How the Role of a Trust Lender Can Impact Beneficiaries in California

Trust Loans in California

How to get a trust loan in California

As most Californians know, property tax measure Proposition 13, voted into law in 1978, capped property tax rates at 1%–2%. Property could now be reassessed on a property transfer from parent to child, with the right to transfer parents property taxes protected by the parent-to-child exclusion which was folded into tax measure Proposition 58, voted into law in 1986, and as you know is now revised, having morphed into 2021 Proposition 19 property tax law, with new rules for property tax transfers in California…

This continued the exemption for property transfers between parent and child, avoiding property tax reassessment with the right to transfer parents property taxes when inheriting property taxes from a parent; with the ability to keep parents property taxes long-term with this type of standard Proposition 19 protected property tax transfer, parent to child transfer and of course parent to child exclusion.

When there is only one heir, child of the parent, property transfer is relatively simple, knowing you have the right to transfer parents property taxes involving only one heir.  Conflict typically surfaces only when there are two or more siblings inheriting property shares… with one heir looking to retain the parent’s home, while the other heir or heirs insist on selling off their inherited property shares; generally calling for a “non-pro-rata” trust distribution, meaning that each heir with an interest in the inherited property receives an equal proportion of the entire estate with the help of a trust lender and a Prop 19 trust loan – however not necessarily of each asset. It’s important to note that non-pro-rata distribution by a trustee can have a major impact on property taxes.

Not using a Prop 19 trust loan solution, the use of personal funds to pay off a sibling co-beneficiary’s interest in a home would be viewed as a “change in ownership” therefore the outcome of this transaction would trigger property reassessment of that beneficiary’s inherited property share. If there are two heirs, each having inherited 50% of the property, the remaining 50% would be open to property tax reassessment. On the other hand, if there were three beneficiaries and only 1/3 of the property were retained, 2/3 beneficiary interest being bought out – 2/3 of the property would be vulnerable to property tax reassessment.

However, with the help of a trust lender funding an irrevocable trust, buying out the beneficiary or beneficiaries looking to sell off inherited shares – the fact that the trust is actually borrowing the funds to equalize distribution to the siblings that are selling out, and funding is not in fact distributed to the sibling or siblings themselves – property tax reassessment is successfully avoided.

For example, let’s examine the Anderson family in North Hollywood, who owns a home valued at $800,000, free and clear of any debt. In other words the family owns the house outright. Assessed value is $100,000. Let’s say, for the sake of argument that sibling Nina insists on selling the home, and wants a cash for her share; while another sibling, Jasper, is determined to keep the home.

(Option A) Jasper cleans out his savings account and pays out $400,000 to buy out Nina’s inherited property shares. This results in a “change of ownership” with respect to Jasper’s 50% property buyout, and the assessed outcome is a 50% property tax reassessment with a significant increase in property taxes.

(Option B) Jasper enlists the help of a trust lender, who provides a $400,000 loan to an irrevocable trust, along with getting approval to allow the trust loan to work in conjunction with Proposition 19; enabling Jasper to keep his parent’s low Proposition 13 protected property tax base. The third-party trust lender also sees to it that that funds are distributed equitably to Nina – in fact with more cash than any outside buyer would be likely, realistically, to offer – with no change in ownership, and no property reassessment; and therefore no property tax hike. The trustee at this point transfers the entire property to Jasper who plans to pay off the $400,000 loan to the irrevocable trust by cashing out a life insurance policy.

Thad Farrell, Proposition 19 / trust loan account manager (Commercial Loan Corporation at 877-756-4454) at the Commercial Loan Corp trust lending firm in Newport Beach, sums up the process as follows:

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! 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 looking to sell out receives approximately $15,000 extra in a cash trust distribution when compared to selling the home to a regular buyer; because they avoid costly realtor and real estate sale expenses. A realtor typically charges 6%, there can be costs to prepare the home for sale and closing costs such as title, escrow or assistance with buyer closing costs on top of that… Each beneficiary keeping the inherited home winds up saving on average $6,200 (each) in yearly property taxes. So do the math, for starters. Whereas, if the property is reassessed – the cost can be very high.

At the end of the day, there are positive emotional outcomes from this process as well as financial savings and extra funds… However the key result is the fact that when everyone walks away from using a trust loan to take advantage of the proposition 19 parent to child property tax transfer, they all understand that they have just completed a win-win transaction… In other words, unlike most business transactions where there is often a winner and a loser – in this scenario everybody wins and no one loses.

