Financial Firms Help Californians Lower Property Taxes & Stabilize Financial Standing

Keep a low property tax base on an inherited home

Keep a low property tax base on an inherited home

Help From Property Tax Specialists – Bridging the Wealth Gap

Important cities responsible for growing jobs and driving opportunities that generate revenue for consumers, such as Los Angeles, San Diego, San Jose, San Francisco, Long Beach and Anaheim – have all experienced population shrinkage since 2020, due in part to shrinking real estate possibilities as well as unreliable employment, fluctuating sales conditions and unstable economic conditions overall.

Some financial services companies are looking to help reverse this trend and contribute to building a more positive economic and business environment for residents to thrive in, rather than struggle in.

Contributing time and effort towards helping beneficiaries that are inheriting property yet are in danger of falling prey to increased property taxes and limitations to property tax breaks – some financial services companies include middle class and upper middle class families in their suite of services, as opposed to just focusing on wealthy families as many investment, lending and wealth management firms do.

Examples of property tax professionals who are more open to helping middle class Californians are specialists like Advanced Tax & Estate Planning, Trust Administration attorney Rachelle Lee-Warner, at Cunningham Legal, Michael Wyatt Property Tax Relief  Consulting, or Estate & Trust Lending firm Commercial Loan Corp – all who do in fact include middle and upper middle class families in their wide range of property tax services. 

These firms, and others, are now seeking broad, proactive ways to reach and assist middle class and upper middle class homeowners and beneficiaries expecting to inherit business property or a home from parents, yet find themselves to be victims of financial bias… unable to enlist the help of high-end property tax experts due to their middle class, or rather non-wealthy, financial status.

Free Property Tax Savings Estimate & Consultation

To help preserve net worth for middle class families, the trust lending firm mentioned above recently decided to offer a free consultation & estimate for property tax savings to California middle class and upper middle class homeowners and beneficiaries, as well as affluent residents, all who want to avoid property tax reassessment by keeping parent’s low property tax base… locking in the same low tax rate their parents enjoyed.

Property tax firms are looking to help residents work around obstacles associated with a Proposition 19 parent to child property tax transfer on an inherited home, and is well known for providing ways to save new homeowners and heirs of estates and trusts thousands of dollars in annual property taxes. They are also assisting beneficiaries with applications for trust loans to buyout siblings that are also inheriting property but wish to sell their shares.

This type of consultation helps residents to evaluate, in-depth, the benefit of a loan to an irrevocable trust, and various financial options associated with property tax transfers in California – plus buying out co-beneficiary siblings who are looking to sell their share of an inherited property. Moreover, going through a trust lender  you trust; keeping your parent’s low property tax base when inheriting a home

Firms like Commercial Loan Corp work with families to help them preserve their modest financial security; alongside their attorney, accountant or property tax consultant; and assist family members and beneficiaries by helping them avoid property tax reassessment at current market rates, and determine through in-depth consultation how much a family can expect to save on property taxes,

On average this saves more than $6,200 per year, per beneficiary; as well as weighing costs and benefits of a trust loan working alongside Proposition 58 – now for all intensive purposes having morphed into Proposition 19. This enables a simple buyout of inherited property from co-beneficiaries, providing them with more money than an outside buyer would furnish them with; while keeping parents’ low property tax base.

Thaddeus Farrell, Account Manager at Commercial Loan Corp, offers an Insider’s Viewpoint on Estate & Trust Lending

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

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

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

Where to get help from Property Tax Savings professionals

Families, beneficiaries, or their attorneys, who want to take advantage of Commercial Loan Corp’s Free Consultation for Property Tax Savings and/or speak to attorney Rachelle Lee-Warner about Proposition 19, at Cunningham Legal; or perhaps discuss the facts with Michal Wyatt Consulting, in terms of keeping parent’s low property tax base; or to receive a trust loan to buyout co-beneficiaries’ property shares, and learn more about keeping parents’ low property tax base when inheriting family property – can call (877) 756-4454 and set up a free evaluation in person or over the phone.

