Tag Archives: CA Proposition 13

Property Ownership that is Excluded from Reassessment

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Inheriting Property Taxes in California

Inheriting Property Taxes in California

California residents voted Proposition 19 (Assembly Constitutional Amendment No. 11), into law on Nov 3, 2020 – and became active on Feb 16, 2021; changing the parent-to-child exclusion and adding other tax relief exemptions involved with inheriting property taxes in California.

Reassessment Exclusions and Property Tax Exemptions

Regardless of revisions of any kind, an exclusion from property  reassessment at current property tax rates still allows parents to transfer their primary residence or in certain cases a “family farm” – to their children, as heirs avoiding full reassessment; as long as they move into their home as a primary residence once the property transfer is complete, or if it’s a farm, as long as they continue to use that property legitimately as a functional farm.

If a home is being transferred, heirs have to claim a “homeowner’s exemption” to prove that that the home is being used as a primary or principal residence. As most people know by now, this exclusion is now under limitations as to the assessed value of the home, plus $1,000,000. Even if all the “i’s” are dotted and the “t’s” are crossed the home will be reassessed at current market value if it exceeds the existing assessed value plus $1,000,000. Moreover, the “Claim for Reassessment Exclusion” and “Claim for Homeowners’ Property Tax Exemption” must be completed and filed.

Pro Rata & Non Pro Rata Distribution

Even though the parent-to-child exclusion (i.e., parent-child exemption) applies to non pro rata trust distributions from a parent to their children (heirs) – this never applies to transfers between siblings… So many think it’s better to give the trustee managing the trust the power to distribute equal cash assets to the heirs as pro rata distribution, rather than allow a trustee to give the children different values… 

Of course, when a trust loan is applied to the process in conjunction with Proposition 19 (formerly Prop 58, passed in 1986), it is as pro rata distribution, so all beneficiaries selling off their inherited property shares will receive equal revenues from the sale, typically from one heir, or multiple beneficiaries, looking to keep their inherited parental property, while keeping their parent’s low property tax base, as stipulated and protected by CA Proposition 13. 

Avoiding Property Tax Reassessment & Property Tax Hikes

As long as a beneficiary moves into an inherited home as a primary residence within 12-months of the passing of the parent, the beneficiary can transfer parents property taxes and keep parents property taxes when inheriting parental property and subsequently inheriting property taxes in California. A  property tax transfer (inheriting property taxes in California) still goes hand in hand in California with a parent-child transfer, namely a parent-to-child exclusion, to avoid property tax reassessment or fair market property tax rates. 

Which is why it is so important to keep up with correct information on any current property tax hikes…  Plus, staying current with any new releases from the Legislature regarding property tax breaks, or new rules for property tax transfers.  Moreover,  it really is critical to keep up to date on all pertinent, accurate  and timely property tax news and resources for transferring property taxes in California

Working With a CA Trust Lender or Property Tax Consultant

A pro rata distribution of the assets of an estate means that each heir receives an equal portion of each asset in the estate. A non pro rata distribution means that each heir receives an equal proportion of the entire estate but not necessarily of each asset.

Should the children of the grantor parents decide to trade properties after the distribution of the trust – any real estate will certainly be reassessed.  That’s why it’s so important to have a trust lender or a property tax consultant at your side before you plunge into all of this, if you are a middle class homeowner and can’t afford an expensive real estate attorney. That’s perfectly understandable.  Join the crowd…

Why Consulting With an Attorney, a Property Tax Specialist or Trust Lender is Crucial Now, When Inheriting a Home in California

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Inheriting a Home in California

Inheriting a Home in California

When inheriting a home from parents, one should always have a reliable estate attorney, if we’re looking to transfer a parent’s property taxes or we’re inheriting assets in trust or in a standard estate or probate; with an experienced eye on all  proceedings, especially the process of “equalizing trust loan distribution among beneficiaries” if a trust loan is a part of the process – a phrase often used by property tax specialists, and frequently misunderstood by heirs and beneficiaries.

“Equalizing trust loan distribution” simply means that each heir or beneficiary / sibling intent on selling their shares of inherited property  left to them by a parent, will receive an equal amount of money… settling expenses when there is little or no cash in the trust. 

