Property Taxes In California

How to Transfer a Parents Property Tax Base

How To Keep A Parents Low Property Tax Base On An Inherited Home

What is California  Proposition 13?

In the 1970s property tax hikes were completely out of control. Working class and middle class families were losing their homes because they could no longer afford to make their mortgage payments with the rapidly increasing property taxes factored in. California Proposition 13 changed all of that!

California Proposition 13, officially named the People’s Initiative to Limit Property Taxation, was amended the Constitution of California in 1978. The initiative was approved by California voters on June 6, 1978.  California Prop 13 states that the maximum amount of any ad valorem tax on real property shall not exceed one percent (1%) of the full cash value of such property. The one percent (1%) tax to be collected by the counties and apportioned according to law to the districts within the counties.

Additionally and perhaps most importantly, Proposition 13 decreased property taxes by assessing values at their 1976 value and restricted annual increases of assessed value to an inflation factor, not to exceed 2% per year. It also prohibits the reassessment of a new base year value except in cases of change in ownership or completion of new construction.

By making these changes to the California Constitution, Prop 13 stabilized property taxes for home owners. People were able to predict if home ownership was going to be affordable for them now and in the future. In situations of rapidly increasing property values, like we have experience in California over the last 50 years, people were no longer in jeopardy of losing their homes due to the inability to afford the increase in their property taxes.

What is California Proposition 58 – Parent to Child Property Tax Transfer?

As time passed a new issue made itself evident. When parents passed on the family home to children a change of ownership would occur and the child who inherited the home would have the property reassessed. In many situations, this property tax reassessment would make the home unaffordable and the child would have no option but to sell the family home.

On November 6, 1986,  California’s Proposition 58 granted Californians the ability to avoid property value reassessment on inherited real estate. With certain limitations, California Proposition 58 allowed for the exclusion for reassessment of property taxes on transfers between parents and children. Proposition 58 allows the new property owner to avoid property tax increases when acquiring property from their parents. The new owner’s taxes are instead calculated on the established Proposition 13 factored base year value, instead of the current market value when the property is acquired.

What is California Proposition 19?

On November 3, 2020, California voters approved Proposition 19. Prop 19, also known as the Home Protection for Seniors, Severely Disabled, Families and Victims of Wildfire or Natural Disasters Act made sweeping changes to a property owner’s ability to transfer their Proposition 13 Assessed Value and also replaced California Prop 58. The measure allows homeowners to transfers their assessed value in some situation and added new transfer provisions for victims of disasters and individuals severely handicapped. Prop 19 changed Prop 58 and limited the parent to child property tax transfer and exclusion for property tax reassessment to $1,000,000 in assessed value and to owner occupied properties. In order to receive your Prop 19 parent to child transfer benefit, the California Board of Equalization and the County Assessors Office has requirements on how the transfer is made.

Commercial Loan Corporation works with your Estate Attorney or California Property Tax Profession to help you qualify for your Prop 19 Parent to Child Transfer Benefit. We provide loans to Irrevocable Trusts and Probate; allowing for an equalized distribution to be made to all involved child beneficiaries without having a personal guarantee from the acquiring beneficiary.

Are you curious if you are eligible for the California Prop 19 Parent to Child Transfer Benefit or would like to learn more about it? We have helped hundreds of clients receive their benefit and on average save them over $6,500 per year in property taxes. Call us at 877-464-1066; we will answer all of your questions and let you know how much you may be able to save in property taxes on an inherited home.

Irrevocable Trust Loans

Lending to an Irrevocable Trust

Lending to an Irrevocable Trust

Commercial Loan Corporation is one of only a few California lenders that will lend directly to an irrevocable trust. So what is an irrevocable trust?

An irrevocable trust is a type of trust where its terms cannot be modified, amended or terminated under most conditions. Often times, an irrevocable trust will begin as a living trust and once the grantor passes, will turn into an irrevocable trust. An irrevocable trust designates a trustee and beneficiary(s). The trustee is the person who manages the trust and may also be one of the beneficiaries. An irrevocable trust is commonly used to pass assets to heirs while avoiding probate. When you transfer your assets into an irrevocable trust, you relinquish control of those assets. The trust becomes the owner of the assets at that point.

The reason why most lenders will not lend directly to an irrevocable trust is because the trust is the owner of the assets, as opposed to an individual. This become important when a child is inheriting a home from a parent and would like to use Prop 58, or Prop 19 to keep a parents low property tax base. The California Board of Equalization requires and equal distribution of assets be made when multiple beneficiaries are involved unless specific conditions are met. If there are not sufficient cash assets in the trust to make an equal distribution, then a loan against real estate in the trust will be needed to qualify for the parent to child transfer to avoid property tax reassessment.

That is where Commercial Loan Corporation comes into play. We specialize in lending to trusts and estates; specifically irrevocable trusts.  Our trust loans, allow one child to keep an inherited home with the parents low Prop 13 tax base in tact, while the other child beneficiaries receive an equal portion of cash. Everybody wins! By avoiding expensive realtor fees, each beneficiary on average receives and additional $15,000 in inheritance and the child keeping the family home saves on average $6,200 per year in property taxes.

If you, a family member or a client may be able to benefit from a trust loan, we are here to assist you and answer any questions you might have.  Please call us at 877-464-1066.

Orange County Bar Association Trust & Estate 2018 Holiday Social

Orange County Bar Association Trust & Estate 2018 Holiday Social

Please Join Commercial Loan Corporation at the Orange County Bar Association Trust & Estate 2018 Holiday Social

Orange County 2018 Holiday Social

Please join Commercial Loan Corporation at the 2018 Orange County Bar Trust & Estate Holiday Social. The event is being held on December 6th, 2018 at the Ocean Institute in Dana Point. Both Mike Riggs and Tanis Alonso will be attending the event from the Commercial Loan Corporation Trust & Estate Lending Department.  They can answer any questions that you may have on our loans to trusts and estates. We are experts on 3rd party financing to trusts and estates to help our clients preserve a parents property tax base on an inherited home.

Third Party Trusts & Estate Loans To Keep A Parents Property Tax Base On An Inherited Home.

If you will not be able to attend the Trust & Estate Holiday Social, but would like more information on our trust loans, estate loans or a loan to a home in probate; please call us at 877-464-1066. We can give you a free estimate on how much you might be able to save by preserving the property tax base on an inherited home. We assist both clients and attorneys with matters regarding California Proposition 58. For additional information on our trust loan programs or to apply for a trust or estate loan online, please visit this trust and estate loan page on our website.

You can register for the Orange County 2018 Holiday Social Here:
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