To Transfer Property Taxes: New Rules & Regulations
When Proposition 19 was voted into law in Nov 2020, taking affect in Feb of 2021 â a learning curve was suddenly in effect for new homeowners and beneficiaries inheriting property from parents. It became essential, especially for middle class and upper middle class families, to quickly learn about changes to tax relief laws that would impact both existing trusts and inherited real estate.
For example, a âqualified personal residence trustâ (QPRT), which is a trust that is established with the intent of allowing parents to continue to live in a house; and once that period of time has ended the balance of the interest is transferred to beneficiaries.
Put simply, a QPRT is a special kind of irrevocable trust that allows the person who created it to remove a primary residence from his, or her, estate so gift taxes can be reduced when transferring assets to a beneficiary.
Buying Out Sibling Property Shares While Keeping Your Inherited Home at a Low Proposition 13 Tax Base
As many Californians know, a loan to an irrevocable trust can also be used to buyout siblingsâ property shares, inherited from a parent⦠while allowing beneficiaries who wish to retain that property, to transfer property taxes and keep that home at their parentsâ low Proposition 13 protected tax base. Itâs essentially a home equity loan on inherited property, made to the trust.
What a lot of people donât know is the fact that the trustee and beneficiaries who are intent on keeping their inherited property will frequently borrow money to have their trust funded by a qualified trust lender licensed in the state of California so that an equal distribution of the trust can be made in order to meet California Proposition 19 Board of Equalization requirements.
Typically, beneficiaries enlist funding from a trust lender when a trust does not have sufficient cash to make an equal distribution to all the beneficiaries who are looking to sell their inherited property. Hence, the ability to transfer property taxes, mainly to transfer parentsâ property taxes; and avoid property tax reassessment of an inherited home. Usually a savings of over $6,200 per year in property taxes.
Avoiding âFair Market Ratesâ with Proposition 19 Trust Loan Exclusion from Property Reassessment
Changes to California property tax relief in 2021 are a challenge to understand. Trusts, Californians have discovered, are now used for more purposes than merely deferring property taxes for a few months. Californians have also discovered that they can avoid being reassessed at fair market rates by moving into inherited property as their principle residence â bearing in mind a $1,000,000 cap on an exclusion from existing property tax rates.
The benefits of making a lifetime transfer of inherited property has to be compared to a transfer at the passing of a parent, which may cause you, as an heir, to inherit a âstepped-up basisâ in transferred property. In other words, when you inherit assets that increased in value from when your deceased parent owned it, the assetâs âbasisâ is increased to the propertyâs current or âfair marketâ value on the date of the parentâs passing. Unless you take steps to avoid this increase, to be able to transfer property taxes successfully, and avoid property tax reassessment altogether!
Saving Money on Property Taxes With Help From Experts!
When purchasing a new home or inheriting your parentsâ residence it makes sense to call a specialist experienced in the use of irrevocable trust loans to maintain your parentâs low property tax base, for example like the Michael Wyatt Consulting firm out in Corona, CA. If you are inheriting a home, or expect to inherit a home and plan to transfer the low property tax base to a new home down the road, through an irrevocable trust loan in conjunction with Proposition 19, or Prop 58.
If youâre inheriting a home from a parent and wish to avoid property tax reassessment you still have all the tools to do so, as long as all new requirements are met. If youâre a beneficiary, a brand new homeowners, you can transfer parents property taxes when inheriting property and thus inheriting property taxes; with the ability to keep parents low property tax base, as long as you live in your inherited home.
