property taxes. If, by any chance you reside in California, and you happen to be a beneficiary inheriting property from your parents, or an older person simply maintaining property you have owned for years, consider yourself very lucky.

This is why so many real estate lawyers in various locations these days strongly believe every state should have a property tax measure similar to California Proposition 13 and Proposition 58.  Beneficiaries everywhere agree wholeheartedly.

However, one gets the sense that every property owner may not be fully aware of all these tax benefits in California. The CA Proposition 13 tax shelter benefits during and after property tax transfer (with CA Proposition 58) saves beneficiaries big bucks, being able to transfer parents property taxes, being able to keep parents property taxes… inheriting property taxes that are capped.  We should never forget that   in California it’s just as many middle class people as wealthy folks who are able to avoid property tax reassessment at present day evaluation, through Proposition 13 benefits… And that saves you major money every year off property taxes… typically in the neighborhood of $6,200+ per year in fact.  Not a million dollars, but then again not nothing either!  

PART TWO: The CA Proposition 15 Split-Roll “Trojan Horse” Commercial Property Tax is Coming Up for a Vote!

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2020 California Proposition 15

2020 California Proposition 15

Gifting & Inheriting Property: Property Tax Relief Basics

Gifting your primary house, or secondary inherited property to your adult children – is it worth it?  We imagine for many it is, otherwise why would they do it?  And for others, well… what can you say, it’s simply a matter of subjective opinion.  And let’s never  forget that under Proposition 13 in California you can get the same low tax base benefits applied to your first primary residence inheritance to a secondary inherited property.  So there are built in benefits. 

Also, there are emotional reasons not just financial ones involved in all this…  It’s a real gift of love that often leads to an even closer relationship. And your offspring should realize that, and most probably do. In simple terms, it may be a principal residence, and that type of transfer may actually cause future tax appreciation of the value of that home, as a taxable item, when it might otherwise have avoided property tax reassessment if the property had remained in the decedent’s name with Proposition 13 transfer of property tax relief benefits. 

Nationwide Property Tax Relief Urgently Needed for Residential & Commercial Property Owners in a Severe, Pandemic Economy

This is the biggest problem for most beneficiaries, middle class  property owners and elderly home owners – i.e., property taxes; transfer taxes; etc.  This often forces folks to sell a beloved inherited property, as they simply can’t afford to pay the taxes on it every year, deal with utilities, upkeep, repairs, and so on.

We should all address the fact that, especially now, in the midst of an unprecedented Pandemic, with literally tens of millions of Americans out of work or  under-employed – with over 12 million people staring down the dark tunnel of foreclosure or eviction – every state in the union should be adopting, without delay, the same sort of property tax relief as California’s 1978 Proposition 13, as well as other critical property tax relief measures such as CA Proposition 58 property tax transfer benefits, voted into law in 1986.

At the risk of stating the obvious, it’s worth noting that these tax relief measures have become life-savers to property owners, as well as renters who enjoy lower rentals due to the ability their landlords have to avoid property tax reassessment.  We’re all aware of what things were like pre-1978, before Proposition 13 came about and began preventing the frequent foreclosures of the 1970’s, where we saw numerous elderly widows with fixed incomes being thrown out of their homes, literally onto the street, because they could not afford to pay egregiously high, unpredictable property taxes.

In fact, most middle class home owners at that time had trouble paying unusually high tax rates, and lived year to year with the shadow of the California ‘property tax guillotine’ looming over their heads.  In fact that is exactly what the situation looks like in many states now,  or in many expensive counties.  This is where the major problem is with most middle class estates, not with estate planning. Without property tax benefits, as in California, many beneficiaries inheriting property from parents simply can’t afford the upkeep and property taxes on an inherited home, and frequently are forced to sell their parents’ property right away. Often against their will.
 
We hear a great deal of chatter lately, among realtors and real estate attorneys in various states, about “adopting a property tax shelter” for all property tax transfers, when inheriting a home from a parent.  Or we can simply call it “property tax relief” similar to property tax benefits that are taken for granted in California; with Proposition 13, or during a property tax transfer or a sibling property share buyout; utilizing CA Proposition 58, and a trust loan – keeping property taxes much lower on a permanent basis, avoiding property tax reassessment basically forever.  

