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…

Will California Prop 58 Tax Breaks Survive Proposition 19?

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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.

Loans to Irrevocable Trusts

Loans to Irrevocable Trusts

Loans to Irrevocable Trusts

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

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

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

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

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

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

A Trust Loan Solution to Family Conflicts

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

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

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

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

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

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

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

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

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

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

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

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

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