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.

Commercial Loan Corporation Welcomes Tanis Alonso

Tanis Alonso - Account Executive At Commercial Loan Corporation

Tanis Alonso – Account Executive At Commercial Loan Corporation

Commercial Loan Corporation welcomes Tanis Alonso, Account Executive for our Trust & Estate Bridge Loan Department.

Commercial Loan Corporation is very excited to welcome Tanis Alonso as the latest addition to our team! Tanis is an Account Executive in our Trust & Estate Bridge Loan Department. Her primary role is to assist clients, attorneys, trust administrators, paralegals and fiduciaries in obtaining short term bridge loan financing for beneficiaries and heirs that want to take advantage of Proposition 58’s exclusion from property tax reassessment to preserve a parents low Proposition 13 tax base on inherited property.

Tanis Alonso:

“My commitment to my clients is that i will always put your needs first! You can expect 100% transparency from me and i will always look out for your best interest.

Prior to joining the Commercial Loan Corporation team, I attended California State University, Fullerton for Business Management.  I obtained my Real Estate license in 2005, but continued down the path of Restaurant Management advancing into a Customer Service Specialist and Developmental Training Manager. I have a passion for taking care of others, am very detail oriented and have a do whatever it takes mentality.

Outside of work, I like to spend my free time with my family and volunteering with various organizations. My favorite thing to do is take my dog Beau to the dog park so he can play with all his friends.

I am beyond excited to start a new journey with Commercial Loan Corporation and to be working alongside a group of individuals with the upmost integrity and expertise.”

Contact Information For Tanis Alonso:

Tanis Alonso, Account Executive for the Trust & Estate Bridge Loan Department can be reached at 714-442-8995 or by email at talonso@cloanc.com. If you are interested in more information on our Private Money Bridge Loans for Trusts & Estates, please call Tanis or complete the short form located here. For immediate assistance from any member of the Bridge Loan department, please call us at 877-464-1066.

For additional information on our bridge loans that assist clients who are inheriting real estate from a parent and want to keep the existing low property tax payment, please click here.

Residential Property Tax Specialists

California Residential Property Tax Specialist, Proposition 13 and Proposition 58

California Residential Property Tax Specialists

The Importance Of Working With A Residential Property Tax Specialist

Working with the right business professionals can make all the difference. When it comes time to secure a Proposition 58 Exclusion From Property Tax Reassessment, through Prop 58, that could not be more true. The process of obtaining your exclusion from property tax reassessment can be littered with pitfalls. Even just one small mistake can be the difference between obtaining an exclusion or not. Retaining a Parent’s or Grandparent’s low Proposition 13 property tax rate can save you potentially thousands of dollars each year. That is why it is important to have a good Private Money Lender, Attorney and or California Property Tax Specialist on your side to help guide you.

When providing clients with a third party loan to a trust, we always recommend that they work with either a Trust & Estate Attorney, Qualified Trust Administrator and or a Property Tax Specialist. Attorneys and Residential Property Tax Specialists provide different services. Some California Residential Property Tax Consultants specialize in assisting clients in obtaining a Proposition 58 exclusion from property tax reassessment. Their expertise in these matters can be invaluable. The best of them even have experience working for the County as a Property Tax Assessor. This gives them a great deal of insight into what the assessors office will need in order to grant your exclusion. It can be especially helpful in complex situations where time is of the essence. In California, you only have three years to file for the exclusion from property tax reassessment. A long process can also delay the distribution of a trust in some cases.

The complexities of obtaining an exclusion from property tax reassessment should not be understated. Unless you deal with California’s Proposition 58 Exclusions From Property Tax Reassessments on a regular basis, it can be difficult to avoid mishaps.  Here are just a few examples of issues that a qualified California Property Tax Consultant can assist you with.

Common Proposition 58 Exclusion From Property Tax Reassessment Mistakes:

Not conducting the 3rd party financing properly and causing a property tax reassessment to occur.

Not keeping track of each eligible transferor’s $1 million limit; thereby exceeding the $1 million limit and triggering a reassessment for the overage.

Avoiding situations where an acquiring beneficiary lends money to the trust when funds are needed to make an even distribution. The California Board of Equalization views this as a child buying out another child as opposed to a parent to child transfer. The exclusion for reassessment requires a transfer from parent to child.

These are just a few examples of circumstances where a California Property Tax Specialist can assist you. If you are in need of a third party loan for a trust, a qualified Trust & Estate Attorney or a Property Tax Consultant referral, please call us at 877-464-1066 so that we may assist you.

If you are a California Trust & Estate Attorney, Probate Attorney, Fiduciary, Estate Planner, CPA, Wealth Manager or Property Tax Specialist and would like to be added to our list of Trust & Estate Professionals, please use the following link to apply to become a Commercial Loan Corporation recommend Trust & Estate Professional. Credentials will be reviewed and verified.

Trust & Estate Professionals Link

 

Trust & Estate Professionals