Beneficiaries who are inheriting property from a parent or step-parent  in any of the 58 counties in the state of California are generally protected from property tax reassessment. And have a low tax base to look forward to, not to exceed 2% as stipulated by California Proposition 13.

And let’s not forget having the ability to make good use of a loan to an irrevocable trust, working in concert with Proposition 58, something a lot of people don’t know anything about. With trust loans from trust lenders being used to equalize cash to beneficiaries looking to sell an inherited property held up by beneficiaries of the same trust, looking to keep the same inherited home and/or land… For once making scenarios like that a win-win situation for everyone associated with an estate or trust, with a trust loan from a reliable trust lender. Instead of experiencing problematic family conflicts revolving around property issues. 

Residential & Business Property Tax Breaks in All States

Beneficiaries and home owners, as well as commercial and industrial property owners of all types, all across America, should be getting familiar with the way they implement property tax breaks in California. How they handle having the right to keep parents property taxes, to transfer parents property taxes, when inheriting property taxes. If, by any chance you reside in California, and you happen to be a beneficiary inheriting property from your parents, consider yourself very lucky. This is why so many real estate lawyers in various locations these days strongly believe every state should have a property tax measure similar to Proposition 13 transfer of property and inheriting property taxes; and Proposition 58 property transfer tax benefits. 

So if every state in the United States had a Proposition 13 and Prop 58 type of property tax relief system… and could make good use of ancillary tax breaks such as buying out inherited property shares from siblings intent on selling out — through a loan to a trust, from a specialty trust lender; using a trust loan in conjunction with Proposition 58 to permanently solidify a low property tax base, made possible by Proposition 13; given the legal right (in every state, not just California)  to avoid property tax reassessment.

Therefore, every property owner in America dealing with inherited property in trust or in an estate; perhaps also addressing sibling conflicts revolving around who wants to keep inherited property versus who insists on selling, and who can buyout whom, using a trust loan, in order to keep inherited property in the family; avoiding property tax reassessment basically forever.  Everyone with these types of sibling property conflicts or property tax issues of any kind, even just the ability to pay them – would walk away happy… and for once all estate or trust family related conflicts would wind up as a win-win inheritance scenario, every single time these property tax measures were employed.

>> Click Here for Part Three…

PART ONE: The CA Proposition 15 Split-Roll “Trojan Horse” Commercial Property Tax is Coming Up for a Vote!

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California Proposition 15

California Proposition 15

The battle in California between supporters of property tax relief and critics of property tax breaks for Californians, still drags on in tedious fashion… specifically concerning  Proposition 13 (in short, the ability to transfer parents property taxes, with the right to avoid property tax reassessment; with a parent to child exclusion – capped at 2% maximum tax rate) as well as  Proposition 58 (in summary, Prop 58 helps heirs buyout sibling property while providing low rates on property tax transfers for beneficiaries, with a long-term low Prop 13 property tax base through a trust loan, while avoiding property tax reassessment at present day rates).

Critics of California property tax relief still repeat the same old talking points, like parrots, opining on the exaggerated need for cash from property taxes to “save the drowning school system from disaster; etc.”  Whereas their Proposition 15 Split-Roll property tax would in fact be the very thing that would bring about economic disaster in California. 

Split-Roll supporters even added a deceptive “exemption” from two to three million dollars in property value as a promotional trigger point, hoping that this deceptive and confusing formula will succeed in unraveling  tax breaks for owners of industrial facilities and commercial properties – which they are now calling “Proposition 15”… a safe, innocuous sounding title that is actually cloaking a rather toxic, sinister process  that would begin the slow, poisonous destruction of property tax relief in the sunny state of California.

Knowing that going after residential property tax benefits would be something like going after the popular Medicare program or the even more popular Affordable Care Act… Likewise, you don’t directly attack popular property tax benefits that millions of people love and depend on – first you start nibbling at the edges… then you work your way inward, towards destroying the center.  It looks to us like that is exactly what is going on in California right now. 

