Information on California Proposition 58 & Avoiding Property Reassessment

California Proposition 58 Avoiding Property Tax Reassessment

California Proposition 58 Avoiding Property Tax Reassessment – Call 877-464-1066 For Assistance

California Proposition 58 Property Transfer & Avoiding Reassessment

California Proposition 58 provides California property owners with the ability to transfer real estate and a low property tax base between a parent and child. There are requirements to qualify for the benefits of Prop 58 and limitations to the benefits granted. Thanks to the assistance of Michael Wyatt who worked in the Orange County Tax Assessors office for nearly 25 years, we have compiled a list of some of the most common mistakes made when filing for an exclusion from property value reassessment and misconceptions about how California’s Proposition 58’s Parent to Child Transfer works. The following information is not legal advice. Every situation is different and we highly recommend that you contact an attorney or property tax consultant before taking any action. If you require assistance, please call us at 877-484-1066 and we can place you in contact with a qualified party to help you.

Commercial Loan Corporation is one of only a few California lenders in existence that provides loans and mortgages to trusts and estates. These trust loans allow for a Proposition 58 parent to child transfer to be granted by providing the cash needed for the trust to make an equal distribution to all beneficiaries.  If you would like more information on our trust and estate loan programs, please call us at 877-464-1066 and we can answer any questions you may have and also provide you with a free Trust Loan Benefit Proposal. The proposal will calculate how much you may be able to save by taking advantage of the California Proposition 58 Parent to Child Exclusion for Property Tax Reassessment.

Proposition 58 Parent to Child Transfer Most Common Mistakes 

1. Filing a claim for an exclusion from property tax reassessment too late

Filing for a Proposition 58 exclusion from property reassessment is time sensitive and may be an urgent matter. You have three years; or six months from a Supplemental Notice of Assessment or Escape Assessment. If you have exceeded this time frame you may still be able to petition for your benefits.

2. Not keeping track of each “eligible transferor’s” $1 million limit

Exceeding the $1 million limit can trigger a tax reassessment on a property. The million dollar limit is associated with the transferor and not with the property.

3. A parent owns a home. He or She creates an LLC in which the parent and his/her two children equally own 33.33% of the LLC. He or She then transfers the real property to the LLC.

The California Board of Equalization has very specific requirements for how the transfer of real estate must occur and the order it must occur in if a parent to child exclusion is to be granted. In this situation the parent must first add the children on to title and then apply for the parent to child exclusion prior to placing the home into the LLC. Before proceeding with a property transfer it is recommended that you contact a Property Tax Consultant such as Michael Wyatt if you have any questions or concerns regarding your Proposition 58 Parent to Child transfer eligibility and to make sure that it is not jeopardized.

4. Filing a claim where the transferred property will be assessed at its current market value where its market value had fallen below the transferor’s original Proposition 13 factored base year value.

It is very rare in California, but in some extreme situations of declining property value, it may not be of benefit to file for an exclusion from property reassessment. Call us at 877-464-1066 and we can help you determine if filing for your Property 58 exclusion or taking out a trust loan is beneficial for you and how much you may be eligible to save in property taxes.

5. A person over 55 sells his/her long-time original residence to his child. He/she first applies for and is granted the Parent-Child Exclusion. He/she then buys a replacement residence and applies to transfer the base year value under Proposition 60 to his or her replacement property.

After transferring an interest in the property to the child, the parent is no longer eligible to qualify for the California Proposition 60 benefit. California Proposition 60 requires that the original residence must be “sold” to qualify. By previously qualifying for the Prop. 58, the property is viewed as a transfer and not as a sale of the original residence.

6. A person owns several low-value small condominiums. He or she also owns several high-value apartment complexes. He or she transfers these condominiums to a child and applies for and is granted the Parent-Child Exclusion, thereby reducing the $1 million limit for the apartment complexes.

California Proposition 58 limits how much real estate can be transferred from a parent to child while still avoiding reassessment. In a complicated situation where several pieces of real estate are involved with multiple child beneficiaries; it may make sense to consult a property tax consultant. Doing so may help you maximize the benefit received from a parent to child transfer while adhering to the Proposition 58 transfer limits.

7. Two parents own real estate through the medium of their trust. The father dies in 1995. The mother dies in November 2017. The successor trustee files the Parent-Child Exclusion claim, and only reports the mother’s $1 million. The trustee forgets to also include and report the father’s $1 million, to get a total of $2 million.

