California Proposition 19 Continuing Legal Education – Free for California Attorneys
Commercial Loan Corporation Now Offers Free Proposition 19 Continuing Legal Education Online for Licensed California Attorneys
Commercial Loan Corporation offers a 1 hour presentation on the use of Parent to Child Property Tax Transfers under Proposition 19, 58 and 193. The presentation covers the use of proper calculations when equalizing distributions and use of Proposition 19’s transfer of tax base provision. This California Prop 19 CLE presentation is approved by the California Bar for 1.0 MCLE credit. Our continuing legal education is offered completely free to Attorneys and Fiduciaries. Commercial Loan Corporation is a California Lender that specializes in lending to Trusts and Estates and has helped hundreds of clients retain a parents low property tax rate on an inherited home.
Commercial Loan Corporation is a licensed provider of continuing legal education for the state of California. This course covers California Proposition 19, Proposition 58 and third party loans to trusts and estates to facilitate an equal distribution. The course can be performed online and scheduled at a convenient time of your choice during the business hours of Mon-Fri 9am-4pm.
Please contact Commercial Loan Corporation at (877)464-1066 to signup for this free California Proposition 19 CLE today.
Information of California Proposition 19 and Property Tax Transfers.
California Proposition 19
So what is California Proposition 19? Proposition 19 also known as the Home Protection for Seniors, Severely Disabled, Families and Victims of Wildfire or Natural Disasters Act, or Prop 19 for short is an amendment to the California Constitution that impacts state property tax laws and regulations. On November 3, 2020, California voters approved Proposition 19. In simplified terms Prop 19 is a Constitutional Amendment that imposes new limits on property tax benefits for inherited family property. Under Proposition 19, a child or children may keep the lower property tax base of the parent(s) but only if the property is the principal residence of the parent(s) and the child or children make it their principal residence within one year of receiving ownership. Additionally, Prop 19 allows homeowners who are over 55 years of age, disabled, or victims of a wildfire or natural disaster, to transfer their lower assessed property value of their primary home to a newly purchased or newly constructed replacement principal residence up to three times, or once per disaster. Proposition allows the property tax base may be transferred to a property located anywhere in the state of California.
Section 10 of article II of the California Constitution provides that a measure approved by a majority of votes cast takes effect on the fifth day after the Secretary of State files the Statement of the Vote for the election at which the measure is voted on, but the measure may provide that it becomes operative after its effective date.1 The language of Proposition 19 for both the base year value transfer provisions and the parent-child and grandparent-grandchild exclusion provisions have specified operatives dates, as follows:
• The base year value transfer provisions become operative on April 1, 2021.
• The parent-child and grandparent-grandchild exclusion provisions become operative on February 16, 2021.
Base Year Value Transfer
Beginning on and after April 1, 2021, section 2.1(b) of article XIII A of the California
Constitution provides that an owner of a primary residence who is over 55 years of age, severely disabled,2 or a victim of a wildfire or natural disaster may transfer the base year value of their primary residence to a replacement primary residence located anywhere in California that is
1 On June 5, 2018, the voters of California approved Proposition 71, which changed the effective date of ballot measures from the day after the election to five days after the California Secretary of State certifies the results of the election. See LTA No. 2018/068. 2 Revenue and Taxation Code (RTC) section 74.3(b) defines a “severely and permanently disabled person” as “any person who has a physical disability or impairment, whether from birth or by reason of accident or disease, that results in a functional limitation as to employment or substantially limits one or more major life activities of that person, and that has been diagnosed as permanently affecting the person’s ability to function, including, but not limited to, any disability or impairment that affects sight, speech, hearing, or the use of any limbs.”
California Proposition 19 Parent to Child Exclusion Chart.
California Proposition 19 Charts to help you better understand how the proposition may impact you can be found here. The following Prop 19 chart illustrates how the proposition differs from the previous Prop 58 and Prop 193 California legislation.
The California Proposition 19 Parent to Child Exclusion Chart
The Proposition 19 Base Year Value Transfer Chart
Assistance with the California Proposition 19 Parent to Child Transfer
Commercial Loan Corporation works with clients, Estate Attorneys and California Property Tax Consultants to help you qualify for a California Proposition 19 Parent to Child Transfer. We provide loans to Irrevocable Trusts and Probate that do not have sufficient cash assets. Our trust loan or probate loan allows for an equalized distribution to be made to all involved child beneficiaries without having a personal guarantee from the acquiring beneficiary.
If you require additional information on California Proposition 19 or if you are curious if you are eligible for the California Proposition 19 Parent to Child Transfer Benefit, we can assist you. We have helped hundreds of clients receive their benefit and save them over $6,500 per year in property taxes on average. Call us at 877-464-1066 and we will answer all of your questions. We can also provide you with a free benefit analysis and let you know how much you may be able to save in property taxes on an inherited home.
