PART TWO: Are Trusts, Trust Loans and California Property Tax Breaks Strictly for the Rich?

Loans to Trusts

Loans to Trusts

CA Proposition 58, Loans to Trusts and Property Tax Breaks

Beneficiaries in every state in America should have property tax measures like California does, and be able to use trust loans & Proposition 58 to equalize property shares sold by co-beneficiaries;  and by all rights be able to transfer parents property taxes, when inheriting property taxes in California, to themselves at the low rate their respective parents used to pay, whenever inheriting property taxes in California on gifted or inherited property — either residential or business real estate.  In all states, and especially in high tax states like New York,  Texas, Massachusetts and Pennsylvania. 

If people want to march on something, egregious property tax rates in most of this country would be worth marching for.  Trust loans & Proposition 58 in California, and by now institutionalized California tax breaks from Proposition 13, saves beneficiaries a great deal of money; avoiding property tax reassessment on the transfer costs,  plus the low base rate from parents, from CA Proposition 13.

Lawmakers in every state can, and should, pass property tax relief bills that make sense, like CA Proposition 58 and 193, enabling low raxes on property tax transfer from parents and grandparents when inheriting a home, for example… as well as maintaining a low Proposition 13 tax base from parents, forever.  California trust loans are used to resolve inherited property conflicts, between beneficiaries, working alongside CA Proposition 58 – enabling co-beneficiaries to sell shares of inherited property, a beneficiary buyout of sibling property shares… while avoiding property tax reassessment. Generally buying out a sibling’s share of an inherited house – as real estate lawyers call it, “transfer of property between siblings” or “sibling to sibling property transfer” – lending money to an irrevocable trust – from a lender specializing in trust loans and CA Proposition 58, from A to Z.

And likewise, inheriting property taxes on that home in accordance with parent to child transfer or parent to child exclusion, from present day property tax rates, avoiding property tax reassessment simply to keep property taxes low, giving beneficiaries the ability to utilize trusts for personal estate use and benefit – for all Americans; not just for the VIPs and the wealthy.  California is the model every American state should mirror when it comes to property tax relief.

If this were in fact the case, all Americans, in every state, would be able to enjoy a bit more of a sense of genuine financial comfort, with a greater sense of security, that most people associate with their home…  Placing this sense of “home security” under threat year after year, by jarring home owners and business property owners’ feeling of security, where their home is concerned, with unexpected, seemingly arbitrary property tax hikes on what is most Middle Class people feel is their most valuable asset, and the very foundation of what little security  Middle Class Americans have these days. 

Middle Class Americans as a rule do not have a seven-figure bank account or eight-figure net-worth “portfolio” that helps them sleep better at night!  In fact, a recent 2019-20 financial report tells us that most Middle Class Americans have trouble coming up with $400 in cash to deal with a personal emergency!  Bearing in mind that unreasonable taxes on their home – what they consider their base asset for personal security, along with their health and income – might intrude on their security at any time – unless controlled by iron clad property tax relief, such as the 1978 CA Proposition 13 tax break, and the 1986 CA Proposition 58 property transfer tax measure

This automatically made  unpredictable, arbitrary tax hikes, imposed by politicians with questionable motives and goals, impossible to impose on all Californians.  Property tax relief is not just a dream, as many critics in other states might suggest.  California accomplished it. Why not every other state as well?

If you are seriously considering a loan to a trust in California, to take advantage of California Proposition 58,  our Senior Editors would advise you, without hesitation, to look into Commercial Loan Corp at 1-877-464-1066 in Newport Beach, CA. This firm is one of the only California lenders that not only specializes in assisting beneficiaries with Proposition 58 – unlike conventional lenders, they are also able to lend directly to an Irrevocable Trust with loans of any size and, unlike other lenders, surprisingly, they treat all their clients like V.I.P accounts –  regardless of the size of their loan, or property value.