Paying off a debt that a parent or grandparent has on a home can impact beneficiaries looking to borrow, as well as lenders. Having a competent attorney who knows how to structure a trust so that beneficiaries looking to keep inherited property at their parent’s low property tax base can retain that family property… while making sure that co-beneficiaries intent on selling their inherited property get an equal share of cash from a loan to an irrevocable trust.

This is where an experienced trust lender comes into play, preferably a lender that provides trust funding with their own capital, which ensures that interest charged will be as low as possible. Not using expensive money from investors, lenders with their own capital are free to charge as little as they wish, in terms of fees. In fact, a trust lender like this is free to exercise extreme flexibility with underwriting, maintaining particularly reasonable terms and conditions; as well as being able to implement trust loan transactions quickly, in seven to ten days.


“A private money lender that loans to irrevocable trusts, applies for and works in tandem with California Proposition 19… So all the beneficiaries [in the family] who are looking to sell their real property shares – for the purpose of facilitating “non pro-rata distribution”, in other words getting an equal share of the entire overall estate – however not necessarily of every asset.

If there is a family that goes to a conventional, pricey lender like Wells Fargo for instance – they will always require adult children, beneficiaries that want to sell an inherited property, to ‘go off-title’, and that always triggers present-day tax reassessment. And that spells an expensive 66.66% tax hike!

If the family in question uses the Commercial Loan Corp, a company we have been using for years… the loan they provide is to a trust, and not to beneficiaries; so there is no title, and no crippling 66.66% property tax reassessment. 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.”

Having access to private capital, along with seasoned advice, and expertise from a property tax consultant and a trust lender on how to transfer a parent’s property taxes,  becomes even more crucial in an inheritance scenario when a family is looking to keep a family home for a long period of time. 

California Proposition 19, which was (voted into law in 1986) formerly California Proposition 58, can enable a parent-to-child home transfer of a “principal residence” to be excluded from property tax reassessment even if associated with a “change in ownership”.  Which could trigger reassessment of property taxes, often by accident, resulting in  property tax reassessment – if not for experienced guidance from a trust lender and, frequently, from a property tax consultant or tax attorney as well, guiding the trust loan process and  property tax transfer; working in concert with Proposition 19 and parent-to-child exclusion (from high current  market rates).

Advice from property tax transfer specialists like this generally includes guidance for beneficiaries and new home owners within the process of being able to transfer a parent’s property taxes, plus showing inheritors what they need to do to keep parents property taxes when inheriting property and subsequently inheriting property taxes from a parent.

Contact Commercial Loan Corporation for all of your Trust Loan needs at https://cloanc.com/ or by phone at 877-464-1066.

 

Beneficiary Property Disputes Resolved by Loans to Irrevocable Trusts

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Loans to Irrevocable Trusts

Loans to Irrevocable Trusts

Over the past several years, since 2016, we have seen a fair amount of estates, or inheritances in trust, that are embroiled in a dispute or infra-family trust battle over who should be receiving the larger share of cash assets or the largest percentage of an old home left a Mom or a Dad. And we see this pattern repeated over and over again; the same words, the same playbook, similar arguments and similar claims.

Several US firms that provide inheritance loans and cash advance assignments for estate heirs and trust beneficiaries receiving inheritance assets and property have all confirmed, when asked, that up to 75% of the families they have provided advance funds to were mired in infra-family squabbles and disputes over inheritance funds or inherited real estate. 

In California a simple trust loan solution involving Proposition 58, as well as specific tax breaks within Proposition 13, resolve certain beneficiary property disputes.  Only in California is it possible for family members to buyout a co-beneficiary, usually a sibling or several siblings, with the help of established property tax breaks…

Therefore, family disputes caused by sibling disagreements over whether or not they should sell or retain shared inherited property; or what that inherited property value should be, if the assigned tax assessor value is mistrusted, can easily be minimized… Generally, these conflicts are resolved rapidly and satisfactorily if a large loan to an irrevocable trust (working in tandem with CA Proposition 58) is implemented effectively through an experienced trust lender.