Working With An Irrevocable Trust Lender

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

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…

CA Proposition 58 and Prop 193 Exclusions

Parent to Child Property Tax Transfer in California

Parent to Child Property Tax Transfer in California

Based on their recent efforts, how do the folks running the state of California, in the Legislature, think that adding property taxes will 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 would literally be a social and financial disaster for the state as a whole?

Since Proposition 58 (as well as Proposition 193 concerning the “Grandparent to Grandchild Exclusion”) is such a critical element holding up property tax relief in the state of California, we might as well take a quick, very simple high-level look at how this all works. To take advantage of Prop 58, certain eligibility requirements must be met. For example, eligible children under this proposition include:

a) Children born of the parents in question
b) Stepchildren
c) Sons-in-law and daughters-in-law
d) Children adopted under the age of 18
e) Children of a child of grandparents (regarding Proposition 193)

Propositions 58 and 193 exclude three types of property transfers, avoiding property tax reassessment at current high market rates:

1. Transfer of a primary residence: The assessed value of a primary residence is eligible for reassessment exclusion, or exemption.

2. Transfer of property through gift, sale, or inheritance: Parent-to-child transfer through a trust will qualify for an exclusion of property tax reassessment.

3. The parent-child exclusion can only be used if the “transferee child” uses the home as the child’s primary residence, and files for the homeowner’s exemption for the property. The parent-child exclusion will not be available if the home is used as a vacation home or is rented out by the children. If the home is transferred to more than one child, they would all have to live together in the home as their primary.

4. A parent can only shelter $1 million of increased value from reassessment. Any appreciation above that will be added to the property tax assessed For instance, if the primary residence is currently assessed at $500,000 but is worth $1,500,000, the child receiving the home and using it as the child’s primary residence will keep the same property tax assessed value of $500,000. However, if the home is worth $3,000,000 and not $1,500,000, the $2,500,000 appreciation will result in an added $1,500,000 assessment; the child’s new property tax assessed value will be $2,000,000 ($500,000 current property tax assessed value + $1,500,000 of “excess appreciation”). This new limitation also applies to a family farm.

Proposition 19 eliminates the second current alternative completely. As of Feb 15, 2021, there will no longer be a Parent to Child exclusion for a transfer of any property other than the parent’s primary residence and a family farm. Although you can still get the benefit of Prop 58 and an irrevocable trust loan if you require that type of financing.

Proposition 58 does not automatically apply to each parent-to-child transfer. To receive the full benefit of Proposition 58, you are required to file within 3-years of the transfer of property ownership.

There are several forms you must file to take advantage of property tax reassessment exclusion. They are Proposition 58 Form BOE-58-AH: Claim for Reassessment Exclusion for Transfer Between Parent and Child; or Proposition 193. Form BOE-58-G: Claim for Reassessment Exclusion for Transfer Between Grandparent and Grandchild.

This completes a very simple, high-level view of what Proposition 58 is all about. Once you understand all that, the next step is to enlist the help of a trust lender to get approved to be able to take advantage of Prop 58 and an irrevocable trust loan for funding to equalize the finances between beneficiaries if some wish to hold on to inherited property while others are looking to sell out to outside buyers.

From that point onward, the next step is to make use of the trust fund loan process, if you wish to equalize financing between you and your siblings or co-beneficiaries, to retain inherited property from your parents and buyout property shares inherited by a sibling, or several co-beneficiaries. You can then own your inherited home without the encumbrances of co-beneficiaries to be concerned with.

Best CA Lender For A Proposition 58 Loan

California Lenders for Irrevocable Trusts

California Lenders for Irrevocable Trusts

When Should a Trust Lender Enter the Picture?

There are many ordinary, middle-income families, often referred to as “trust fund heirs” who put their assets into a trust with the help of an experienced trust lender like Commercial Loan Corp. When Mom or Dad passes away, and the property is held in trust,  some beneficiaries either sell their inherited property or they keep the property and, through  a trust loan and Proposition 58 tax benefits, manage to lock in a low property tax base, and frequently buyout an inherited property from co-beneficiaries, to be able to own an inherited  home without difficulties and complications from shared property ownership. 