Michael Wyatt, an Expert on CA Tax Savings for Homeowners Shares His Viewpoint on Keeping a Low Property Tax Base
As Michael Wyatt of Michael Wyatt Consulting, tells us:
âWhen it comes to keeping a low property tax base, with Prop 58 [or now Prop 19] and a trust loan, I always bring my clients to Commercial Loan Corp. Their loans to trusts give my clients several invaluable benefits. Their terms can be a lot more flexible than an institutional lender like Wells Fargo or Bank of America. Theyâre self funded, and thatâs why they can extend easier terms to clientsâ¦
When your parents die, and your trust agreement says âequal sharesâ â That means equal shares! People basically just get the overall concept of getting money from a trust loan even if it doesnât sell. It makes more sense all around to get a trust loan; and everyone gets more money.â
Regarding the ever-present issue concerning families deciding to either sell inherited property; Or opting to keep property inherited from their parents â Mr. Wyatt weighs in, telling us:
âMore heirs and beneficiaries end up not wanting to sell their inherited property. And if they did want to sell, a lot of people can be easily convinced, with more cash from a trust loan and trust lender than an outside buyer would come up with, âequalizingâ things for themâ¦
You have to look at it this way: there are always one or two, minimum, who insist on selling their shares in an inherited property. And there is our initial client contact, with those who want to sell. And that is where these family estate or trust conflicts begin. If they sell their property, capital gains tax always hits them. Thatâs where a trust loan comes in, to avoid that.
A trust lender like Commercial Loan Corp, that doesnât charge any fees up-front, thatâs another great benefit. Plus, they donât charge interest on their trust loan in advance. Not only that, there is never a âdue-on-saleâ clause⦠that requires the mortgage to be repaid in full when sold; or that all or some of the interest owed must be paid up-front to secure the mortgage. No âalienation clauseâ⦠in the event of a property transfer, stating the borrower has to pay back the mortgage in full before the borrower can transfer the property to anyone.
Going with a firm like that â all costs are offset, unless you plan to keep a property for 2, 3 years or less. Then it doesnât make sense. But generally youâre looking at keeping that property for seven or more years, as a rule...â
To learn more about your options when inheriting a home from parents â transferring their low property tax base to your new primary residence â contact Michael Wyatt Consulting, or the Commercial Loan Corp, at (877) 756-4454 to speak with a Trust Loan or Property Tax Savings specialist. Chances are the end result will be a much lower property tax bill.
For more information on California Property Tax News, visit the PropertyTaxNews.org website for all of the latest information and updates.
To Transfer Property Taxes: New Rules & Regulations
When Proposition 19 was voted into law in Nov 2020, taking affect in Feb of 2021 â a learning curve was suddenly in effect for new homeowners and beneficiaries inheriting property from parents. It became essential, especially for middle class and upper middle class families, to quickly learn about changes to tax relief laws that would impact both existing trusts and inherited real estate.
For example, a âqualified personal residence trustâ (QPRT), which is a trust that is established with the intent of allowing parents to continue to live in a house; and once that period of time has ended the balance of the interest is transferred to beneficiaries.
Put simply, a QPRT is a special kind of irrevocable trust that allows the person who created it to remove a primary residence from his, or her, estate so gift taxes can be reduced when transferring assets to a beneficiary.
Buying Out Sibling Property Shares While Keeping Your Inherited Home at a Low Proposition 13 Tax Base
As many Californians know, a loan to an irrevocable trust can also be used to buyout siblingsâ property shares, inherited from a parent⦠while allowing beneficiaries who wish to retain that property, to transfer property taxes and keep that home at their parentsâ low Proposition 13 protected tax base. Itâs essentially a home equity loan on inherited property, made to the trust.
What a lot of people donât know is the fact that the trustee and beneficiaries who are intent on keeping their inherited property will frequently borrow money to have their trust funded by a qualified trust lender licensed in the state of California so that an equal distribution of the trust can be made in order to meet California Proposition 19 Board of Equalization requirements.
Typically, beneficiaries enlist funding from a trust lender when a trust does not have sufficient cash to make an equal distribution to all the beneficiaries who are looking to sell their inherited property. Hence, the ability to transfer property taxes, mainly to transfer parentsâ property taxes; and avoid property tax reassessment of an inherited home. Usually a savings of over $6,200 per year in property taxes.