If this trust loan process is not implemented properly, the wheels trend to come off the estate wagon, so to speak, and these particular estates typically do not end well.  Whereas, if this trust loan & Prop 58 process is executed correctly beneficiaries end up owning their  inherited property securely, while siblings who insist on selling their inherited property shares end up receiving more money through the trust loan process than if they had received a direct non-trust cash payment from an outside buyer.

Residential and commercial property owners in every single state in America need to research benefits provided by trust lenders furnishing loans to trusts, specifically loans to irrevocable trusts and CA Proposition 13 transfer of property establishing a fixed low base rate in conjunction with a Proposition 58 transfer of parents’ property and transfer of parents property taxes. 

All property owners, for their own good, will eventually have to understand what inheriting parents property, inheriting property taxes, property tax transfer and what the ability to  transfer parents property taxes is really all about.  Plus how to keep parents property taxes at the lowest base rate possible.  Moreover, they must understand why a parent to child transfer, or parent to child exclusion, is so profoundly important and creates the core of property tax relief in California… And we can only hope in other states as well.  If homeowners in other states begin calling and sending emails to their often invisible representatives in Washington DC, this might actually become a reality in the near future – and should, given the economic challenges middle class families are facing, and will continue to face for some time to come.

Goods and services as well as real estate can be incredibly pricey in states like Connecticut, Texas, California, New York, New Jersey, Massachusetts… these are all expensive states, in terms of day to day living… However, decreasing property taxes down to a more manageable level can change people’s entire outlook on their life, helping middle class families to function more effectively with financial struggles, at least to some degree.

Moreover, the concept of paying yearly taxes on something you purchase and then keep for many years, might be flawed to begin with. What other large purchase you may make continues to charge you fees for ownership, for the rest of the time that you own that item?  Other than insurance, do you continue to pay taxes on a boat you own? An airplane? A car? A motorcycle? None. Only real property.  Perhaps the whole concept of taxing real estate after the initial purchase could use some fresh, new examination.

At any rate, California is still the only state in America where you can avoid property tax reassessment at current market rates; capped at 2% taxation,  as long as you own property inherited from parents… thanks to 1978 CA Proposition 13 enabling the ability to  transfer parents property taxes.  These issues are covered in detail on the California State Board of Equalization, that covers Proposition 58 at great length.  Or you can look at business oriented sites that focus on property tax relief,  such as trust loans and Proposition 58 at sites like Commercial Loan Corp;  or go take a look at resource info blogs such as Loan to a Trust, or even a blog like this one,  Property Tax News for information on Proposition 19, Proposition 13, and support or opposition to property tax relief in California, in the present as well as in years past for an accurate historical perspective.

Working With An Irrevocable Trust Lender

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Irrevocable Trust Lenders

Irrevocable Trust Lenders

First, let’s go back over the key elements involved in the most popular trust loan beneficiary-conflict solution available in California.  It’s worth mentioning that California is still the only state in America where you can avoid property tax reassessment at current rates; capped at 2% taxation basically as long as you own property inherited from parents… thanks to 1978 CA Proposition 13. 

And this is where we get into trust liquidity – something a lot of folks in California don’t really understand. California business property and residential property owners, in addition to having the right to keep parents property taxes, and transfer parents property taxes upon inheriting property, and then inheriting property taxes at the low Proposition 13 two-percent tax rate maximum – can maintain a low property tax transfer rate basically forever, through a parent to child transfer, or “parent to child exclusion”, as long as all tax relief requirements have been met, usually with the assistance of an experienced irrevocable trust lender.  

Additionally, Californians even have the right to apply for the same tax break on a secondary property inherited from parents.  Approval is a formality only. No only that, as a California property owner you can buyout as many siblings as you like; that is to say, as many co-beneficiaries as there are who wish to sell their inherited property shares – as long as you are approved for the appropriate amount of funding to a trust loan, from your trust lender… And as long as the co-beneficiaries are fully committed to selling out through a trust loan, rather than accepting less money from a third-party outside buyer – while you keep the same inherited property from your parents, financed through the trust loan, avoiding property tax reassessment for that point on, establishing and maintaining a low Proposition 13 property tax base.