California Proposition 58 permits each parent with property ownership to transfer $1 million in property value, allowing their child beneficiary to avoid property tax reassessment.

8. A trust agreement specifies that after a mother passes away, her trust shares are to be distributed equally to her three children, A, B, and C. The children decide that A is to get the real property, and B & C wish to get cash, but the trust does not have equal portions of real estate and cash for each child. The children contact a conventional institutional lender. The loan officer says they don’t lend to a trust. The loan officer advises the family to first take the real property out of the trust. The lender will then loan money to A so that B & C can receive cash.

Once the property is taken out of the trust, the distribution has been made with out an equal distribution occurring and child A will only be eligible for a 33% exclusion. In order to get the full exclusion, a 3rd party loan must be made directly to the trust with no personal guarantee from a beneficiary. Once the trust has received the funds from the loan, an equal distribution of equity in the real estate to child A and cash to child B & C can be made allowing for a 100% exclusion. Commercial Loan Corporation is one of just a few California lenders that will lend directly to a trust with no personal guarantee from a beneficiary, allowing a child inheriting a property to qualify fro a Proposition 58 exclusion from reassessment and keeping a parents low Proposition 13 property tax base.

9. Sending an incomplete request package to the Assessor, delaying the granting of Parent-Child benefit.

Depending on the complexity of the trust or estate, the County may require a variety of supporting documentation in order to grant a Proposition 58 parent to child transfer property tax exclusion for reassessment. If the submitted package is incomplete or not filed correctly, the request will be rejected. We advise that you contact a California Property Tax Consultant such as Michael Wyatt or an Attorney if you are unsure if you are filing the request properly. Call us at 877-464-1066 and we can put you in contact with a qualified attorney or property tax consultant to assist you.

10. Failing to included subsequent amendments and restatements along with a copy of the trust when submitting your request for a California Proposition 58 parent to child transfer exclusion.

When submitting trust documentation to the County, it is important to include the entire set of trust documents. Not including any existing amendments or restatements may result in a rejection of the request.

11. Not including a copy of death certificate for one of children/heirs listed in the trust agreement who has passed away prior to distribution.

When submitting documentation to the County for an exclusion from reassessment, it is important to include supporting documents as well. The County will require evidence to support the claims made in the request form. Some of these documents may include death certificates, evidence of a third party loan and trust documentation.

If you have any questions or require assistance, please call us at 877-464-1066 and we will do our best to assist you!

Additional information on California Proposition 58 can be viewed here:
California Proposition 58 Information

 

Join Us At The Orange County Estate Planning Council March 26th Event

Orange County Estate Planning Event

Orange County Estate Planning Event

Orange County Estate Planning Council Event

Commercial Loan Corporation is the featured sponsor for tonight’s Orange County Estate Planning Council Event. Mike Riggs and Tanis Alonso will be on hand to answer finance related questions pertaining to California Proposition 58, Parent to Child Real Estate Transfers, Trust Loans, and avoiding property tax reassessment on an inherited property.  Tonight’s Estate Planning council is focusing on INGs and Spousal Lifetime Access Non-Grantor Trusts (SLANTs) PLUS IRC 678 and the Beneficiary Deemed Owner Trust. The event will be from 4:30pm – 8:00pm at the Santa Ana Country Club in Santa Ana, Ca. Tonight’s Orange County Estate Planning Council speaker is Edwin Morrow from US Bank Private Wealth Management.

The presentation will be focusing on INGs and Spousal Lifetime Access Non-Grantor Trusts (SLANTs) – Not Just for State Income Tax Avoidance: How “INGs” and “SLANTs” Can Save State Income Taxes and Why Tax Reform Makes Them Even More Powerful. This segment of the presentation will be from 4:30 to 5:30 PM . IRC 678 and the Beneficiary Deemed Owner Trust will be presented from 7PM to 8 PM focusing on income tax benefits of such trusts include much simpler tax reporting, lower tax brackets, capital gains tax exclusions for residences, much more favorable Section 179 expensing, disregarded transactions, firmer S corporation status, charitable deductions for business income, more favorable life insurance and annuity rules, better treatment for capital losses, and many more benefits often overlooked. Asset protection for such trusts, while seemingly substandard, is hardly a disaster. Any ill effects of a withdrawal power can not only be counteracted but even turned into an advantage over other trust designs. A 50-state comparison chart will be included which summarizes the various state asset protection statutes and law around powers of withdrawal and lapses. 
Both of these presentations qualify for 1-hour of CE for MCLE, CPA, Professional Fiduciary and Trust Officers.