On the other  hand, if beneficiaries in that position decide they’d prefer to sell the property directly to an outside buyer, instead of receiving a typically higher payment from a trust loan – then those beneficiaries will get significantly less money due to realtor fees (typically 6%) when the property sells. 

Interestingly enough, beneficiaries will generally net, on average, $16,400 or more by not selling the property – and instead having at least one sibling, a co-beneficiary, take advantage of Proposition 58.  Moreover, the average family estate will net $45,000+ more than if the property was sold outright to an outside buyer, with the  revenue from that sale being divided evenly between the  beneficiaries.

Higher taxes imposed on families by Proposition 19 will tend to compel a great deal of beneficiaries to sell their inherited property, even if their preference is to keep  the old home and/or land.  Naturally, this is often good for realtors, who will tend to bank more commission revenue from increased sales.  However It’s not good for a middle class or working class family who is suffering the loss of a generally beloved Mom or Dad.

A trust lender usually enters the picture when enlisted by a beneficiary, or beneficiaries, who wish to keep their inherited property, while buying out owned shares of the same inherited home, mutually inherited by siblings.

Trust lenders who run their practice with integrity generally work with siblings that have lost a parent and are  helped a great deal by the California Constitution’s provision that serves to protect beneficiaries from owing  thousands of dollars in property taxes,  as they settle estate or trust business matters and typically complicated financial issues.

A trust loan introduced into this type of estate or trust equation allows a beneficiary or beneficiaries, often referred to as “trust fund heirs” by realtors and real estate attorneys, to retain the home they have happily inherited from their Mom or Dad – safely and securely, at a nice low property tax base. 

Meanwhile, without having to actually sell the property, co-beneficiaries walk off happy as clams, with more cash in their pocket having had a loan to an irrevocable trust used to buyout their shares in their inherited property – than if the property had been sold to an outside buyer, at current market value. 

Middle class beneficiaries typically do their own research on how to protect their inheritance from the tax man… On property tax breaks that make real sense, on trust lenders when inheriting property taxes; on property tax transfer and estate planning; and usually on their legal right to keep parents property taxes as well as having the ability to transfer parents property taxes at the same low tax rate that their parents had. 

Many beneficiaries will conduct their own research on property tax benefits first (prior to going to a trust lender) on how to avoid property tax reassessment, on Parent to Child Transfer benefits and  the complex Parent to Child Exclusion (from current tax evaluation). 

Beneficiaries gravitate to info-sites such as the state government BOE site at https://www.boe.ca.gov  or to a well known trust lender like the Commercial Loan Corp firm we mentioned here, they can also be reached at 877-464-1066; generally due to their reputation as a firm with a family  atmosphere, where clients all seem to get treated like V.I.P.s  regardless of their net worth or the value of their inherited property.

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

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.

 

California Proposition 58 & Proposition 19 Lenders

California Proposition 58 and Proposition 19 Lenders

California Proposition 58 and Proposition 19 Lenders

A Period of Uncertainty and Stress in America

We all know it’s a period of time right now in America of great uncertainty, insecurity and stress… affecting many families, creating enormous tensions, frequently financial…  Even affecting family estates, when a parent passes away; and where ‘will contests’ can be a real problem for families – for example, sibling-A believing she/he should be getting more than sibling-B;  so on and so forth.  We see a lot more of this sort of family conflict lately, over the past few  years, than ever before.

Although we do, thankfully, have solutions in California to prevent such conflicts from descending into disaster. Some of these solutions are tied into getting approved for CA Proposition 58 so heirs can avoid property tax reassessment; as well as classic CA Proposition 13 property tax breaks, for California property owners looking to work around new Proposition 19 property tax obstacles that force homeowners to move into inherited property within one year or lose their “Parent to Child Exclusion”. This can be a stunning loss of property tax relief; unless we meet it head on, and are able to  successfully work around it. 

It seems it’s still possible to take advantage of the property tax transfer benefit from parents, with the ability to keep parents property taxes while avoiding property tax reassessment of course. Despite newly passed obstacles, we can still transfer parents property taxes when inheriting property – bottom line, inheriting parents property taxes at a low base rate the way Proposition 13 was intended!  