Trust and Estate – Proposition 19 Loans to Irrevocable Trusts
On March 7th, 2022, Tanis Alonso-Kluever will be providing a Continuing Legal Education presentation for the Orange County Bar Elder Law & Special Needs Section. Tanis is a Senior Account Executive at Commercial Loan Corporation and specializes in lending to Irrevocable Trusts and Estate so that her clients can qualify for California Proposition 19’s and Proposition 58’s parent to child transfer and avoid property tax reassessment. This presentation is approved by the California Bar for 1.0 MCLE credit.
In the presentation, Tanis will cover understanding the differences in law as they pertain to Parent to Child Transfers under Proposition 19, 58 and 193. Using proper calculations when equalizing distributions and use of Proposition 19’s “transfer of tax base” provision. We welcome any members of the Orange County Bar Association to sign up. Attached is the signup PDF.
Parent to Child Property Tax Transfers in California
Perhaps the greatest benefit of California Proposition 58 and Proposition 19 is the ability those propositions grant to a parent allowing them to transfer their low property tax base to a child. On average avoiding property tax reassessment saves a child inheriting a home over $6,500 a year. In some situations that property tax savings means the difference between a child being able to afford keeping an inherited home or having to sell it.
Depending on the date of death of the parent who is transferring real estate to a child, the child may be able to take advantage of the Proposition 58 benefit or be forced to use the new Proposition 19 property tax transfer benefit. California Proposition 19 went into effect on February 16, 2021. The California Board of Equalization has created a chart (located here) to help you understand the difference between the Prop 58 and the Prop 19 parent to child transfer benefits. The two primary differences boil down to the ability to transfer a home that will not be used as a primary residence and the amount of property value that you are able to exclude from reassessment. Proposition 19 only allows a child to avoid property tax reassessment on a home that will be used as their primary residence, where Proposition 58 does not have that restriction. Additionally, Proposition 19 allows you to exclude the current taxable value plus $1,000,000; where Proposition 58 has no value limitations for a principal residence.
Often times when a trust is involved, a parent will leave a family home to multiple child beneficiaries. When that is the case and one of the children wishes to keep the family home and take advantage of their Proposition 58 or Proposition 19 property tax transfer benefit to avoid property tax reassessment, the trust may need to borrow money against the home so that an equal distribution on trust assets can be made. In many cases the California Board of Equalization will require an equal distribution of the trust assets be made in order to qualify for an exclusion from property tax reassessment. If there are not sufficient cash assets held in the trust, the trust will need to borrow the funds to make the equal distribution. Commercial Loan Corporation is one of the few lenders in California that will make a loan to an irrevocable trust.
We specialize in assisting beneficiaries and trust administrators when a loan to an irrevocable trust is required. If you would like to learn more about how a loan to a trust can help you avoid property tax reassessment on an inherited home, please call us at 877-464-1066.
Recently PropertyTaxNews.org conducted an interview with Commercial Loan Corporation Trust & Estate Loan Account Executive Thad Farrell on the benefits of California Proposition 19 and a loan to an irrevocable trust. Here are some of the highlights from that trust loan interview.
Mr. Thaddeus Farrell is an Account Manager at Commercial Loan Corporation in Newport Beach, California. He arrives from a long, successful career in mortgage banking and is considered a rising star in the Trust Loan marketplace. We were fortunate to have Mr. Farrell agree to share his views on property tax transfers, California Proposition 19, and irrevocable trust loans for new homeowners and beneficiaries in California.
Property Tax News: As an account manager with Commercial Loan Corp who do you generally communicate with, on a daily basis?
Thaddeus Farrell: I usually talk to attorneys, licensed fiduciaries, trust or estate administrators, Conservators, trustees, beneficiaries and executors. Mostly regarding their need to keep a parents low property tax rate on an inherited home. Frequently, I follow up with attorneys and work with them during the trust loan process. Part of my job is to help them help their clients. In terms of driving interest from lawyers or CPAs I may be talking to. It’s case by case, and timing, as to what an existing client is in need of at this or that very moment.
Property Tax News: In your opinion sir – what is the most important way Proposition 19 helps families inheriting property in California?
Thaddeus Farrell: Overall, to assist families with their property taxes, transferring property taxes through Proposition 19 as well as helping with buying out co-beneficiaries’ inherited property shares.
Property Tax News: What is it precisely that these California families are trying to accomplish?
Thaddeus Farrell: Simply put, to transfer their parents’ low property tax base. Look at it this way – property reassessment can cripple a family financially. I look at it like this – expenses are a part of life, and when you inherit a family home, if the property is reassessed at current rates, those expenses will usually go sky high. Most middle class people can’t afford to pay that type of tax hike. They want to take advantage of Proposition 19 and a trust loan, transferring CA Property Taxes from a Parent to an Heir tax break, to avoid property tax reassessment, and move into an inherited home within a year as a principle residence, which was their parents’ principle residence formerly protected by Proposition 58 and Prop 13.
Property Tax News: How does Commercial Loan Corp fit in, put very simply?
Thaddeus Farrell: We guide beneficiaries through a process that will maintain their parents’ low property tax base. Usually siblings that want to retain inherited property from parents come to us first, generally after being referred to us by a California Property Tax Consultant, Law Firm or a Trust and Estate Attorney. Middle class families that can’t afford to pay reassessed taxes on an inherited home… Which pretty much sums up most families these days!