For additional information please visit the Orange County Estate Planning Council website at: http://www.orangecountyepc.org/

We Make Loans To Irrevocable Trusts Easy

California Lender for Loans to Irrevocable Trusts - The Cash You Need To Distribute A Trust

Commercial Loan Corporation is a California Lender specializing in Loans to Irrevocable Trusts. We lend the cash you need to distribute a trust and receive your proposition 58 exclusion from property tax reassessment on an inherited home.

Loans to Irrevocable Trusts in California

When it comes time to distribute an irrevocable trust and funds are needed to make an equal distribution, you will find that most lenders are unwilling to lend on real estate that is held in a trust. This becomes extremely problematic if you plan on filing for a California Proposition 58 exclusion from property tax reassessment on real estate being inherited from a parent.

One of the requirements to qualify for an exclusion from property reassessment is for the trust to make an equal distribution of the trust assets to all child beneficiaries. Often times that is not possible to do if one of the trust assets is an expensive piece of California real estate. In the situation where a home is creating an unequal trust distribution, a mortgage or third party loan must be taken out to infuse the trust with enough cash so that the equal distribution can be made. That way one child receives the encumbered property while others receive cash and or other assets, equalizing the distribution of the trust. The state does not allow for the acquiring beneficiary to use their own funds to equalize the distribution. Doing so would create a sibling to sibling buyout and make the beneficiary ineligible for an exclusion from reassessment. That is why a third party loan is required. The problem is that most California lenders will require that the property be removed from the trust in order to lend on the home. Unfortunately, once that is done, you have jeopardized your ability to qualify for the Prop 58 property tax reassessment exclusion since the assets of the trust were distributed unevenly at that point.

The solution is to have a mortgage placed on the home while the property is still held in the irrevocable trust. That is where Commercial Loan Corporation comes in. We are a leading California lender of mortgages for homes held in an irrevocable trust. What makes us unique is that we lend to the trust as opposed to a beneficiary; allowing the beneficiary to qualify for the California Proposition 58 exclusion from property tax reassessment on a home inherited from a parent.

If you, a client, or someone that you know is in need of a loan to a trust, please have them call us at 877-464-1066. We specialize in the process and can answer any questions that they may have. We can also provide them with a free loan benefit proposal. The proposal compares the cost of the trust loan to the benefits received from a Prop 58 parent to child property transfer, ensuring that the trust loan is beneficial.  We can also determine how much additional funds you would receive by maximizing your trust distribution. On average we help clients distribute an additional $42,000 to beneficiaries my maximizing their trust distribution.

Call Us At 877-464-1066

Congratulations Autumn!

Autumn Skerritt - Commercial Loan Corporation Operations Manager

Autumn Skerritt – Commercial Loan Corporation Operations Manager

Congratulations Autumn!

As is typical with Autumn Skerritt our Operations Manager; she went above and beyond when it came to meeting the expectations of a client! If fact, the client was so appreciative of Autumn, she sent her a bouquet of flowers and a very thoughtful card to thank her!

Autumn assisted her client in processing a complex trust loan where an old lien needed to be cleared from title before the loan could close. She helped the client make an equal distribution on their trust. This allowed them to preserve their parents property tax base on the inherited home, saving them thousands of dollars each year in property taxes. Autumn stayed in contact with the client throughout the entire trust loan process and did everything she could to help them close as quickly as possible! Her hard word and dedication to her clients needs sets her apart from other people in the industry. Those are just a few of the qualities that makes Autumn such a a pleasure for her clients and coworkers to work with.

Thank you for everything that you do for your clients and our company Autumn!

California NAELA 2019 Summit San Francisco

Trust Loans Booth at the California NAELA Joint Chapters 2019 Summit

Trust Loans Booth at the California NAELA Joint Chapters 2019 Summit in San Francisco

Loans to Trusts & Estates

Mike Riggs, Senior Account Executive for Commercial Loan Corporation is attending this years California NAELA Joint Chapters 2019 Summit in San Francisco. If you are an attendee and have any questions on our California Proposition 58 safe loans for Trusts & Estates, please visit Mike at our booth. He can review our Trust Loan Benefit Calculator with you and determine if a trust loan makes sense for your client.  As you can see from the sign in the photo above, on average we save our clients $6,200 per year in property taxes by helping them qualify for a parent to child transfer and exclusion from property reassessment.