 

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

Thad Farrell - Proposition 19 Property Tax Specialist

Thad Farrell – Proposition 19 Property Tax Specialist

Mr. Thaddeus Farrell is an Account Manager at Commercial Loan Corporation at Newport Beach, California.  He arrives from a long, successful  career in  mortgage sales, and is considered a rising star in Trust & Estate Lending.  We were fortunate to have Mr. Farrell agree to share his views on property tax relief, Proposition 19, and irrevocable trust loans for new homeowners and beneficiaries in California…
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Property Tax News:  As an account manager with Commercial Loan Corp who do you generally communicate with, on a daily basis?

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Thaddeus Farrell:  My pleasure.  Glad to do it. 

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

Lowering or Pausing CA Property Taxes to Combat Effects of the Pandemic

California Property Taxes

California Property Taxes

Removing certain taxes is something the CA Legislature can control to lessen the current financial strain on middle class  Californians. Income taxes and sales tax pose greater political obstacles at the revision stage, and payroll taxes fund Medicare and Social Security to a large extent – therefore California would do well to look carefully at decreasing or putting property taxes on hold, until the pandemic lifts and normalcy has returned to some degree.

The California Legislature proposing tax deferments for a few months will not help the state if thousands of homeowners are about to be foreclosed on and evicted – hence paying no property taxes thereafter; as an example of non-taxation that the government will survive without for a year or two.  Putting property taxes on hold  would not trouble California in any meaningful way.

Certainly, lowering or removing property taxes is a logical solution for property owners who are in trouble all over the state. Insisting on all property taxes being paid no matter what is a poor answer right now, as long as the Covid crisis continues causing shutdowns, mass unemployment, widespread under-employment, and unprecedented health issues.

If pausing property taxes is not a realistic possibility, then the state government would be wise to spend more time and energy educating the public on property tax breaks that are available to them, such as how to still take advantage of Prop 58, as well as Proposition 13 and who, as well as how, folks can make use of Proposition 19. Communications on this to educate the public in California is not nearly as robust as it could be.

Increased, easy to understand information dissemination on Proposition 13 and Proposition 58, as well as Proposition 19 and parent to child property tax transfer on an inherited home.  This would help Californians take more advantage of sibling-to-sibling CA property transfer in conjunction with Prop 19; to become more familiar with parent-child transfer rights – taking advantage of every key property tax break… establishing an exemption from paying  current, property tax rates when inheriting or transferring a primary residence, within a 12-month period.

More residents should be exposed to information about getting a trust loan, to take advantage of a sibling-to-sibling CA property transfer in concert with Proposition 19, to be able to lock in a low Proposition 13 property tax base – buying out siblings’ inherited property tax shares without issues, plus equalizing distribution, in fact for more money than an outside buyer would offer, for heirs that want to sell their inherited property shares.

. All of these decreases would help California to assist residents in spending less on taxes, if not implementing a total hold on property taxes until the pandemic is completely under control and life returns to normal in California, and throughout America as a whole.

Keeping Your Parent’s Low Property Tax Base When Inheriting a Home

Keeping Your Parent’s Low Property Tax Base When Inheriting a Home

Keeping Your Parent’s Low Property Tax Base When Inheriting a Home

How to Keep Parents Property Taxes In 2021

What was once the parent-to-child property tax break called CA Proposition 58 has now morphed into a property tax relief measure to help avoid property reassessment, called CA Proposition 19… active as of Feb 16, 2021.  

Estate and trust lenders are accustomed to teaching beneficiaries and new homeowners freely, in unfettered fashion, how to keep parents property taxes with Proposition 13 or Proposition 58 property tax breaks. But they are still funding trusts with a loan to an irrevocable trust, and helping clients to establish a low property tax base, to avoid property reassessment… Property tax specialists like this are still helping beneficiaries buyout a sibling’s share of inherited property, through a trust loan – the transfer of property between siblings. 

Property tax relief experts are still showing beneficiaries how to keep parents property taxes on a property tax transfer, taking advantage of the parent-to-child transfer or parent-to-child exclusion (from current property tax rates); helping families inheriting a home to transfer parents property taxes when inheriting a home, and inheriting property taxes. 