Elements that drive this process are worth researching, to understand the subject better and simply to be able to work more effectively with a trust lender… Many of these process elements are covered in detail on the California State Board of Equalization website, focusing on various relevant components within Proposition 58 among others.  Or you can research heavily detailed business sites such as Commercial Loan Corp, the brainchild of forward-thinking CEO Kerry Smith;  or info-blogs such as Medium.com,  or perhaps  the Trust and Estate Loans micro-site; or the Property Tax News blog…  Trust loans working in accord with Proposition 19 make it possible for heirs and beneficiaries to sell their shares of inherited property, a co-beneficiary buyout of sibling property shares – as realtors put it, “the transfer of property between siblings”, and “lending money to an irrevocable trust“ – typically from an irrevocable trust loan lender.

Commercial Loan Corporation in Newport Beach, CA appears to be the “favorite flavor” of the decade, where trust lenders are concerned, as they specialize in taking full advantage of all Proposition 19 property tax relief benefits for clients; helping beneficiary siblings avoid property tax reassessment, while making sure they transfer parents property taxes correctly, when inheriting property taxes from parents, a business facility, home and/or land; abruptly inheriting property taxes that have to remain low, simply to free up some needed cash; in order to keep up a reasonable lifestyle, what with the cost of living in California these days.  

You also want to be careful, to work with a trust lender that has a great deal of experience with this process… To make sure that beneficiaries and  property owners take full advantage of the right to keep parents property taxes, with a low Proposition 13 tax base.  No other state in America even comes close to providing this sort of property tax relief. And property taxes in this country, for the most part, are high for a middle class and working class families. No other state gives residents the ability to use a CA Proposition 58 or California Prop 13 type of property tax transfer, with parent to child transfer, or as lawyers like to call it, “parent to child exclusion”.

The fact is, we need to know how to work with a professional trust lender to be able to use tax breaks as efficiently as possible, that as Californians we are fortunate enough to have access to.  Moreover, every property owner in every state should know how to work with an irrevocable trust lender to buy out a beneficiary’s share of inherited property; and basically understand how a sibling-to-sibling property transfer or co-beneficiary buyout of sibling property works in California.

Bottom line, every state in this country should have trust lenders to work with  to take advantage of residential and commercial property tax relief solutions similar to Californian property tax breaks such as CA Proposition 13, and now Proposition 19 – enabling property owners to keep parents property taxes, at a low 2% capped tax base from Prop 13… along with property tax transfer benefits still in effect from CA Proposition 58; enabling the transfer of property between siblings, or, more specifically, allowing a co-beneficiary buyout of sibling property, paying them cash to not sell out, while you get to keep your parent’s house and/or land at that super low Proposition 13 protected tax base.

If you are in need of a loan to an irrevocable trust, please completed this form and we will have a representative from Commercial Loan Corporation contact you; or you may call them at 877-464-1066:

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

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A certain Proposition 15 was promoted with millions of dollars behind it, yet it didn’t pass. However, the fact that the California Legislature was in favor of it is still troubling to many California homeowners. 

Proposition 15 would have removed commercial properties like office buildings and industrial parks from Proposition 13 protections, mainly the ability to avoid property tax reassessment from current tax rates… Inheriting business properties from a parent would, under Prop 15, no longer have provided  business property heirs with Proposition 13 tax breaks – so heirs can avoid property tax reassessment for inherited commercial properties. 

Inheriting property taxes at a low Proposition 13 base would no longer apply to beneficiaries inheriting commercial property.  Beneficiaries inheriting office buildings and other business facilities would no longer have been able to transfer parents property taxes.

It would have raised the rents on apt. buildings and office buildings, on all commercial tenants, affecting stores and malls, supermarkets, car dealers, pharmacies and you name it. Effectively raising the prices of all goods and services in California. An economic disaster in the making. Fortunately, it did not pass.

As a well known realtor in Santa Barbara pointed out recently in an interview, “Estate-planning attorneys are going to be very busy now, as Proposition 19 may cause many family members to decide to sell property they had intended to pass on to their heirs. Although other siblings will decide to keep and move into a home inherited from parents – as a primary residence – so heirs can avoid property tax reassessment  It’s a game-changer….