If you are not attending the California NAELA 2019 Summit, but would like more information on our Proposition 58 third party loans to trust and estates, or would like information on maximizing your trust distribution; please call us at 877-464-1066. We can answer any questions that you might have provide you with a free benefit analysis. On average we help clients distribute an additional $41,000 in proceeds to beneficiaries!

Call Us At 877-464-1066 For Trust Loan Information

Avoid Property Tax Reassessment On An Inherited Home

Avoid Property Tax Reassessment With California Proposition 58

Avoid Property Tax Reassessment On A Home Your Inherit From Your Parents

How to avoid property tax reassessment on a home you inherit from your mother or father in California

One of the biggest mistakes that most Californians make when inheriting real estate from a parent is not taking advantage of California Prop 58. In fact even some Estate Planners, Attorneys and Fiduciaries do not fully understand the full benefits and how to navigate Proposition 58. California Proposition 58 provides Californians with the ability to avoid property reassessment when inheriting a home from a parent.

Why is Proposition 58 and the ability to avoid property tax reassessment so important?

Avoiding property reassessment means you assume the existing property tax valuation that your parent had. With how rapidly property values have appreciated in California over the last 50 years, avoiding reassessment can mean an enormous tax savings. For instance, lets say that your parents purchased their home in 1980 for $180,000. Because of California Proposition 13, the county can not reassess a home more than 2% per year while held by the same owner. For this example we will estimate the county has the home you are inheriting assessed at $250,000. If the County property tax rate is 1.2%, that means the yearly property taxes on the home are just $3,000.

If you inherit the property from your parents, and you or your legal representation do not submit a request for an exclusion from reassessment and the home is currently valued at $1,250,000, your annual property taxes will jump to $15,000! That is a difference of $13,000 per year in property taxes that you could potentially be avoided. To compound the issue, property assessment values can be reassessed upwards by 2% annually. So the following year if that occurs, your property taxes will increase by another $300 as opposed to just $60 if you had received your exclusion from reassessment. Over 10 years that can really add up.

How can Commercial Loan Corporation help with Proposition 58 and an exclusion from Property Tax Reassessment?

California Proposition 58  has eligibility requirements. A process needs to be done correctly and proper documentation needs to be filed in order to receive and exclusion from property reassessment on a parent to child transfer of real estate. One of the stipulations is that when a parents home is held in a trust, an equal distribution of the trust assets must be made to qualify for Proposition 58. An important side note is that the beneficiary receiving the property can not use their own funds to create an equal distribution. If this is done, the assessors office views it as a property transfer between beneficiaries as opposed to a parent to child transfer, making it ineligible for a Proposition 58 exclusion from reassessment. Instead, the California Board of Equalization requires that a third party loan be used to provide the trust with sufficient cash for an equal distribution to be made. This information can be found on the California Board of Equalizations website at the following link that addresses questions and answers regarding California Proposition 58.

California Board of Equalization Website Information on Prop 58: BOE website document link

“When a trustee or estate administrator has the power to distribute trust assets on a pro rata or non-pro rata basis, the distribution of real property to one child  qualifies for the parent-child exclusion if the value of the property does not exceed that child’s interest in the total trust estate. A trustee who elects to make a non-pro rata distribution may equalize the value of the other beneficiaries’ interests in the trust assets by encumbering the real property with a loan and distributing the loan proceeds to the other beneficiaries. However, a loan cannot be made by any of the beneficiaries of the real property to the trust in order to equalize the trust interests. Such loan would be considered payment for the other beneficiaries’ interests in the real property resulting in a transfer between beneficiaries rather than a transfer from parent to child, which would disqualify the transfer from the parent-child exclusion.”

Commercial Loan Corporation is one of the only lenders in California that provides loans to trusts with out the requirement of a personal guarantee. This unique mortgage product allows an illiquid trust to become liquid and for the inheriting beneficiary to qualify for the benefits of Proposition 58 by meeting the parent to child transfer requirement. Unlike other lenders, we specialize in Proposition 58 loans. Our trust loan enables a beneficiary to encumber the inherited home and infuse the trust with the cash needed so that an equal distribution can be made and they can qualify for the parent-child exclusion and avoid a property tax reassessment with Proposition 58.