 

PART ONE: Trust Loan Distribution and Equalizing Solution

Trust Loan Distribution and Equalization

Trust Loan Distribution and Equalization

Improving Your Family’s Yearly Financial Security With Lower Property Taxes…

When families inheriting property are experiencing conflicts between beneficiaries who wish to retain their inherited property and siblings who want to sell their property shares – a loan to a irrevocable trust is frequently the answer.

Many property owners can also be qualified to apply and keep a significantly lower tax rate on a secondary dwelling as well; if they are 55+ and retaining the initial inherited property for 2 years or longer.

Steps, rules & regs for the trust loan process – in conjunction with California Proposition 58 – are typically as follows:

1. Determination of who will keep the property
2. Determination of the loan amount
3. Loan to trust/estate is implemented
4. Trust lender equalizes cash distribution to beneficiary or beneficiaries
5. Property is transferred into the acquiring beneficiaries name
6. Parent child exclusion is filed, avoiding property tax reassessment
7. Five to seven day funding turnaround
8. The trust loan is repaid, concluding a win-win family arrangement
9. No Up-Front Costs
10. No Hidden Fees

An Alternative Financial Solution for Beneficiaries:

As an example of this alternative financial solution for beneficiaries, we’ll take a look at the Anderson family in Newport Beach, CA; who found themselves in exactly this type of situation recently.  Siblings Don and Marie Anderson decided to seek help from Proposition 58, plus a trust loan, from a well known, nearby trust lender; whose motto impressed them – Commercial Loan Corporation, whose motto states: “Regardless of trust loan amount – all clients receive VIP treatment, and become a permanent member of the Commercial Loan Corp family!”

The Anderson‘s decided they would allow Marie to keep the inherited home from their late mom, as long as her brother Don could receive enough cash with a trust loan from a reliable trust lender, for his shares in the inherited property… making  the transfer of property between siblings possible.  Therefore, selling to a third party buyer would not be necessary – a process otherwise known as beneficiary buyouts of sibling property shares. At the same time maintaining property tax transfer from parents or, in other words, inheriting property taxes that simply transfer parents property taxes that retain the low property tax base their parents paid… due mainly to tax benefits made possible by California Proposition 13, parent to child transfer or, as attorneys call it, parent to child exclusion

A secondary conflict revolved around the value of the house, which was in dispute. A figure was finally agreed to of $1,400,000. This end result was finally resolved by both siblings agreeing to a value based on taking the middle number of the two property value projections. The Anderson’s trust loan was $958,000; and property taxes under Commercial Loan Corp’s trust loan management were assessed at only $1,687.50 – whereas estimated property tax at Current Value (1.1%) was $15,400. Estimated Annual Tax Savings was $6,857.

Both siblings were motivated to keep the low (2% maximum) property tax base that was paid in the past by their parents, thanks to property tax relief provided by the 1978 California Proposition 13 property tax measure.  Both Don and Marie were receptive, however each had their own attorneys, and Don, who was looking to sell, would only talk to the trust lender through his attorney, who was quite experienced with beneficiary buyouts of sibling property shares.  Both siblings fortunately agreed to the trust loan process in general, with Commercial Loan Corp., but disagreed on precisely what assessed value to apply to the property.

At one point, Don insisted he would sell to an outside buyer if his sister would not agree to the assessed value of the property that he favored.  It was finally decided that a Cost Benefit Analysis was required to insure it would be worthwhile to even keep the property. Subsequently, the positive outcome of that analysis resulted in a mutual agreement that it would be worthwhile to keep the home.

Additionally, there was property tax savings of $6,857, while Marie was able to keep this wonderful family property without any issues; with all her cherished family home memories perfectly intact.

Bottom line, it would have cost $84,000 in closing fees, attorney  charges, and so forth – to sell this inherited property outright. Cost to keep the property, with a trust loan covering all costs and fees, was only $23,255. Moreover, the trust received an additional $60,745 more, than if they were to sell the property to an outside buyer.

Obviously, this financial choice the Anderson’s made, with respect to choosing a trust lender and opting for a trust loan plus help from Proposition 58, turned out to be the right decision for this family.

 

PART ONE: Are Trusts, Trust Loans and California Property Tax Breaks Strictly for the Rich?

