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.

Inheriting a Home in California – Property Tax Guide. Keeping A Parents Low Property Tax Base.

Inheriting a home in California, Property Tax Guide

Inheriting a home in California, Property Tax Guide

Keep A Parents Low Property Tax Base

Many Californians that are seeking lower property taxes or to keep a parents low property tax base know by now that new property tax relief measures opened up new opportunities for you to take advantage of. If a parent is leaving property to you and your siblings and you’re looking to keep a low property tax base, a loan to an irrevocable trust may be needed to qualify for a California Proposition 19 Parent to Child Exclusion from Property Tax Reassessment.

Highly effective property tax breaks are now available to Californians. If you’re a beneficiary inheriting a home from a parent and the property is currently held in an irrevocable trust; a trust & estate loan to that irrevocable trust is likely required if the trust does not contain sufficient cash to make an equal distribution to all of the child beneficiaries. This is frequently taken advantage of by beneficiaries, perhaps like yourself, who intend to keep a home inherited from parents at the original low property tax base. A loan to an irrevocable trust makes it possible to buyout inherited property shares from co-beneficiaries and greatly speeds up the trust distribution process. A trust loan also saves a great deal of money when compared to selling the family home. Avoiding property reassessment is a property tax relief benefit available to all Californians.

Hands On Experience, Establishing a Low Property Tax Base

If your siblings were receiving their funds from the irrevocable trust by selling the home, they would likely receive far less money. The costs associated with preparing the home for sale, expensive realtor fees and potential closing costs associated with selling the home can be incredibly expensive. When a trust loan is used to facilitate a trust distribution, each beneficiary receives an average of an additional $15,000.00 in distribution when compared to selling the home. The person receiving the family home also benefits greatly. On average our clients save over $6,200.00 a year in property tax savings by avoiding property tax reassessment on an inherited home. Having a specialist to help guide you through some of the advantages of Proposition 19 ends up saving you a lot of money on property taxes.

Trust Loans & Estate Lending in Concert With New Property Tax Breaks

It may sound complicated, but when you speak to your Trust & Estate Attorney, Trust Lender or California Property Tax Consultant, the details become clearer. At Commercial Loan Corporation we specialize in loans to trusts and consistently help Californians inheriting a family home keep their parents low property tax rate. If you are inheriting a home and would like to learn more information on if a loan to an irrevocable trust or a bridge loan is right for you, please call us at 877-464-1066.

California Proposition 13 & Proposition 58

California Proposition 58 and Proposition 13

California Proposition 58 and Proposition 13

Recently there has been debate in California if Proposition 13 and Proposition 58 still make sense. Without hesitation, the answer is yes. In June of 1978, California voters passed Proposition 13 with 65% of the total vote. Still, to this day, interestingly enough, 65% of “likely voters” in California still support the Proposition 13 this tax relief initiative.

California Prop 13 stabilized property taxes for Californians and gave a great incentive that encouraged Californian’s to become homeowners. The Proposition 13 tax break made property tax increases more affordable by limiting them to a maximum of 2% annually. Californians are fortunate enough to still be benefiting from this same formula 42 years later.

Proposition 58 works in conjunction with Proposition 13. Prop 58 allows a parent to transfer their Proposition 13 protected property tax base to a child. This is especially important when a child inherits a home from a parent. Prop 58 allows the child to inherit the home without having the property taxes reassessed, saving potentially thousands of dollars annually. This can make a home that may otherwise be unaffordable for the child, now affordable.

Parent to Child Property Tax Transfer

California parent to child property tax transfer

Information on the California parent to child property tax transfer

Parent to Child Property Tax Transfer on California Real Estate

Did you know that in some situations California property owners can transfer a property tax base to another person?  It is possible, but there are some limitations. California Proposition 58 allows parents and children to pass property to one another and avoid property tax reassessment in some cases.

Why is a parent to child property tax transfer important for Californians?

Simply put, it allows you to keep your parents low Prop 13 tax base on an inherited home. This can make the cost of keeping the home more reasonable. Here is an example of how it works. Say a parent purchased a home in 1982 for $125,000.  The parent passes away in 2018 and the property is then worth $800,000. Because California Proposition 13 limits the amount that property taxes can increase to just 2% per year; the parents annual property tax payment may be only $2,000 per year when they pass. If that home were to have its property taxes reassessed, the taxes would jump to around $8,000 per year.