Help From Experts  

Some California firms with property tax relief expertise have been encouraged to get creative, to meet new property tax challenges and obstacles head on.  Firms such as Michael Wyatt Consulting in Corona who specializes in base year value transfers and parent-child transfer exclusion; real estate issues and property tax relief; or well known trust lender and Prop 58 / Prop19 experts Commercial Loan Corp in Newport Beach, who specializes in irrevocable trust loans and lending.  This particular trust lender is now offering heirs and beneficiaries inheriting a home from parents a free consultation for property tax savings – to help beneficiaries inheriting a home from parents to keep the parents’ low Proposition 13 property tax base; while also taking full advantage of Proposition 19 and Proposition 58.

This type of evaluation for property tax savings is designed to simplify a relatively complex process, helping heirs evaluate the benefits of a loan to an irrevocable trust, specifically for beneficiaries who want to buyout siblings’ inherited property shares, while keeping inherited property at their parents’ low property tax rate – as well as avoiding costly expenses associated with selling property through a realtor.  

The name of the game is to simplify the use of Proposition 19, as well as the transaction between trust lender and beneficiary. A process that is often difficult for families to understand.

Inside View From an Account Manager’s Perspective

One such seasoned proponent of simplification of the Proposition 58,  trust loan process is a highly experienced account manager by the name of Tanis Alonso – a particularly hard working, dedicated senior manager, who works closely with her clients, and frequently their estate lawyer or accountant.

In a recent interview with this blog Miss Alonso described her unique personal approach to planning and implementing estate & trust loans for families; how property tax saving trust loans and Proposition 58 tax breaks factor into her family undertakings and financial proceedings, Miss Alonso tells this blog:

We don’t view each trust loan scenario as simply a ‘financial transaction.’ Nor do we see the home they’ve lived in for decades as just a ‘piece of real estate’. To us, this a ‘piece of family history’ in the making. And the process a ‘family decision,’ not a ‘transaction’…

Let’s say a property value is currently one million dollars and the current tax base is $1,200. If they were to get reassessed at current value that would be around $11,000 annually. By someone keeping the property and obtaining a trust loan to properly buy out their siblings that allows the beneficiary that is keeping the property to keep parents property taxes, to retain 100% of the Proposition 13 tax base that was paid by their parents and keep that low property tax base of $1,200.

This of course creates much greater affordability than if they were to improperly buy out their siblings and have that property reassessed. The loan to trust goes hand in hand with the Proposition 58 property tax transfer system, creating enough liquidity to equalize distributions, not sell, and allow a beneficiary to keep their parents property with their low property tax base.

Feedback From A Seasoned Property Tax Consultant

The other example we mentioned, Michael Wyatt Consulting, works in conjunction with real estate attorneys and frequently a trust lender, and formally reviews clients’ real estate values. The firm studies and forms strategy for proposed real estate transactions; ensuring avoidance of property tax assessment.

Mr. Wyatt conducts comprehensive research on real property, real estate deeds, and other instruments for accuracy; and serves as a liaison between clients and the Tax Assessor’s Office – maintaining problem-free communications with Assessors and other essential local government agencies. Mr. Wyatt explains:

We let our clients know the Proposition 58 [or Proposition 19] tax benefit entitles children of parents leaving them property to preserve the low Proposition 13 maximum 2% tax base. A California property tax transfer. However, a lot of people don’t fully understand that you have to apply for the benefit. It’s not automatic. And it doesn’t apply to the principal home. explain to them that they get the assessed value tax benefit only if it’s a non principal home. You get the assessed value waved if for example it‘s a million dollar property… You get the million excluded – but the overage is reassessed… A lot of people don’t know that.

The creators of the trust get this benefit. definition of ‘a child’ or “children” is typically the adult children of a decedent…But this also refers to step-parents. Step-parents can also transfer property to a step-child… Mom can be a step parent and can still get the benefit. In-laws get the benefit as well. You don’t have to be blood relatives.

We basically introduce the trust lender, for example Commercial Loan Corporation, as a private money lender that loans to irrevocable trusts, that applies for and works in tandem with California Proposition 58 [or Proposition 19]… for beneficiaries who are looking to sell their real property shares – for the purpose of facilitating “non pro-rata distribution”… So every heir gets an equal share of the entire overall estate – however, not necessarily of every asset.