Like the Post Office nationwide, for example… if you dismantle the system internally, mail won’t be delivered on time, no matter what anyone tells you to the contrary.  Sometimes things are exactly as they seem to be!  So no matter what anyone says, after dismantling property tax breaks for commercial property owners, the next step is clearly to unravel property tax relief for home owners.  Sometimes things are exactly as they appear to be.

Once critics of property tax relief start in on affluent landlords who own business rental properties, they won’t stop until they dismantle middle class commercial property owners… and then, of course, wealthy and then middle class home owners – until every single middle class American is scraped clean!  Easy prey for them. Low hanging fruit. They call it a “wealth tax” in some states, and in California they’re calling it a “split-roll” tax. A new way to get more money from us, basically.  One way or the other.  It’s a similar ploy to ramp up and increase tax revenue they want us to pay.  It’s plain to see.

It was retired, older couples and elderly widows who were being kicked out of their homes (that they resided in for 4, 5, 6 decades), basically due to unpaid or under-paid property taxes in 1974 and 1975, 1976… before Proposition 13 was finally passed by voters in 1978, thanks to Mr. Howard Jarvis and friends, at the Taxpayers Association in California.

Now, with Proposition 15, formerly the “split-roll” tax, underway – this time it will be middle class and working class “mom & pop” shops and consumer businesses renting store-fronts and offices in leased buildings, or Uber drivers who are home owners… who will be harassed by the Tax Man, and ultimately displaced, with nowhere comfortable and safe to go!   

Wayne Lusvardi says in CaliforniaGlobe.com: “Proposition 15 – the so-called split-roll commercial and residential tax hike – on the November ballot, is being advertised as solely a commercial property tax. But there is a Trojan Horse contained in Proposition 15 that will unravel Proposition 13 property tax protections even for residential properties.

Single-family residential homes used for home offices or UBER drivers who park their cars at their owned residences will have their homes reclassified as commercial properties under proposed Proposition 15. Eventually, property taxes will be equalized by the legislature, and the mandates of Proposition 15 will apply to all owners who hold multiple homes and apartments, not just commercial properties. Moreover, small business owners will have the higher property taxes passed through to them in the form of higher rents and will not be able to stay in business after a couple of years.”

And guess who will pay the ultimate price for this so-called “split-roll” property tax? Higher commercial property taxes… Wait, let’s re-phrase that – MUCH higher commercial and industrial property taxes will ultimately be paid by the consumer. All of us.

Why?  All the services and goods you have grown to depend on will go way up in price thanks to business, industrial and commercial property taxes going up – landlords renting our store space and office buildings will have no choice but to raise their rents to survive, and subsequently their tenants, who own gas stations and super markets and stores and strip-malls, and office buildings all over California, will have to raise their prices to keep from going flat out of business within 10, 12 months. 

Moreover, this move would most likely open the door for critics of commercial and industrial property tax breaks, to eventually attack and unravel consumer property tax relief, including Proposition 58.  As we all know, Prop 58 helps heirs buyout sibling property with the use of a trust loan, while locking in a low Proposition 13 property tax base, more or less forever.

Hence, if this new property tax passes… that sound of air whooshing out of a balloon you hear will be the air whooshing out of the economy all across the once great state of California. 

>> Click Here for Part Two…

PART TWO: Trusts, Intra-Family Loans & Property Tax Benefits in California

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Beneficiary Loans California Proposition 58

Beneficiary Loans California Proposition 58

Beneficiary Trust Loans in Concert with California Proposition 58

The use of trusts  and trust loans by trust attorneys and real estate professionals, other than the process that is  popular in the state of  California, where Prop 58 enables inherited property buyouts —  we see a different yet similarly unique trust loan process described in summary by financial magazine Barrons in the following way: “With interest rates at historic lows—for the time being—wealthy families are turbocharging their estate-planning strategies by pairing intra-family loans with trusts.”  It’s a great concept; a great outcome to save on property taxes.  And it’s nice to see estates paired with trusts and intra-family loans welcomed into the higher-end oxygen at Barrons. There’s just one problem. Only for “wealthy families”.  There is the catch.