Sibling-to-Sibling CA Property Transfer

Firms like Commercial Loan Corp can help solve estate conflicts between beneficiaries; making it possible for us to buyout siblings with a “sibling to sibling property transfer”, siblings who want to sell their inherited property shares, while allowing us to keep the same mutually inherited property from parents – with a trust loan, at that low base rate.  As long as we get approved for Proposition  58, heirs can avoid property tax reassessment, as the California State Board of Equalization explains.  Or possibly at a niche property tax info blog like this one, Property Tax Transfer

As long as everyone gets the cash they were expecting with a trust loan, and/or end up with a nice low property tax base… everyone ends up in a win-win happy sibling scenario. As long as the ‘will contest’ can be resolved to some degree, and direct communications between siblings doesn’t completely fall part.

These conflicts have often dominated family structures, so much so that some family groups actually splinter apart… with some family members literally leaving California for ever.  Additionally, Southern California home prices are currently at record levels, which doesn’t help. 

Rising Cost of Real Estate, Property Taxes & Day to Day Living Causing Many Homeowners to Leave California 

Because of hyper expensive home pricing many people are moving from California to nearby states where cheaper real estate can be found, in decent middle class or lower middle class neighborhoods; including Texas, Nevada, Arizona, and in some cases Oregon and Washington, according to Jordan Levine, an economist at the CA Association of Realtors (C.A.R.), who says California residents leave to get out from under general California inflation and an increasingly expensive overall lifestyle that many middle class families simply cannot afford to sustain – in terms of buying a home, feeding a family, maintaining numerous cars and insurance plans, health coverage expenses; schools; you name it. 

It is ironic that C.A.R. (California Association of Realtors) produces a report describing elevated living expenses in the state of California, while they are in fact the chief sponsor supporting the recent Proposition 19 property tax measure, watering down  property tax relief for California home owners… contributing to the higher cost of living in the state… Obstructing the way heirs can avoid property tax reassessment by unraveling the “Parent to Child Exclusion” or Parent-to-Child Exemption, as realtors like to call it.

As a matter of fact, this past August, the median home price in California was up more than 12% from a year earlier, according to CoreLogic/DQNews. Experts say the median home price is being impacted by an increase in luxury homes along with the flexibility of remote working options, which also allows people to move away from places like Los Angeles or San Francisco, to nearby states, in rural areas where families can get more space and amenities for far less cost than in many populated areas in California.

California real estate is often significantly more expensive than other, nearby, states. But then again, so is property in states like New York, or Chicago, in Oregon,  Maryland or Massachusetts. However. At least in California, homeowners and beneficiaries inheriting property have been fortunate enough to have property tax breaks at their disposal since 1978 such as Proposition 13, maintaining a low property tax cap of 1% to 2 % max.

Proposition 19, Trust Loans & Parent to Child Exclusion

Since 1986, Proposition 58 (now Proposition 19) has positively impacted property transfers and naturally property tax transfer, avoiding property tax reassessment on inherited property while inheriting property taxes from parents.  This  has actually saved homeowners in California tens of thousands of dollars over the years.  Hundreds of thousands, literally, over decades.

In fact, thanks to Proposition 19, trust loan based estate funding transactions save beneficiaries $6,000 to $8,000 or more on average, per family, every year.  No, it’s not millions… But for a regular middle class family it is definitely significant.   And if homeowners can’t access this type of benefit, it will hurt them financially year after year.

So even if we can buy a house more cheaply in a relatively inexpensive state like Ohio, or Idaho, South Dakota, North Carolina, or Wisconsin, for example… All comparatively less pricey than average property in many areas in California — we end up spending more anyway every year in property taxes in those other states. So we end up spending more every year anyway.