Well, if the family in question uses the Commercial Loan Corp company that 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.  Well, for example, there might be three siblings… beneficiaries – and a house to inherit. And this is always important to remember.

If you’re one out of the three siblings that wants to keep the inherited house, you are definitely looking at a 66.66% property value tax reassessment – if you’re operating without a loan to a trust, or you’re using your own cash; or getting money from a very pricey institutional lender – typically with multiple restrictions and extremely strict terms.”

Mr. Wyatt sums up and simplifies a process that tends to look complicated to new clients.  At the end of the day, all families need to understand is the fact that in the end, they save a great deal of money on property taxes if they aim to keep their parent’s home.  If they are looking to sell, they simply need to understand that they will be putting lot more cash in their pocket  using the trust loan approach, rather than selling to an outside buyer.  Everything else is secondary, if you are inheriting property.

If you are interested in finding out how much you might be able to save by keeping a parents low Prop 13 property tax base on an inherited home, we suggest you contact Commercial Loan Corporation at 877-756-4454. They will provide you with a free estimate on what your annual property tax savings will be and provide you with information on the Proposition 19 process.  They can even put you in contact with a trust and estate attorney in your area if needed.

Strengthening Proposition 19 Property Tax Relief During a Pandemic

California Prop 19 Property Tax Transfer

California Prop 19 Property Tax Transfer

In the midst of a relentless Pandemic, causing untold economic carnage, unemployment and financial damage  to middle class Californians, it would be advisable for the state to provide middle income and working class residents with the ability to not only make more money, if that were to be possible,  but to be able to spend less.

One proposed solution to accomplish this – proposed by respected real estate analysts and property tax consultants – would be expanded property tax relief; despite certain limitations and obstructions from special-interest groups and changes to Proposition 58.   Proposition 19 property tax breaks should most likely be strengthened in favor of property owners, with a robust initiative led by the Governor – rather than an unhelpful deferred property tax payment plan, such as he has already suggested.

Forward thinking tax consultants such as property tax consultant, Proposition 13 specialist, Michael Wyatt Consulting have proposed property tax breaks that save homeowners, commercial property owners, and beneficiaries inheriting property more money from property tax breaks than are currently in place.   

Well known Trust and Estate Lender  Commercial Loan Corp, furnish trust beneficiaries with irrevocable trust loans, working in conjunction with Proposition 19 benefits, can establish a low Proposition 13 property tax base for homeowners, and save inheritors thousands of dollars every year in property taxes.

These property tax reduction measures – as long as homeowners make good use of them and keep inherited property, or allow other siblings or co-beneficiaries to buyout their shares  of inherited property through a trust loan working with Prop 58 tax breaks – will avoid property tax reassessment.  This process will, in fact, create a low property tax base for the singular owner or owners of this shared inherited property.  And there indeed is one solution to enable homeowners to spend less.  

This helps middle class property owners and working families to not only spend less, but also to retain more cash in  their bank and investment accounts. Most importantly, this type of trust loan financing also helps trustees and beneficiaries resolve disputes  over assessor stated property values – as well as resolving often heated conflicts over whether they should sell to an outside buyer, or profit more by allowing a co-beneficiary to buyout their property shares while avoiding property tax reassessment of this family property altogether. As realtors call it, “transfer of property between siblings” or “sibling to sibling property transfer” – lending money to an irrevocable trust, for trust loan financing  – can resolve various squabbles and infra-family problems between estate heirs and trust beneficiaries. 

Noted originator of trust loan financing, Commercial Loan Corp President Kerry Smith; and other outspoken supporters of property tax breaks for the middle classes, such as Property Tax Relief Consultant Michael Wyatt,  Jon Coupal, President of the Howard Jarvis Taxpayers’ Association; and Paramount Property Tax Appeal President Wes Nichols, have all stated, repeatedly, that Proposition 13 and Prop 58 should be better protected and expanded; That Proposition 19 should be expanded to better serve homeowners; and at the same time strengthened in the courts so Amendments that can potentially wipe out property tax breaks like Proposition 58 for example, in a single vote, will be impossible to advance without a great deal of trouble and expense.

California, since 1978, is the only state where you can avoid property tax reassessment at current rates; but the state does need to better protect, not water down, residents’ property tax relief options; to keep parents property taxes… and to transfer parents property taxes as well as inheriting property taxes at a low base rate for even a secondary inherited property.