California Loans to Trusts

California Loans to TCA rusts

CA Proposition 58, Loans to Trusts and Property Tax Breaks

Gifting property to adult children is a wonderful thing to do, setting aside any potential tax breaks for a moment… although property tax relief does obviously make it all the more wonderful for parents and offspring. And, thankfully, to take advantage of these benefits in all 58 California counties, you don’t always need to be wealthy, with $1,200 per hour tax attorneys standing by to manage your ability to avoid property tax reassessment, or to learn how to use a trust to save on taxes or to buy out siblings’ shares in your inherited real estate… with a trust loan.

Naturally, it doesn’t hurt to live in a state like California, where you get to save tens of thousands of dollars over the years in unique property tax breaks, tax breaks that compared to other states…. or compared to California the way it was pre-1978, before Proposition 13 came about, and later in 1986 when Proposition 58 became a reality, when Californians became able to keep parents property taxes upon inheriting property from parents, with the ability to transfer parents property taxes, inheriting property taxes that are as low as they can possibly get on a property tax transfer, with a simple parent to child transfer, or, as lawyers call it, a “parent to child exclusion”.

Another related point that seasoned California trust lenders, real estate attorneys, and realtors know quite well, is the fact that large loans to irrevocable trusts are not simply for the extremely well off. These are trust loans in California for wealthy and middle class beneficiaries alike… loans to irrevocable trusts, to buy out siblings’ share of inherited property, with sibling to sibling property transfer when selling shares of inherited property. 

This provides beneficiaries who insist on selling inherited property with secure, fair transfer of property between siblings; with enough cash to equal, in fact generally to surpass, their share in that property; this process allows the beneficiary or beneficiaries who do not wish to sell out, the absolute  right to retain the inherited property in question – plus receive a low yearly property tax rate at levels unimaginable to most property owners and beneficiaries in other states.

Quite simply, all business and residential property owners in America, nationwide, should pay no more than the 2% maximum property tax rate property owners pay ever year in California in property tax rates, plus low rates on property transfer, thanks to California Proposition 13 and Proposition 58, generally in concert with a trust loan that pays for expensive closing and legal costs.

 

 

PART FOUR: Interview With Michael Wyatt, Real Estate Tax Advisory Firm

California Property Tax Advice

California Property Tax Advice

California Property Tax Advice and Consultation

Our conversation with CEO Michael Wyatt of Michael Wyatt Consulting, a Real Property & Property Tax Advisory firm based in Corona, CA – continues…

Property Tax Transfer:  And what about your clients, Mr. Wyatt?  Do they understand and go along freely with your plan, avoiding property tax reassessment with Proposition 13, and property tax transfer, with the right to transfer parents property taxes, and other benefits from Proposition 58… the whole nine yards?

Michael Wyatt:  Most of my clients own real estate….  To inherit a house from their parents, my clients would have to pay reassessed taxes on their own home and the inherited property from their parents.  Most people understand that with Proposition 13 they (A) save their inherited home, and (B) get a significant tax break on their primary residence…  Without these tax breaks most middle class people,  and elderly folks living on a fixed, generally modest  income – would, in most cases, be forced to sell their inherited property.

Property Tax Transfer:  With so many positive factors generated by Proposition 13 and Proposition 58 – why would anyone go against these tax breaks that positively impact the middle class, the upper classes, blue collar folks – you name it!  Who are all those people over-using the media to endlessly whine about  Prop 13 adversely affecting ownership of real estate in California;  causing shrinkage of the real estate market.  They appear to be endlessly  pushing back against property tax breaks that are so incredibly popular, so beloved by all Californians… that even renters seem to get the fact that keeping landlords’ property taxes low also keeps their rent low…

Michael Wyatt:  Politicians with special interests clearly want to destroy Proposition 13, and ultimately Proposition 58 and 193 – for their political interests, claiming under-funding and over-spending    supposedly brought about by property tax breaks.

Property Tax Transfer: Sir, what in fact is actually causing all that under-funding and over-spending? Folks would like to know this!