Avoiding âFair Market Ratesâ with Proposition 19 Trust Loan Exclusion from Property Reassessment
Changes to California property tax relief in 2021 are a challenge to understand. Trusts, Californians have discovered, are now used for more purposes than merely deferring property taxes for a few months. Californians have also discovered that they can avoid being reassessed at fair market rates by moving into inherited property as their principle residence â bearing in mind a $1,000,000 cap on an exclusion from existing property tax rates.
The benefits of making a lifetime transfer of inherited property has to be compared to a transfer at the passing of a parent, which may cause you, as an heir, to inherit a âstepped-up basisâ in transferred property. In other words, when you inherit assets that increased in value from when your deceased parent owned it, the assetâs âbasisâ is increased to the propertyâs current or âfair marketâ value on the date of the parentâs passing. Unless you take steps to avoid this increase, to be able to transfer property taxes successfully, and avoid property tax reassessment altogether!
Saving Money on Property Taxes With Help From Experts!
When purchasing a new home or inheriting your parentsâ residence it makes sense to call a specialist experienced in the use of irrevocable trust loans to maintain your parentâs low property tax base, for example like the Michael Wyatt Consulting firm out in Corona, CA. If you are inheriting a home, or expect to inherit a home and plan to transfer the low property tax base to a new home down the road, through an irrevocable trust loan in conjunction with Proposition 19, or Prop 58.
If youâre inheriting a home from a parent and wish to avoid property tax reassessment you still have all the tools to do so, as long as all new requirements are met. If youâre a beneficiary, a brand new homeowners, you can transfer parents property taxes when inheriting property and thus inheriting property taxes; with the ability to keep parents low property tax base, as long as you live in your inherited home.
Michael Wyatt, an Expert on CA Tax Savings for Homeowners Shares His Viewpoint on Keeping a Low Property Tax Base
As Michael Wyatt of Michael Wyatt Consulting, tells us:
âWhen it comes to keeping a low property tax base, with Prop 58 [or now Prop 19] and a trust loan, I always bring my clients to Commercial Loan Corp. Their loans to trusts give my clients several invaluable benefits. Their terms can be a lot more flexible than an institutional lender like Wells Fargo or Bank of America. Theyâre self funded, and thatâs why they can extend easier terms to clientsâ¦
When your parents die, and your trust agreement says âequal sharesâ â That means equal shares! People basically just get the overall concept of getting money from a trust loan even if it doesnât sell. It makes more sense all around to get a trust loan; and everyone gets more money.â
Regarding the ever-present issue concerning families deciding to either sell inherited property; Or opting to keep property inherited from their parents â Mr. Wyatt weighs in, telling us:
âMore heirs and beneficiaries end up not wanting to sell their inherited property. And if they did want to sell, a lot of people can be easily convinced, with more cash from a trust loan and trust lender than an outside buyer would come up with, âequalizingâ things for themâ¦
You have to look at it this way: there are always one or two, minimum, who insist on selling their shares in an inherited property. And there is our initial client contact, with those who want to sell. And that is where these family estate or trust conflicts begin. If they sell their property, capital gains tax always hits them. Thatâs where a trust loan comes in, to avoid that.
A trust lender like Commercial Loan Corp, that doesnât charge any fees up-front, thatâs another great benefit. Plus, they donât charge interest on their trust loan in advance. Not only that, there is never a âdue-on-saleâ clause⦠that requires the mortgage to be repaid in full when sold; or that all or some of the interest owed must be paid up-front to secure the mortgage. No âalienation clauseâ⦠in the event of a property transfer, stating the borrower has to pay back the mortgage in full before the borrower can transfer the property to anyone.
Going with a firm like that â all costs are offset, unless you plan to keep a property for 2, 3 years or less. Then it doesnât make sense. But generally youâre looking at keeping that property for seven or more years, as a rule...â