Avoiding property tax reassessment is a crucial tax relief element, and therefore should be better  protected, for new homeowners and beneficiaries inheriting a home and/or buying out a sibling’s share of inherited property   the transfer of property between siblings, sibling to sibling property transfer, the right to transfer parents property taxes when inheriting property taxes – so beneficiaries can keep parents property taxes at its’ original low base rate… which applies to every  property tax transfer,  meaning every parent to child transfer and family parent to child exclusion.

Helpful information on Proposition 13 & Prop 58 as well as property tax appeals and property tax reduction solutions can be found at niche Websites like the CA State Board of Equalization and here at Property Tax News.  Or look carefully at various sections and articles at Loan to a Trust or at  detailed, more sophisticated trust loan info-websites.  Every property owner should know what’s involved with inheriting property taxes at a low rate, or a beneficiary buyout of sibling property shares, or “transfer of property between siblings” – with new, revised Proposition 19 basic property tax relief opportunities that are available to Californians, come rain or shine.

Beneficiary Property Disputes Resolved by Loans to Irrevocable Trusts

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 Michael Wyatt Consulting, or 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.

Is a Parent to Child Transfer Still Relevant for CA Beneficiaries & Homeowners?

Parent to Child Property Tax Transfer

Parent to Child Property Tax Transfer

In a Pandemic depressed economy, with a tsunami of unemployed and under-employed workers floating around in every state… it’s obvious that middle class working  families need to save more… and spend less – on items not classified as necessary for survival.  Property taxes being one of those sort of artificial expenses imposed on citizens by the government.

One solution for this dilemma is property tax relief, which we talk about at length on this blog.  Why not institute genuine property tax relief, not tax deferment as the state government has suggested, moving payment dates around.  Clearly ineffective in a crisis like the one we’re in right now.  California needs expanded property tax relief that’s even more wide reaching than  what we have now.  

We should be building on what we already have – not watering it down!  Despite property tax breaks that no other state has, California could use expanded tax breaks from Proposition 19, to help homeowners establish an even lower property  tax base, saving residents even more during  a crisis like the pandemic we’re in right now.  With an even greater ability to resolve inherited property conflicts between beneficiaries as well. 

In other words, a beneficiary buyout of co-beneficiary property shares, while avoiding property tax reassessment, can be re-drawn so there is no 12-month deadline for beneficiaries to follow… Plus the ability to avoid property tax reassessment on certain investment properties that have revenue potential. 

Residents need more opportunities in a depressed economy like we’re in now to drive revenue, not less.  Solutions like inheriting property taxes in California 2021 need to be expanded statewide, and legally strengthened. Solutions and firms like that will help beneficiaries & homeowners buyout a sibling’s share of an inherited home as an investment property to rent out, not just to live in as a primary residence.

Every property owner should understand the details underlying Prop 19, and know what’s involved with a beneficiary buyout of sibling property shares, or “transfer of property between siblings”, and “lending money to an irrevocable trust“ – from an irrevocable trust lender.  Every California homeowner and beneficiary inheriting property should know how a sibling to sibling property transfer works; keeping yearly taxes on property at parents low rates; and inheriting property taxes in California 2021.

Only California allows this, so it’s worth taking a closer look, and taking full advantage of.  Take a look at the site managed by CA State Board of Equalization, at and research property tax breaks  and Proposition 19 property tax relief revisions at Loan to a Trust  and read up on updates to Proposition 19 at this blog, Property Tax News.    There are also property tax consultants to learn from  such as  property tax specialist Michael Wyatt Consulting who are experts at property tax breaks that save homeowners, commercial property owners, and beneficiaries inheriting property thousands of dollars if not tens of thousands of dollars every year.   

The well known president of Commercial Loan Corp, Kerry Smith is another expert to learn from, or to receive a trust loan from, if the need is there.  Trust and Estate Loans is another source of excellent material, if you want to learn more about establishing a low base property tax rate through a trust loan, and Californians ability to execute a transfer of parents’ property and transfer of parents property taxes when inheriting parents property and inheriting property taxes during a property tax transfer with your parents’ low property tax base. If you’re going to own property in California, it’s worth it to know about your ability to avoid property tax reassessment, and to keep parents property taxes.  Well worth it!  

