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.

California Private Money Lender

CALIFORNIA PRIVATE MONEY LENDER

CALIFORNIA PRIVATE MONEY LENDER

Bridge Loans For Trusts & Estates

When it comes to choosing a California Private Money Lender or California Hard Money Lender, you have a handful of options to choose from. Selecting the right one might be more important than you think.

Interest Rates, Penalties & Fees

For instance, choosing the best private mortgage lender can have a significant impact on your pocketbook. Lenders make money on a loan in a few different ways. The most common ways are through fees, interest rate premiums and penalties. One of the most important things that separates Commercial Loan Corporation from other California Private Money Lenders is that we do not charge any form of prepayment penalties, we offer competitive fees and have some of the lowest interest rates in the hard money lending marketplace. Prepayment penalties alone can cost a borrower potentially tens of thousands of dollars or even worse, trap them in a high interest rate loan that they no longer want or need!

Customer Service

Another important factor to consider when selecting the right private money lender is customer service. We are aware, that in this day and age, the phrase “Customer Service” almost sounds sarcastic. At Commercial Loan Corporation you are more than just a loan number. We might be a relatively small private money lender, but we are big on the customer experience. Regardless of your loan amount, you will always be treated with respect and courtesy by every member of our team. It is a sincere goal of ours to provide you with the fastest and best mortgage transaction that you have ever experienced. In many cases, we can fund a private money loan to a trust or estate in as little as 7 days. Please view some of our recent customer testimonials located here.

Experience

As you may be aware, in some situations California Proposition 58 grants residents the ability to transfer Real Estate along with a Proposition 13 protected property tax base from a parent to child. Sometimes in order to qualify for this exclusion against reassessment of property taxes, the beneficiary or heir may require a private money bridge loan or hard money loan. When it comes to Trust & Estate Bridge Loans and Third Party Private Money Loans to Trusts and Estates, experience with these types of loans is critical. The truth is that most California hard money lenders either never or rarely lend money to a trust or estate for Proposition 58 tax benefit purposes. If the financing is not conducted properly, the County Tax Assessors office is likely to reject the borrowers requests for a property tax reassessment exclusion. Even a small mistake could mean missing out on possibly thousands of dollars annually in property tax savings. At Commercial Loan Corporation, we specializes in providing short term financing and bridge loans to help our clients obtain Proposition 58 property tax reassessment exclusions. Every member of the Commercial Loan Corporation team has at least 15 years of mortgage experience and combined, our team has over 90 years of mortgage experience.

Commercial Loan Corporation is a Professional California Private Money Lender. Please call us at 877-464-1066 for assistance or click here to request additional information online.

Trust & Estate Loan Benefit Calculator

Trust and Estate Loan Benefit Calculator

Trust and Estate Loan Benefit Calculator

Trust & Estate Loan Calculator

Are you are considering taking out a third party loan in order to equalize a trust or estate distribution and take advantage of California’s Proposition 58’s exclusion for Property Tax Reassessment? The act of doing so has saved some of our clients thousands of dollars annually and in most situations it makes sense to do so if you plan on keeping the home for more than just a few years. To make sure that the loan is financially beneficial, it is important to compare the costs of the loan with the expected property tax savings. At Commercial Loan Corporation we do not want to provide a loan to a client if it is not in their best interest and that is why we have created the Trust & Estate Loan Benefit Calculator.

Our easy to use trust mortgage calculator only requires you to enter a few fields of information and then does the rest of the work for you! Simply input the current value of the property in question, the number of siblings who have an interest in the property, the existing low Proposition 13 protected property tax rate and your desired loan amount. From there we can estimate everything from your Prop 58 Property Tax Savings, your proposed loan costs and the time it will take you to recoup your loan expenses. Here is an example of what our easy to use Trust Loan Benefit Calculator looks like:

Trust Loan Calculators

Trust Loan Calculators

Try Out The Trust & Estate Loan Benefit Calculator

Our Trust & Estate Loan Benefit Calculator is free and easy to use. Click here to try it our for yourself. If you have any problems using the calculator, or have questions on trust or estate loans or would like to start the loan process, please call us at 877-464-1066. The Trust Loan Calculator is meant for estimation purposes only. When we speak with you, we will provide you with a detailed trust loan cost estimate and help you to determine you exact Proposition 58 property tax savings. Often times we are able to complete your trust loan process in under 10 days!