In terms of properties being sold that would have been passed on through a family trust, or to beneficiaries who simply cannot afford to pay property taxes that are reassessed are current rates… or folks that just object to paying higher property taxes on principle. Realtors are going to make a lot of money like this. And that’s good for them and possibly good for California. The problem is, a lot of those folks selling their home in response to high income tax exacerbated by    inflated living expenses, are also moving out of the state permanently – if they are also unable to save thousands of dollars every year for emergencies or their retirement account – by avoiding property tax reassessment.  And that’s not good for California!”    

Higher property taxes or not, California will always be an attractive place to live, to start a family, or just because the weather and the sights are pleasant.  People are always going to want to live in California, but long-term residents see life getting more expensive in that state – more rapidly than anyone anticipated.

Moreover, the prospect of getting more and more squeezed by taxes is forcing both large and mid-sized companies, as well as a surprising number of people approaching retirement, soon to be on a fixed income, to move to other states that are far more income-tax, corporate-tax and property tax friendly – and the companies take their jobs with them!

A good number of residents in their 20s (just out of college) are choosing to leave the state, with no intention to return.  In contrast to recent years, when California was an extremely popular state for young homeowners… and people in their 30s and even 40s, looking to start a family. Now, many young adults and families are seeking the most affordable place to live following college, or just as their careers are taking off – frequently with very young children to think about.

And this is where the CA Legislature’s short-sightedness really becomes obvious… Point being,  what else leaves the state with all those young residents and tax conscious companies? The large amount of taxes they pay to California every year!

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

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California Proposition 19

California Proposition 19

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

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

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

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

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

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

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

>> Click Here to Continue to Part Two…

Will California Prop 58 Tax Breaks Survive Proposition 19?

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

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

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

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

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

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

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

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

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

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

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

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

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

With Prop 19, Can we Still Inherit A Home And Retain the Property Tax Base?

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With Prop 19, Can we Still Inherit A Home And Retain the Property Tax Base?

With Prop 19, Can we Still Inherit A Home And Retain the Property Tax Base?

In opposition to what some California newspaper editorial writers,  ill-informed politicos, or ambitious realtors might tell you, California Proposition 13 is not broken.  In fact it’s doing exactly what it’s supposed to be doing.  As they say, “If it ain’t broke – don’t fix it!”

Voters in California, in 2020,  fell victim to a great deal of deceptive public relations and marketing, painting Proposition 19  as a “friendly” property tax… versus “unfriendly” property tax relief.  Always avoiding property tax reassessment  was framed as mainly benefiting wealthy families so they could rent out secondary, non-primary, properties to supposedly get even wealthier by renting these properties out – “starving” the state of much-needed revenue for schools, firefighters, and the Legislature in general.

The fact that Proposition  58 and Prop 13 property tax breaks have been allowing middle class homeowners to basically survive, saving Californians from losing their home; or being able to keep inherited property without going broke… apparently was not  important to the politicos in the capital.

Avoiding property tax reassessment at high current rates, and enabling beneficiaries to avoid having to sell their inherited property, plus being able to lock down a low Prop 13 property tax base and buyout siblings who urgently needed to sell their inherited property shares, through a trust loan working in concert with Prop 58’s Parent to Child Exclusion or Parent to Child Exemption – didn’t seem to matter at all to the folks running the state.  Tax relief like this for the middle class, as opposed to being available only to wealthy Californians, didn’t, and doesn’t, seem to be a priority, interestingly enough.

Opponents to property tax breaks for middle income residents  loaded up their promotional advertising with deceptive language and confusing explanations… Avoiding property tax reassessment was characterized as something you shouldn’t want to do; and voters were convinced they were not harming  themselves financially, as homeowners, or as trust beneficiaries and heirs to estates; and should be delighted that they were now helping seniors and firemen and schools.

In fact, they were actually helping the Legislature pay for unfunded government pensions with a rather vague financial support system for the firefighter’s union and educational system throughout the state.  The benefits were left open as to the “how” and “how much”, and written that way intentionally.

However it worked.  Proposition 19 passed… but just barely.  If it had been presented clearly,  in a straight-forward fashion – it would never have passed.  Many people voted for Proposition 19 without realizing its full implications.  In fact there  is a 160-plus page Assessor’s Handbook “AH401” that has literally been deleted from the Board of Equalization’s website because of changes brought about by Proposition 19; hence California property laws are being rewritten as we speak.