California Proposition 58 allows the child to avoid property tax reassessment on the home inherited from the parent. That means a savings of around $6,000 per year in property taxes for the person inheriting the home. This makes the home more affordable for the child and may allow them to keep the home as opposed to having to sell it. If you have specific question on if you may be eligible for a California Prop 58 exclusion from property tax reassessment, please call us at 877-464-1066.

Can a child inheriting a home avoid property tax reassessment if the home is held in a trust?

Yes, California Proposition 58 does allow a parent to transfer a property held in a trust to a child and avoid property reassessment. That being said, doing so can be complicated when multiple trust beneficiaries are involved. An equal distribution is required in most situations. If there are not sufficient funds in the trust to equalize the distribution, the trust will need to borrow the funds needed. In that situation, the County Assessors office will require that an equal distribution was made with funds provided by a third party loan to the trust in order to grant a Proposition 58 exclusion for reassessment.

Typically at the time of passing, a Family Trust, Living Trust or Revocable Trust becomes an Irrevocable Trust. When the trust becomes irrevocable the ability to make changes to the trust is restricted. The trustee or trust administrator may have few options when it comes to receiving a third party loan on a home held in the irrevocable trust. Most California lenders are not willing to lend on a home or provide a mortgage to an Irrevocable Trust. Even fewer have the experience and proper loan documents to provide a Proposition 58 compliant loan.

Proposition 58 compliant loans to trusts.

Commercial Loan Corporation is one of California’s leading providers of loans to Irrevocable trusts.  Unlike other lenders, this is what we specialize in. While the majority of lenders are unable to lend to an Irrevocable Trust, this is our focus. Every month with assist clients qualify for their California Proposition 58 exclusion from reassessment with our Prop 58 compliant loans to trusts.  If you, a client or a family member are interested in obtaining a mortgage to an irrevocable trust, please call us at 877-464-1066 and we would be happy to assist you.

California Proposition 13 – People’s Initiative to Limit Property Taxation

California Proposition 13 Property Tax Information

About California Proposition 13 Property Tax Information

About Proposition 13

California Proposition 13, also known as the People’s Initiative to Limit Property Taxation was an amendment of the Constitution of California enacted in 1978. California Proposition 13 made it so that the maximum amount of any tax on real estate shall not exceed one percent of the full cash value of such property and additionally restricted annual increases of assessed value of real estate to an inflation factor, not to exceed 2% per year.

Proposition 13 also prohibited reassessment of a new base year value except in cases of change in ownership, or completion of new construction. Later, in 1986 Californian’s passed Proposition 58 which also excludes from reassessment transfers of real property between parents and children, with certain limitations.

Commercial Loan Corporation specializes in helping clients who inherit properties qualify for Proposition 58 and avoid property tax reassessment when a third party loan is needed to equalize the distribution of a trust or estate. This allows you to keep a parents low Prop 13 tax base and save potentially thousands of dollars a year in property taxes. In fact, our average client saves over $6,000 a year in property taxes.

If you are inheriting home from a parent and are interested in keeping their Proposition 13 tax base, 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:
Register online at www.ocbar.org

California Residential Property Tax Consultant

At Commercial Loan Corporation we specialize in assisting clients with the financing they need to keep a parents low property tax rate on an inherited property. Transferring a Parents of Grandparents property tax rate can be a extremely beneficial; in fact, on average we save our clients over $6,000 per year in property taxes. Taking advantage of the California Proposition 58 property tax benefits can be very complicated and we always advice that you use the services of a qualified Attorney or Resident Property Tax Specialist. With so much potential property tax savings on the line, you want to make sure that all of the rules are followed and that all of the documents are processed correctly. Failing to do so may disqualify you from an Exclusion From Property Tax Reassessment.

A residential property tax specialist and specializes in helping clients preserve a parents low Proposition 13 protected property tax rate when a home is transferred or inherited. Often times he works with clients where the inherited real estate is contained in a trust or is part of an estate. It can be a very complex matter. If the property is not transferred appropriately or the financing is not done in accordance with California law, you may become ineligible to retain a parents property tax base rate and the home may be reassessed at current market value.