Michael Wyatt: In fact, what is actually causing these under-funding issues is lavish over-spending on overly generous local government pension plans and salary increases; funding local and state raises and bonuses… over-spending on overly robust health coverage plans, vacation benefits, and retirement-pension plans.  As well as over-spending on special interest projects and massive special interest public works, don’t forget that! 

Property Tax Transfer:  And killing the California real estate market…  Is there any validity to this at all?

Michael Wyatt:  None.

Property Tax Transfer:  Any truth to all that verbiage about Prop 13, and home owners’ ability to transfer parents property taxes, adversely affecting ownership of real estate in California…?

Michael Wyatt:  Zero.

Property Tax Transfer:  (Laughter) Zero!

Michael Wyatt:  Zero! Proposition 13 is not adversely affecting ownership of real estate… Not killing the real estate market in California.  It helps the  real estate market, not hurts it!  Did those opponents and critics of Prop 13 ever hear about the building of new homes and condos in Los Angeles… in the Bay area… in a thousand other locations in California?  There is no truth to that argument whatsoever.  Zero truth to that position.

Property Tax Transfer: Zero truth… That’s incredible.

Michael Wyatt:  Zero!!

Property Tax Transfer: Thank you sir, for a terrific interview. And eye opening analysis of real property inheritance, Prop 13, Prop 58 –  trust lenders; and the art of trust loans throughout the state of California.

Michael Wyatt:  Thank you, sir.  It’s been a pleasure.


Looking at a few cases the Michael Wyatt Consulting Firm has worked recently, gives us a clear overall idea of how the Proposition 13 low property tax base and Proposition 58 property tax transfer and trust loans profoundly affect both home owners and business owners in the state of California – such as:

The Los Angeles County Power Center case, which reduced the Tax Assessor’s value by nearly $22 million, resulting in $232,000 in total refunds. The firm’s Orange County Self-Storage Facility case reduced over $18 million in Assessor’s value, resulting in $185,500 in total refunds. The firm’s work for a Los Angeles movie theater reduced the local Tax Assessor’s assessment by over $12 Million, resulting in a total refund of over $129,000.

The firm’s Orange County Retail Center case lowered the local Assessor’s valuation by $11 Million – generating over $113,000 in total refunds. Just a few examples, like these, show us the enormous potential beneficiaries inheriting California property from parents actually have, in terms of saving  a great deal of money every year in property taxes, due to Prop 13 – as well as the stable  Proposition 58 driven ability to equalize cash payments to co-beneficiaries during real property buyouts, with trust loans. Plus many other lesser known but meaningful benefits. 

When beneficiaries have an opportunity to avoid property tax reassessment, while inheriting property taxes during property tax transfer – typically as middle class or upper middle class California based residential and commercial or industrial property owners – and one has the ability keep parents property taxes – one can transfer parents property taxes over to inherited property; which features parent to child transfer, commonly known as parent to child exclusion. Hence, one retains parents (Proposition 58) or grandparents (Proposition 193) low tax base during property tax transfer… basically forever.

The fact that our property taxes then remain at the low California  Proposition 13 tax base that our parents had generally makes a significant difference to our life.  Financial stress from unpredictable, and often unaffordable, tax rates are lifted off our back.  Tax rates that would be in the tens of thousands of dollars every year, were it not for CA Proposition 13 tax relief, and Proposition 58 property tax  transfer benefits.   

For assistance with California property tax issues or to take advantage of California Proposition 58, Michael Wyatt can be contacted at (951) 264-6152. You can reach the Commercial Loan Corporation at (877) 464-1066; or simply go to https://cloanc.com with questions on a loan to a trust, irrevocable trust, or a property in probate plus numerous other related issues.