If you look at all this in depth, you can clearly see that if  Prop 19,  had been allowed to go all the way, in terms of completely stripping out homeowners’ and beneficiaries’  right to be always avoiding property tax reassessment…  this would have crippled the  middle class in California.  And it certainly will present some economic challenges to the middle class… however it stops short at being a complete disaster.

Property owners can still take the right steps for avoiding property tax reassessment, can still buyout co-beneficiaries, can still establish and maintain a low property tax base. With a few limitations.  Let’s just say it could have been a lot worse for middle class families.   And that is where these critics of property tax relief are probably heading – so Californians have to keep their eyes open.  But at least now, as many California homeowners and even renters  nurse their buyer’s remorse – they will be prepared if these incessant opponents to property tax relief come back around again to “finish the job”.

A lot of Californians don’t understand how complicated property tax relief is going to be going forward.  Every homeowner is going to need a Proposition 13, Proposition 58 and Proposition 193  expert to address these changes – to take full advantage of the Parent to Child Transfer, or Parent to Child Exclusion, and to analyze their property tax situation realistically;  with the help of a property tax expert.  To see if they are going to have to move into an inherited property within 12-months, and use it only as a primary residence,  to evaluate if that’s even going to be possible after the parent leaving them a home passes away.

All these property tax relief matters that were once so simple, that were implemented simply by habit before Proposition 19 came about, are now going to need expert input from well known property tax specialists like Prop 13 / Prop 58 Consultant or trust loan and Parent to Child Transfer experts at a firm like  Commercial Loan Corp who fully understand how to make use of the exclusion for reassessment of property taxes on transfers between parents and children.

Professionals like that will be needed to side-step  mistakes and not miss out on always avoiding property tax reassessment – ending up paying property taxes at current high rates;  hopefully inheriting property taxes form parents.

Beneficiaries and homeowners are going to have to be incredibly careful when looking to  transfer parents property taxes, with the goal being  to keep parents property taxes on a property tax transfer, using the time honored Parent to Child Transfer,  or Parent to Child Exclusion.  The same applies to going to a trust lender, for example, to get a loan to an irrevocable trust to be able to get approved for Proposition 58 for the transfer of property between siblings – commonly known as buying out a siblings’ share of house – buying out siblings’ property shares,   Or the buyout of co-beneficiaries’ property shares.  Now not as simple as it once was.  But still do-able, working with the right firm who will lead you in the right direction and evaluate your property correctly.

For instance, without expert assistance it’s very easy to accidentally trigger a property reassessment under Proposition 13 that might very well increase your property taxes 10 or 20 times, for yourself or for your heirs or beneficiaries.  It’s so easy to handle a transfer of property incorrectly, without a specialist helping you, meaning a property tax consultant, or trust lender if you want to buyout annoying or dishonest siblings…Or a real estate attorney familiar with Prop 13 and Proposition 58.  It is easy to make an error in a Trust that kills your tax cap that would have saved you thousands of dollars.  Doing these things on your own is terribly risky.

When Prop 19 does into affect  on Feb. 16, 2021, California Prop 19 will change a parent’s ability to leave their children or grandchildren their Proposition 13 protected tax base.  Property will be reassessed at its current fair market value, unless you get expert help to identify a work-around or property tax reduction solution.  Challenges will exist where there were none before… so finding some experts you can trust will become an essential step going forward.   

Loans to Irrevocable Trusts

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Loans to Irrevocable Trusts

Loans to Irrevocable Trusts

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

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

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

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

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

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

A Trust Loan Solution to Family Conflicts

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

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

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

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

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

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

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

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

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

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

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

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

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

How Does the Prop 58’s Parent to Child Exclusion Work?

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California Parent to Child Property Tax Exclusion

California Parent to Child Property Tax Exclusion

Importance of Retaining Proposition 58 & Property Tax Relief

Regardless of what critics of Proposition 58 and Prop 13 have to say in Op-Eds and Editorials in California newspapers… No matter how many times opponents of California property tax relief attempt to completely unravel and decimate invaluable property tax breaks protected by Prop 13 and Prop 58, during a Coronavirus pandemic no less – popular support for property tax relief in California holds… For commercial property owners and homeowners alike.