Property tax transfer, known as a parent to child transfer or parent to child exclusion, will always be low, at 2% or less – if we continue to be able to avoid property tax reassessment.  With new property tax laws in place, if we miss that 12-month deadline to move into inherited property – then we’re right back in the financial vice known as “current market value”…

And, thanks to California politicos who negotiated for us against the Legislature to at least retain enough of Proposition 58 so as long as we do get in under the wire, within that first 12-months after our decedent passes away… with 6-figure trust loan approval, we can, as beneficiaries, buy out co-beneficiaries’ shares of inherited property, which realtors call “sibling to sibling property transfer”, or ”transfer of property between siblings” and end up owning our own property anyway, without the problem of sharing real estate with siblings we’d rather not own property with.

Thankfully, although the timeline has now become more challenging, we can, as California inheritors and homeowners, still take advantage of tax breaks made possible by Proposition 19 and Proposition 13, in concert with an irrevocable trust — and buyout siblings,  so we can take over our own home at a nice low property tax base, more or less equivalent to the tax base enjoyed by our parents. Property tax relief in California may be a bit rocky right now… but it’s still there, if we use it carefully and judiciously.  And keep both eyes on that calendar!

PART ONE: Parent to Child Exclusion From Reassessment

Parent to Child Exclusion From Reassessment

Parent to Child Exclusion From Reassessment

Although trust beneficiaries, estate heirs, and homeowners in general hear more and more these days about “trust loans” and “intra-family trusts” used in conjunction with Proposition 58, which has graced Californians with its’ parent to child exclusion from property tax reassessment at current market value… there are, however, a good deal of misconceptions and a fair amount of confusion about this process that we should try to clear up a bit.

With recent changes to property tax relief surfacing, we don’t fully know what the effect these changes will have on Proposition 58 on Prop 13 property tax relief benefits, including the wonderful benefits trust loan funding provides, in terms of buying out property shares inherited by co-beneficiaries, or “sibling to sibling property transfer”, as realtors and tax attorneys like to refer to this process.

Middle class residents are getting more interested in this type of transaction, as it is moving the lending process away from more conventional, credit-based, hard money loans replete with high-interest charges and fine-print fees, piles of invasive personal-info paperwork… monthly payments that go on for years; so on and so forth.

So starting February 16, 2021, if you transfer your property to your children (or, grandchildren, if the parents have passed away), by way of inheritance, gifting, a sale, any hybrid sort of property transfer; estate planning outcomes; etc. – inherited real property taxes will be reassessed at yearly current market value.

Due to changes to the CA Proposition 58 parent to child exclusion benefit, heirs in the future will no longer be privy to inheriting property taxes, your Proposition 13 low tax base or “Proposition 13 Basis” has been California tax law for decades. With Proposition 58 protected rights such as sibling to sibling property transfer, or transferring parents property taxes inexpensively since 1986… with homeowners being able to continue inheriting property taxes, while having the right to keep parents property taxes on pretty much all property tax transfer scenarios.

However, if this property tax issue involving the watering down of Proposition 58 tax relief benefits is in fact a trend… and it does keep going in the direction is appears to be going – beginning with Proposition 19, with the possibility of Proposition 15 re-surfacing again with a more effective marketing plan the next time around – property tax transfer, parent to child transfer of property and the ability to keep parents property taxes may continue to be unraveled to a point where genuine property tax relief in California may be rendered virtually inactive. 

Most Californians certainly hope this will not be the case, since California is the only state with property tax relief programs that really count, so therefore we trust voters will be more circumspect next time, and perhaps pay closer attention the next time a political measure looking to unravel property tax relief in California comes up for a vote – to help the CA Legislature pay for unfunded pensions as well as assisting the California Association of Realtors in getting more homes up into the market for sale!

Let’s hope that does not occur… and keep sending emails and letters, plus phone calls, to our state political representatives, now that it looks like voters are waking up to what they have been manipulated into voting for – not realizing what actually lurked in the details, under the hood of Prop 19 – with heartstring-tugging provisions, cleverly giving Californians something to vote for, with titles such as Property Tax Fairness for Family Homes, Property Tax Fairness for Seniors, the Severely Disabled, and Victims of Wildfire and Natural Disasters. 