It’s not the same as financial visionary Kerry Smith’s brilliant tweak to the trust funding process, at Commercial Loan Corp in California;  with the final outcome showing us that California Prop 58 enables inherited property buyouts plus a low Proposition 13 property tax base for ever.  Mr. Smith’s visionary trust loans are not simply for the wealthy.  This top of the line trust financing process enables inherited property buyouts, largely for middle class beneficiaries, as well as upper middle class heirs, plus wealthy property owners looking to save a great deal of money on property taxes.  No one likes to give the Government their precious cash, that was hard to make, and easy to lose.

 “The Government had plenty of money – they don’t need our property tax cash to survive!”   ge along with locking down a low Proposition 13 driven property tax base, capped at 2% max – and most importantly… for all home owners.  For all beneficiaries, for middle class families, for working class families, and for rich folks… Not just for the wealthy – as the lenders featured in Barrons view the trust loan process – only for folks in the 7 or 8 figure class.

So, clearly… States other than California obviously have their own way of tweaking the trust financing process… both wealthy and middle class families are taking advantage of these unique tweaks, not just  families that are well off, as gossip and rumors have it.

Therefore, you now have trusts paired with intra-family loans and beneficiary loans, with a view towards different ways to tweak the trust loan process, in order to help conflicted beneficiaries of estates and trusts. So – When you get to property tax relief in the state of California,   the unique pairing of trusts and  loans, or probate estates and loans, with Proposition 58 – throws an entirely new spotlight of results  out there for trust beneficiaries and heirs of estates… 

The ability to avoid property tax reassessment and lock in low parents property tax base forever for permanent property tax relief,  for any property transfer, always with low property tax benefits enabled by the use of Proposition 13… working in concert with Proposition 58, enabling inherited property buyouts and lower property transfer tax hits. Always avoiding property tax reassessment – making sure you transfer parents property taxes, even when inheriting business facilities, inheriting property taxes for commercial properties, at  the same low Proposition 13 property tax base your parents enjoyed.

California trust loans are used to resolve numerous inherited property conflicts, between beneficiaries, working alongside CA Proposition 58 – enabling co-beneficiaries to purchase  shares of inherited property, a beneficiary buyout of sibling property shares… while avoiding property tax reassessment.  Generally buying out a sibling’s share of an inherited house, usually with some land – as realtors call it, “a transfer of property between siblings” or “sibling to sibling property transfer” – lending money to an irrevocable trust – from a reliable trust lender… specializing in trust loans, CA Prop 13, and Proposition 58.   That combination of skills and know-how you can’t find just anywhere, even in California.

So you add CA  Proposition 58 and an experienced California trust lender – plus a low Proposition 13 property tax base for beneficiaries, and residential or commercial property owners – while using trust loans with Proposition 58 in various new ways… This has decidedly become an unquestioned, mainstream financing process; referred by bank officers, accountants, property tax specialists and tax attorneys.  Whereas, prior to 1986, one wouldn’t be able to find this type of trust or estate financing anywhere! 

Think about this… even surfacing in a buttoned-up mainstream publication like Barrons, covering the pairing of trusts and trust loans – they reiterate, “Many wealthy families with taxable estates can benefit from cleverly structured trusts and intra-family loans…”  Establishing the fact that non-conventional uses of trusts and loans is an established process in mainstream financial services – if you’re in the 1% bracket!  Nice concept, with agreeable lenders, helping folks to save on property taxes… for rich clientele only. 

However, if you reside in California, and you’re a middle class beneficiary or new home owner, or moderately well off commercial property owner, you can find a more fair minded, well rounded niche lender who will serve your financial needs if you’re not rich, for example like the Inheritance Funding Co. in San Francisco, CA, if your estate is in probate and you need fast cash from a future inheritance, and you don’t even have to be upper middle class, and certainly not wealthy as you do with the firms and trust loan process Barrons favors…

Or if you’re inheriting real property and need a trust loan to buyout siblings and retain a low Prop 13 property tax base that your parents had, then you want something like the Commercial Loan Corporation,  in Newport Beach, CA.  You can forget pairing a trust with a loan and beneficiaries for wealthy families only!  You don’t need those folks.  You can get your estate or trust financial needs met elsewhere!

> Click Here to go to Part Three…