Despite a win here and there by opponents to property tax relief in California… supporters of watering down critical tax breaks such as the “Parent to Child Exclusion” win a battle here or there chiefly as a result of tricky, deceptive marketing; with slippery snake oil tax measures like Proposition 19 in 2020.

We just narrowly missed a statewide disaster, with the proposed property tax measure Proposition 15 almost passing, which would have resulted in egregious property tax hikes, raising taxes on apt building and office building landlords, commercial shopping center owners and store properties being rented out to hundreds of thousands of commercial tenants all across the state.  

This would have forced commercial and business property owners in all 58 counties in California to raise prices on all goods and services – simply to survive.  Moreover, this would have been the beginning of the final unraveling of the 1978 Proposition 13 tax relief package. The door to worse things to come, so to speak, would have been opened.  Fortunately, the door was closed.  At least for now.

The fact is, if Proposition 15 had passed in Nov. of 2020 everything you buy or rent in the state of California, even online, would have gone sky high.  So, clearly, this was a near miss of a total statewide economic melt-down. As it happens, the other deceptive property tax promoted in 2020, sponsored by the CA Legislature and the California Association of Realtors among others, Proposition 19, did in fact pass.  The lesser of two evils, so to speak.

Although not perfect, there is still enough room within the property tax system in California so beneficiaries inheriting property from parents, and homeowners, can still make good use of Prop 13, of Proposition 58 and the “Parent to Child Exclusion”…  Beneficiaries can still take advantage of trust loans and the ability to buyout co-beneficiaries if they wish to sell off their inherited ownership in inherited property… plus lock down a low Proposition 13 property tax base.  So Proposition 13 remains, for the moment, troubled… but intact.

The right to avoid property tax reassessment is crucial for California’s economic well being. It means beneficiaries can still make use of Prop 58 and irrevocable trust loans to buyout co-beneficiaries wanting to sell off inherited property.  It means residents can inherit and keep parents property taxes, and can transfer parents property taxes. Inheriting property taxes from parents at a low base rate is critical for middle class homeowners. Otherwise, selling off inherited property becomes unavoidable and inevitable.

Middle class heirs, new home owners, frequently are not able to pay current market-value property tax rates – in a hyper expensive state… in the midst of an out-of-control pandemic, where nearly 7 million people in this state are out of work or under-employed, or are still working from home at a 50% salary level.  Not to mention the astronomical costs associated with illness and the loss of life, for family members.  Items that healthcare insurance refuses to pay for.

The folks supporting the realtor community, CA Association of Realtors, politicians running the State Legislature, and organizations such as the California NAACP State Conference, California Senior Advocates League, California Statewide Law Enforcement Association, Californians for Disability Rights, and the Congress of California Seniors simply must begin to look at middle class families and working family life more realistically.  You’d think they would be,  however they apparently did not read the fine print, and were hoodwinked into voting for Prop 19 in Nov of 2020.

By simple good luck homeowners and beneficiaries can still make use of Prop 58 and a trust loan process to buyout inherited property from siblings while locking down a low Proposition 13 protected property tax base.  Had those organizations read the fine print, they would have noticed that certain tax relief protections they took for granted were under direct attack – such as the ability for eligible homeowners to transfer their tax assessments within counties and to homes of equal or lesser market value;  To retain the right for folks age 55 and older, or people with disabilities, to keep the same number of times they are able to transfer their tax assessments;  To be able to transfer tax assessments on inherited homes, including inherited properties not used as primary residences, to be transferred from parent-to-child or grandparent-to-grandchild – without any issues or problems.

California still retains Proposition 13 property tax breaks, and  beneficiaries can still make use of Prop 58 and trust loan funding.  However, had Proposition 15 been successful, and had the Proposition 19 people gotten everything they had wanted – loading all these new proposed property taxes on top of regular working people would have had an extremely negative affect on the majority of the population of California.

Based on their recent efforts, how do the folks running the state of California, in the Legislature, think that adding the property taxes they had wanted to add would affect all these working families? Do they even consider how further unraveling property tax relief would affect the California economy as a whole?

Does it ever occur to the politicos in the Legislature that going further in the direction of eliminating property tax breaks, as they would like to do, would literally be a social and financial disaster for the state as a whole?

The Governor and his friends need to give this some serious thought.