The CA Association of Realtors  and the CA Legislature was clearly not going to be able to engender support  for a property tax measure entitled Prop19, Removal of Parent to Child Exclusion & Unraveling Your Right to Avoid Property Tax Reassessment…

A limited version of the parent to child exclusion, or parent to child exemption, does still seem to be secure for beneficiaries; that is to say moving into inherited property as a primary residence within a year after a parent passes away is a safe way to retain Proposition 58 benefits, with, additionally, the valued ability to buyout property inherited by siblings through a trust loan; as long as one is able to  move ones’ residence over the course of a year – essentially turning ones’ life upside down after the death of a parent – which is hopefully not so inconvenient or troublesome as to be paralyzing or traumatic.  And time will tell how this will play out.

PART TWO: California Proposition 58 and Loans to Trusts ~ Featuring Noted Trust Loan Expert Tanis Alonso from Commercial Loan Corp.

Loans to Irrevocable Trusts for Proposition 58

California Loans to Irrevocable Trusts for Proposition 58 Property Tax Transfers

Our Interview with noted Commercial Loan Corp. Trust Loan and Proposition 58 specialist Tanis Alonso continues…

Property Tax Transfer:  Tanis, let me ask you…  Beneficiaries that call your company, desperate to keep parents property taxes;  for any solution to their property transfer / Proposition 58 issue – is it a safe bet to assume that 99% of the time there are elements that come up again and again?

Tanis Alonso (Commercial Loan Corporation): Well, that’s true, to a point. With beneficiaries that call us, with a trust or estate situation, there is always real property being inherited, going to one or several beneficiaries… and little, if any, cash – and each family always has different dynamics. There are always differences, as regards the people and details involved. But, the one constant you can be sure of is that there is always someone who wants to sell… and always someone who wants to keep the property they are inheriting… dead set against selling.

Property Tax Transfer: And at the end of the tunnel, is it safe to assume that with your company it’s generally a win-win equation, for everyone involved. Everyone involved, more or less, get what they want, right?

Tanis Alonso (Commercial Loan Corporation): That’s right.  99% of the time. The beneficiary, or beneficiaries, that want cash from the sale of the property that they’re inheriting, get the cash they were looking for, from the trust loan…

Property Tax Transfer: And the beneficiary or beneficiaries that want to keep the house, get to keep that house, and keep parents property taxes…

Tanis Alonso (Commercial Loan Corporation): Yes! And let me say that, typically, this is a really, really big win for them – as the siblings that wanted to sell are usually very vocal, and very aggressive about their desire to do so! That beneficiary that wants to keep that property, that is also able to get the other siblings a large amount of cash for their shares in the inherited real estate – while still being able to keep the home they’re so attached to, and keep parents property taxes; keeping parents property tax rate.  This would be practically impossible, were it not for our trust loan. And there’s your win-win equation!

Property Tax Transfer: And what about the cost factor? Costs involved in the equation… How does everyone benefit on that level, getting cash to the beneficiaries that wanted cash from a house sale? Versus coming up with property buyout cash themselves…
       
Tanis Alonso (Commercial Loan Corporation): OK, so cost involved, selling versus keeping inherited property. I’ll try to keep the equation simple. Costs associated with this property funding process through a trust loan, paying for everything, including beneficiary property shares buyout, taxes, etc. is, on average, 3.5% – So by someone keeping the family property everyone will receive more money than if they were to sell the property at approximately 6.5% in costs. The average trust receives $45,716 more to distribute than if they were to sell the property to some random buyer.  Each beneficiary on average is receiving $16,652 more by someone keeping the property, instead of selling it. And our average annual tax savings is $6,043. We have already saved a combined amount just shy of 1 million dollars for our clients on property taxes. That is a significant benefit for all beneficiaries when someone keeps the property instead of selling it! 

PropertyTax Transfer: So you’re saying those savings would have been completely lost, per beneficiary, if they had sold out to a regular buyer…

Tanis Alonso (Commercial Loan Corporation): That’s right. For example, say it’s you and your sister.  A major conflict. You want to keep the house you’re all inheriting from your parents, plus keep parents property taxes. Why should I let my sister sell? The solution there is because you are going to get more cash in your hands than if you were to sell the property! That’s the bottom line. A trust loan transaction takes 7-10 business days whereas selling will take a few months. Everyone receives more money, more rapidly, then if they were to sell the property on the open market. Everyone benefits from this… it’s win-win all the way around.