Property Tax News: What do you discuss with these attorneys that you speak to about Proposition 19 and a trust loan saving their clients money on property taxes?
Thaddeus Farrell: I make it very clear right away with attorneys that siblings inheriting a home have two options. They can sell or keep their inherited property. In other words, your family has to make up their mind – what they want to do, sell or keep. Selling it is far more expensive. By keeping the home, each beneficiary receives approximately $15,000 extra in a cash trust distribution when compared to selling the home because they avoid costly realtor and real estate sale expenses. The child beneficiary keeping the inherited home winds up saving on average $6,200 in yearly property taxes.
Property Tax News: Is it really true that residents save that much?
Thaddeus Farrell: Absolutely! A realtor typically charges 6%, there can be costs to prepare the home for sale and closing costs such as title, escrow or assistance with buyer closing costs on top of that. If the property is reassessed – the cost can be very high.
Property Tax News: And we understand you treat everyone the same, regardless of their property’s value, or their net worth.
Thaddeus Farrell: That is correct. We extend the same commitment to everyone. I for one treat each customer like I would treat my brother or my sister. We have never had one unhappy customer in the last three hundred transactions I’m aware of. Five star reviews, five-star Google ratings, no complaints!
Property Tax News: Thad, if someone needs assistance with California Proposition 19, a bridge loan to make an equal distribution to an estate or a trust loan to an irrevocable trust, how can they contact you?
Thaddeus Farrell: They can contact us at (877) 464-1066; we are always happy to help.
Property Tax News: Great. Well, thanks for talking with us today.
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.
As many Californians are aware, a home undergoes reassessment at “ current market value” if it’s transferred, inherited, sold or gifted from one party to another – and, in turn, taxes on the property often increase significantly providing additional revenue to the city and county they are located in. If the sale or transfer is between parent and child, in certain situations, the home won’t undergo reassessment once specific requirements are met and the application to avoid reassessment is filed properly. It is highly recommended that a trust and estate attorney or California property tax consultant are used to advise you in this situation.
California Proposition 58 is established in section 63.1 of the Revenue and Taxation Code and has been modified by California Proposition 19 in 2021. The below bullet points may untangle some of the confusion that has formed around some of the Prop 19 property tax breaks. We need to take note that property tax relief limitations built into Proposition 19 are presently serving as a replacement to the pre-Feb 2021 Proposition 58 parent-to-child exclusion, also referred to as a “parent-child exemption” which protect the child inheriting a home from a parent from property tax reassessment.
• Proposition 19 was more or less rushed through the political and electoral process, passed by the CA Legislature and placed onto the November 2020 ballot. Homeowners’ ability to transfer parents property taxes, in other words the right to keep parents property taxes on any parental property tax transfer, inheriting property taxes from Dad or Mom and enabling heirs to keep parents property taxes are sill in place as valid tax breaks, allowing beneficiaries or heirs to avoid property tax reassessment – the process is just more limited than it was previously.
• Establishing a low property tax base along with the transfer of property between siblings, sibling-to-sibling property transfer – buying out a sibling’s share of inherited property through a trust loan, in conjunction with Prop 58, is still in place, however inheriting property taxes from a parent has been limited in some circumstances by Proposition 19. Still the majority of children can receive a full property tax transfer from a parent on an inherited home.
• Sections of the approved California Proposition 19 documentation and revisions to various sections are vague. To correct these issues, Santa Clara County Tax Assessor Larry Stone was appointed by the California Assessors’ Association (CAA), with four other tax Assessors, to a CAA “committee” to provide clarity to the new Proposition 19 implementation process. The CAA committee has enlisted specialists and tax lawyers throughout California, and is working with the Board of Equalization (BOE) to furnish guidance and where necessary recommend passage, on an urgency basis, towards implementing appropriate statutes.
• Only inherited properties used as primary homes or farms would be eligible for the property tax transfer. Those who are “severely disabled”, or whose homes were destroyed by wildfire or a “natural disaster” can now transfer their primary residence’s property tax base value to a replacement residence of any value, anywhere in the state.
• Eligible homeowners can now take advantage of “special rules” to move to a more expensive home. Their property tax bill would still go up but not by as much as it would be for home buyers that are “not eligible”.
A claim form must now, as of Feb 2021, be completed and signed by the transferors and transferee and filed with the Assessor. A claim has to be filed within three years after the date of purchase or transfer, or prior to the transfer of the real estate to a third party, whichever is earlier.
If a claim form has not been filed by the date specified above it will be timely if filed within six months after the date of mailing of the notice of supplemental or escape assessment for this property. If a claim is not timely filed the exclusion will be granted beginning with the calendar year in which you file your claim.
If you have questions regarding California Proposition 19, Prop 58 and the benefit that you may be entitled to, please call us at 877-464-1066. We can help you determine if a loan to a trust is needed for you to receive your benefit and how much you might be able to save in property taxes by keeping a parents low property tax base on an inherited home.