The Affect of Prop 19 on the Housing Market & Working Families in California

California Proposition 19 Property Tax Assistance

California Proposition 19 Property Tax Assistance

Jeanne Radsick, president of The Realtors Group, said recently:  “it’s vital  for homeowners who may be empty-nesters or who are looking to move for health reasons to have more options.  And if they can maintain  stable tax basis, they can live a similar life.  There’s not enough senior housing to accommodate older folks otherwise.”

Still, beneficiaries of Proposition 19 are those who already benefited the most under the state’s existing property tax laws.  Homeowners 55 and older in California are more likely to be older and not poor.  Although, an analysis of Proposition 19 by the California Budget and Policy Center, has some interesting things to say. They are a non-profit that is an advocate for working families and lower-income Californians…. 

At any rate,  their analysis tells us that homeowners in California tend to be more white and wealthier and older.  They seem to be forgetting that homeowners  also happen to be middle class and blue collar; but the study ignores the fact that middle class and working families are the principle users of Proposition 13, Proposition 58 and now of course Prop 19 exclusion for reassessment of property taxes.  Although, the real estate industry does i fact stand to benefit from the increase in home sales that is expected as a result of the Prop 19 measure.  But there’s nothing we can do about it, so we may as well focus on what we can do to lower property taxes.

However. Property tax relief is not chiefly for wealthy Californians nor was it meant for them.  In fact if you crunch the numbers without bias, the high volume of beneficiaries using trust loans to buyout siblings, establishing a low property tax base; while using the parent to child exclusion to avoid property tax reassessment… are mostly middle class.  Not millionaires. We don’t quite follow why they keep making that argument.  Millionaires surely aren’t the only folks interested in Proposition 13 and Prop 58, property tax transfer, or rather the ability to  transfer parents property taxes, to keep parents property taxes while inheriting property taxes during a parent to child transfer, or parent to child exclusion. 

We certainly see more working families and upper middle class families buying out a siblings’ share of a mutually inherited home, than we do corporate CEOs. Another key Proposition 58 benefit… allowing for the exclusion for reassessment of property taxes on transfers between parents and children. Not just for rich people!

Ms. Radsick said that protecting Realtors’ interests was not a driving force behind the push for Proposition 19.  “It is not about making money for the Realtors, for crying out loud,” she said. “It’s about tax fairness for people who need help.”  We need to sit back and really ponder that statement.

Liam Dillon at the Los Angeles Times had some interesting views on the   evolving property tax breaks available to Californians.  He writes:  “The biggest winners under Proposition 19 would be homeowners 55 and older who would pay lower property taxes when moving to a new, more expensive residence.  Currently, homeowners who are 55 or older have a one-time opportunity to retain their existing tax benefits if they move to a home of equal or lesser value within the same county. They can do the same when moving between Los Angeles and nine other counties.

Mr. Dillon goes on to say:  “Proposition 19 would further ease the tax burden by allowing the same group of senior homeowners to blend the taxable value of their old house with the purchase price of a new, more expensive home, reducing the property tax payment they’d otherwise face.   Disabled homeowners would receive the benefit as well. The rules under Proposition 19 would extend to every county in the state, and homeowners could take advantage of the break as many as three times when they decide to move.”

The downside, from our viewpoint, is the fact that given higher property taxes, using  inherited homes as rental properties may soon become unprofitable, without raising rents significantly… and that is not likely to be an effective long-terms solution. The fact of the matter is, these new property tax laws may encourage a lot of residents to sell properties they own, that they intended to leave to their heirs. Hence, realtors and brokers make more money, and that was one intention right from the beginning for Prop 19.

The concern surfacing among analysts revolves around the possibility of important companies leaving California for more business-friendly, lower-taxed states, taking their jobs with them.  As well as young white collar folks in their 20s and 30s, seeking more affordable property to settle into in nearby states; with a new job; focused on raising a family where they won’t get blasted every year with super high property taxes and income taxes, along with a high cost of living.

But, on the other hand… Higher property taxes or not, California will always be an attractive place to live.  There is still exclusion for reassessment of property taxes; there is still sunshine 12 months per year, an ocean nearby, convenient cities and beautiful rural areas 30 minutes away. And you can always find a good deal on most things, if you look for it.  People are always going to want to live in California.

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

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

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…