Call Us Today For Assistance

If you have any questions on the process of obtaining a loan for a property held in an irrevocable trust, please call us at 877-464-1066. One of our Proposition 58 loan specialists can answer any questions you may have. We can also provide you with a no cost trust loan benefit proposal. The proposal will show you how much you could save by optimizing your trust distribution. On average we save our clients over $6,000 per year in property taxes and $40,000 in additional distributions to beneficiaries. Let us help you avoid property tax reassessment!

Call 877-464-1066 or Click Here to request additional information.

Free Continuing Legal Education for Attorneys & Fiduciaries

Free Online Continuing Legal Education

Free Online Continuing Legal Education

Free Continuing Legal Education Online

Commercial Loan Corporation has partnered with Michael Wyatt to provide continuing legal education to Attorneys and Fiduciaries. Michael Wyatt is a California Property Tax Consultant with over 20 years of experience working in a California Tax Assessors Office. Commercial Loan Corporation is a California Lender that specializes in lending to Trusts and Estates. We are the leading provider of Mortgages to Real Estate held in a Trust to help clients retain a parents low property tax rate on an inherited home.

We are a licensed provider of continuing legal education for the state of California. Our course covers the pitfalls in change of ownership as well as third party loans to trusts and estates to facilitate an equal distribution and transfer of property tax base from a parent to child via an exclusion from property value reassessment. Even better, the course can be performed online and scheduled at a convenient time of your choice during the business hours of Mon-Fri 9am-4pm.

Presentation Name: A Jet Tour through the Mine Fields and Pitfalls of Change of Ownership for Trusts, Legal Entities, Estates and Probates
Credits:1 Hour MCLE

Please contact Tanis Alonso at 714-442-8995 or via email at talonso@cloanc.com and get signed up today!

How to keep a low property tax rate on a home your inherited from your parent in California.

How to keep a parents property tax rate on an inherited home.

How to keep a parents property tax rate on an inherited home.

KEEP A LOW PROPERTY TAX RATE ON AN INHERITED HOME

When inheriting a home from a parent or grandparent, California Proposition 58 may allow you to avoid a property tax reassessment. Taking advantage of this Proposition 58 provision can save you thousands of dollars each year in property taxes.  In fact, our average client saves over $6,000 a year in property taxes.

In order to avoid a property tax reassessment, certain procedures must be followed and documents must be properly submitted to the county tax assessors office. The process can be complicated. This is especially true when the property is held in a trust or when multiple siblings are inheriting property, money or other assets from a parent. An even distribution of assets is required to qualify and a beneficiary can not contribute their own funds to make an equal distribution. This is where Commercial Loan Corporation can help.  We are one of just a few California lenders who provide loans that will not jeopardize a Proposition 58 approval. We are able to lend directly to a trust and do not require a personal guarantee.

Commercial Loan Corporation has a track record of success. We work with a California Property Tax Consultant who has over 15 years of experience working in the California Tax Assessors office. With his assistance we can help you solve even the most challenging cases and help you avoid a property tax reassessment. Call us at 877-464-1066 and let us help you keep a low property tax rate on an inherited home.

CALL 877-464-1066 FOR A FREE CONSULTATION

Reverse Mortgage

Reverse Mortgage Loan

Reverse Mortgage

Reverse Mortgage

In addition to providing loans to trusts and estates in California, we also specializes in assisting clients with Reverse Mortgages. Reverse Mortgages are quickly becoming one of our most popular mortgage products. A Reverse Mortgage may be a great option for borrowers age 62 years and older who are looking for a more comfortable retirement. A reverse mortgage, also know as a  HECM or Home Equity Conversion Mortgage allows a borrower to convert the equity they have accumulated in their home into a stable income stream or pool of funds that they can draw from when needed. This can provide security and independence when it is most needed.

As more and more baby boomers enter into retirement, Reverse Mortgages loan programs have grown in popularity. A Reverse Mortgage can enable you to tap the equity in your home and make your retirement more comfortable. The proceeds from a Reverse Mortgage can be used to pay for medical care, delay or supplement Social Security and or have additional funds every month to make retirement more enjoyable.

Commercial Loan Corporation has made the Reverse Mortgage process easy!  Our qualified Reverse Mortgage specialists can answer any questions that you have and explain all of the options available to you in a no pressure environment. In some cases a Reverse Mortgage might not be your best option. We can provide you with the information needed to make an informed decision. Simply call us at 877-464-1066 so that we may assist you.  You may also request additional information on Reverse Mortgages online by filling out the form located here.

Call 877-464-1066 for assistance with a Reverse Mortgage