PropertyTaxTransfer: So you let your sister sell, so everyone wins – is what you’re saying.

Tanis Alonso: Of course! Let her sell, let her get her way – and you end up getting your way… you get what you wanted, to keep your house with everyone paid off and happy. No more conflict. On a $500,000 property – do you want to spend 6.5% to sell that property, with a realtor, or 3.5% through our trust loan, in keeping with the Proposition 58 tax system? Which number would you want to give away, 6.5% or 3.5%? 

Property Tax Transfer: Naturally. So the long range picture looks like increases in taxes as well, so that’s not as affordable either.

Tanis Alonso (Commercial Loan Corporation): Absolutely right. In certain cases a property tax reassessment can add an extra $700 to $1000 per month to your property taxes. That’s an extra $1,000 per month – not per year! Month after month. That is affordability vs not affordability to many. 

Property Tax Transfer: Going through the Proposition 58 tax system, with the trust loan paying everyone off…  What would property taxes look like going down that road?

Tanis Alonso (Commercial Loan Corporation): OK so the question is, “why do I need a trust loan to buy out beneficiaries who want to sell our inherited house?”  The answer is you can still keep the house you’re inheriting, and not spend any of your own money in the process.  The importance of the trust loan is that you can buy out your siblings and still keep parents property taxes. You keep 100% of the low Proposition 13 property tax base that was originally paid by your parents.  If you were to use your own money to buy out your siblings, the State Board of Equalization would see that as a sibling buying out a sibling – and that would definitely trigger a property tax reassessment. Naturally, the result of that would be higher taxes.  So you need the trust loan to buy out your siblings in order to take advantage of Proposition 58, and keep the low property tax base. 

Property Tax Transfer: Most people don’t have that kind of cash on hand nor do they want to use all of their cash for this just to buy out beneficiaries in an estate setting. Especially if the numbers go higher…

Tanis Alonso (Commercial Loan Corporation):  Beneficiaries who want to keep their inherited property still put a lot more money in their pocket, still save a lot more,  by not using their own funds…  by buying out beneficiaries that want to sell by going the trust loan route.  Staying within the discounted Proposition 13 tax base, being able to keep parents property taxes … taking advantage of the  Proposition 58 property tax system, or tax shelter.  Using this tax shelter  that we looked at before, if you recall – would be around $1,200 per year on a million dollar property.  Saving thousands of dollars annually on property taxes by taking advantage of Proposition 58; keeping their parents low property tax base. 

Property Tax Transfer: Yes, the difference in the numbers are stunning.

Tanis Alonso (Commercial Loan Corporation):  Yes it is.  So if you use your own money to buy out your siblings you will trigger a reassessment… if that was reassessed normally, without doing the property transfer and beneficiary payoff with our trust loan – you’d be looking at an $11,000 tax hit per year on the same million dollar property!  If reassessed at the current, present day, base rate – that tax hit goes up 10 times. A significant difference in cash back in your pocket after it’s all done and said. Trust loans are a huge benefit for all of these families and that’s how we’re able to really help people in a significant way.  

Property Tax Transfer: The amount of money saved really is remarkable.  And I can see that you genuinely enjoy helping your clients save a great deal of money with these trust loans. Making great use of the low Proposition 13 base rate, and the Proposition 58 property transfer tax shelter… The formula works!

Tanis Alonso: Absolutely. And helping people in this way is what it’s all about! That entire viewpoint is the basis for this whole company, from the top down – starting with the CEO, who is a truly terrific guy, who genuinely loves helping people, with money, memories, and time. And you can’t replace memories and time!

Property Tax Transfer:  You can’t replace memories and time… Very well put!  That is a concept to remember.

Tanis Alonso: It is so important to remember, when you truly care about what happens to the people you’re helping.

Property Tax Transfer: Very true.  Your clients are lucky to have you folks working for them.  Thanks so much for speaking with us today.

Tanis Alonso: Thank you.  It was a great pleasure chatting with you.