California Property Tax Consultants work with the clients of attorneys, CPAs, financial planners, and real estate professionals to minimize real property tax assessments before or after transactions involving the transfer or purchase of real estate. One of the reasons why Property Tax Consultants are so valuable when it comes to keeping a parents low property tax rate is that he formerly worked for the Orange County Tax Assessor’s Office for almost 25 years. So he has the first hand experience to make sure you obtain the tax savings that you deserve. Prior to becoming a California Residential Property Tax Consultant, Michael worked as a Legal Analyst at the County Tax Assessors Office. During that time, Property Tax Consultants have observed many real estate transactions that had undesired results due to property owners either never consulting with counsel, or advisers were not familiar with property tax law and its consequences. A Property Tax Consultant in order to help advisers and their clients avoid those unintended results, and plan and structure their real property transactions to achieve their goals.

 If you are in need of Trust or Estate financing or are interested in preserving a parents low property taxes on an inherited home, please call us at 877-464-1066 so that we may assist you. We can help you put together a plan of action and review your potential property tax savings with you.

CALIFORNIA PROPOSITION 58 INFORMATION

California Proposition 58 Trust Loans

California Proposition 58 Information

What is California Proposition 58 and how may it benefit you?

On November 6, 1986, California Proposition 58 became effective. Proposition 58, with certain limitations, permits the exclusion for reassessment of property taxes on real estate transfers between parents and children. California Proposition 58 is codified by section 63.1 of the California Revenue and Taxation Code. In the State of California, real estate or real property is reassessed at market value if it is sold or transferred. Property taxes can sometimes increase dramatically as a result of a property tax reassessment. Per Prop 58, if the sale or transfer is between a parent and their child, under limited circumstances, the property will not be reassessed, providing certain conditions are met and the proper application is filed in an appropriate amount of time. California 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, as opposed to the current market value.

It is important to be aware that there are some limitations to California Proposition 58. For instance, on non primary residences transfers are limited to the first $1 million of real property. The $1 million exclusion applies separately to each eligible transferor. These transfers may be the result of a sale, gift, or inheritance. A transfer via a trust also qualifies for this property tax reassessment exclusion. Additionally, for Proposition 58 there are limitations for who is eligible to receive these tax benefits. Here are the existing guidelines for Prop 58 relationship eligibility: A “child” for purposes of Proposition 58 includes any child born of the parent(s), any stepchild while the relationship of stepparent and stepchild exists, any son-in-law or daughter-in-law of the parent(s), and any adopted child who was adopted before the age of 18. Spouses of eligible children are also eligible until divorce or, if terminated by death, until the remarriage of the surviving spouse, stepparent, or parent-in-law. For California Proposition 193, an eligible “grandchild” is any child of parent(s) who qualify as child(ren) of the grandparents as of the date of transfer.

There are additional factors that are important to consider when it comes to California Proposition 58 eligibility. For instance, the acquiring beneficiary can’t lend money to the trust when funds are needed to make an even distribution of the trust. The reason why is that the Board of Equalization views this act as a child buying out another child as opposed to a parent to child transfer. The child would no longer be eligible for the exclusion of property tax reassessment because the exclusion for reassessment requires a transfer be from parent to child. Often times the only solution in this situation is for the trust to take out a mortgage on real estate located in the trust to supply the trust with the cash needed to make an even distribution. This is not as simple as it sounds. The acquiring beneficiary does not own the property because the real estate is held in the trust. Almost all conventional lenders are opposed to lending to trusts. They will typically ask the trustee to put the title in the name of the acquiring beneficiary before funding their loan. If this is done before the even distribution of the trust, the exclusion for reassessment will usually be denied. Commercial Loan Corporation can help in this situation. Commercial Loan Corporation is one of just a handful of California Lenders who are willing to provide loans to trusts; in fact, we specialize in it.

What separates Commercial Loan Corporation from other Private Money Trust Mortgage Lenders is that our Trust Loans are specifically designed with our clients needs in mind. Our trust and estate mortgages enable our clients to take advantage of the Proposition 58 property tax benefits while at the same time avoiding steep pre-payment fees and interest rate expenses charged by many of our competitors. Commercial Loan Corporation charges no pre-payment penalties or specified required months interest prior to loan payoff. Additionally, we permit our clients to pay down their mortgage and will recalculate their mortgage payment for them based on the outstanding mortgage balance. This benefit alone can save our clients potentially thousands of dollars in interest.

If you, a client or someone you know could benefit from a trust loan, please call us at 877-464-1066 or complete the trust mortgage inquiry form located here.