PART THREE: Interview With Michael Wyatt California Property Tax Consulting

California Property Tax Consulting

California Property Tax Consulting

Our conversation with CEO Michael Wyatt of the Michael Wyatt Consulting firm, Real Property & Property Tax Advisory, based in Corona, CA continues…

Property Tax Transfer:  Mr. Wyatt, how do you see the inner dynamics of your average real estate conflicted estate, or trust? Meaning, the conflict between those who are determined to keep their inherited property, and those who prefer to sell…

Michael Wyatt: When your parents die, and your trust agreement says “equal shares”…. That means equal shares.  People basically just get the overall concept of getting money from a trust loan even if it doesn’t sell. If you’re going to hold a property for more than 7 years, it makes more sense, and it’s more money in your hand…  It makes more sense all around to get a trust loan; and everyone gets more money.  For short term it may not be more beneficial to not sell. 

Property Tax Transfer:  From your experience, do more people prefer to sell inherited property?  Or do they lean towards keeping property they inherit from their parents?

Michael Wyatt:  Judging from the beneficiaries that come to us, more 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 cash from a trust loan equalizing things for them. 

Property Tax Transfer: Aside from fast, inexpensive trust loan cash, how is it that so many beneficiaries are  easily convinced?  Relatively, anyway.

Michael Wyatt: 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.  When mom and dad die proceeds are in effect, since inheritance is not subject to capital gains tax.  But people who do plan on selling an inherited property come to see very quickly that they are going to be hit hard by capital gains tax. If they sell their property, capital gains tax always hits them. 

Property Tax Transfer: And so that, in fact, is a very strong convincing factor.                                     

Michael Wyatt: Correct. 

Property Tax Transfer:  And property tax relief in general… How did this come about in California, whereas there is nothing quite like this anywhere else in the USA?  

Michael Wyatt: Well, we have Oregon, and they’re close, with a maximum property tax rate of 3%…  which is close to California’s Proposition 13 cap of 2%.  But, right – you’re correct, that’s about it in the United States for serious,  meaningful property tax relief.  

Property Tax Transfer: So how did this type of property tax break  actually start, and evolve into such a strongly supported property tax system, with rock solid rights to parent to child transfer, or rather parent to child exclusion… consistently avoiding property tax reassessment, and so on?   

Michael Wyatt: These property tax benefits from Proposition 13 came about in California because people didn’t want property tax increases of 25% or 30%, or whatever.  It really was out of control.  And property tax rates were particularly high and unpredictable and unstable in California, for whatever reason, prior to 1978 when Prop 13 passed. So, as you know, property appreciates let’s say on average 20% per year. For the sake of argument, let’s say 20%.  But property tax values are only going up by 3%… People know intuitively that they can’t rely on the Assessors evaluation.  Property value goes up 10% or more let’s say, as opposed to assessed value going up by 2%. That’s a significant difference. 

Property Tax Transfer: Was property taxation in California so bad before 1978 that something like Proposition 13 property tax relief, parent to child transfer rights, was simply inevitable? 

Michael Wyatt: Was California really that bad before 1978, when Proposition 13 tax relief went into affect?  Yes. California was raising taxes more than any other state, before 1978. Most seniors – before Prop 13 – were reassessed at present-day rates. And many, many were forced out of their home. They simply could not afford the property tax hikes descending on them.  Period.  People, especially older people, were being impacted with higher property taxes year after year.  And in many cases – with catastrophic results, obviously.

>> Click Here for Part Four, to Continue Interview…

PART TWO: Interview With Michael Wyatt, CEO of Michael Wyatt Consulting Property Tax Advisory Firm

California Proposition 58 Property Tax Advisor

California Proposition 58 Property Tax Advisor


Our in-depth interview with CEO Michael Wyatt of the Michael  Wyatt Consulting Firm in Corona, CA continues…

Property Tax Transfer: Are there other essential benefits to using trust loans, with special Proposition 58 benefits?

Michael Wyatt: Well…  going back to Commercial Loan Corporation…  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.  Also, Commercial Loan Corp is self funded, and that’s basically why they can extend easier terms to clients.

Property Tax Transfer:  And compliance issues?

Michael Wyatt: Compliance for both commercial and residential property owners is far less strict.  Commercial Loan Corp doesn’t charge any fees up-front, that’s another great benefit. Plus, they don’t require paying interest on their trust loan in advance. Not only that, there is never a “due-on-sale” 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 “alienation clause”… in the event of a property transfer, stating that the borrower has to pay back the mortgage in full before the borrower can transfer the property to another person. There is none of that.

Property Tax Transfer: That is impressive. We understand that using their loan-to-trust process is far less expensive – and much faster.

Michael Wyatt: No question about it. The speed of their trust loans  is much faster, typically five to seven days instead of two or three weeks. And if you sold a property outright, without using a trust loan, you have closing costs, legal fees; a commission;  etc.  It gets very expensive.  Going with a firm like Commercial Loan Corp – all costs are offset, unless you plan to keep a property for 2 or 3 years or less. Then it doesn’t make sense. But generally you’re looking at keeping that property for seven or more years, as a rule.

Property Tax Transfer: Didn’t you work for the Orange County Tax Assessor’s office for many years prior to opening up your own firm to help clients with real estate and property tax issues?

Michael Wyatt: Yes, that’s correct. I worked for the Orange County Assessors office for 25 years – working on the more complex industrial and commercial cases. I eventually became a manager reviewing ten Appraisers dealing with CA property tax law… until 2010. But it was mostly all pretty normal, average cases.

Property Tax Transfer: During all that time with the Orange County Assessor’s office, does anything stand out, looking back?

Michael Wyatt: Interestingly enough, we worked on the largest Great Park deal, which Lennar Homes purchased from the United States Navy. We actually ended up discounting the pricing on account of contamination. Coincidentally, my supervisor ended up being my partner in our current firm. By and large, most of the deals I managed were very ordinary.

Property Tax Transfer: By and large, who are your clientele?

Michael Wyatt: Most of my business, with property owners, comes from real estate attorneys… In fact, we’ve been approved by the California Bar to teach attorneys about Proposition 13 and SBE “share and share alike” – And the attorneys pre-qualify our clients. They get the value proposition right away, without much effort.

Property Tax Transfer:  At the root of it, what do you think brought about California Proposition 13 – inheriting property taxes, at a low base, from parents? 

Michael Wyatt: Let me tell you… During the time I worked for the Orange County Assessors office – Howard Jarvis, originator of the Proposition 13 property tax measure, was one of the largest apartment building owners in California… Many people don’t know this. And he saw first-hand that landlords don’t move. Citizens move – every 7, 8 years. So landlords benefited even more from Proposition 13 tax relief than the consumers! And it did benefit consumer of course, and still does. But this did help landlords even more so, and helped to keep rents low.

Property Tax Transfer: The Split-Roll commercial & business property tax – will it pass?

Michael Wyatt: The California Split-Roll tax on commercial real estate will not pass.

Property Tax Transfer: You truly believe that?  Commercial property owners will continue inheriting property taxes at a low rate; they’ll keep paying low property taxes every year, continuing to avoid property tax reassessment…

Michael Wyatt: Absolutely. Because all the big money people and power brokers in California, in Los Angeles, in the entertainment industry, in other big time industries, don’t want it. If it passed, shopping center owners and store owners would have to increase their prices on goods and services. No one in leading positions in the business world wants that. However, John Q. Public doesn’t   understand that. Big donors do understand it, and they affect the process. So the Split-Roll tax will not even get to a vote.

Property Tax Transfer: Really.

Michael Wyatt:  Really. It’s not even going to get to a vote.

Property Tax Transfer:  Not even get to a ballot? That’s incredible. Let me ask you something… Don’t consumers even suspect  that if the Split-Roll tax passed, there is no more inheriting property taxes from parents at nice low rates… No more cheap rent… All the goods and services they’re used to would go up, as landlords (owners of business and commercial properties), will be paying much higher property taxes, and will be forced to increase their tenants’ rent?

Michael Wyatt: No. Consumers typically don’t analyze these issues far enough out to see what the fiscal affect will be on them. But, even so – the public is still 99% in favor of leaving Proposition 13 in place. Despite all the misinformation in the media.

Click Here for Part Three….

PART ONE: Interview With Michael Wyatt, CEO of Michael Wyatt Consulting ~ Real Property & Property Tax Advisory Firm in Corona, CA

California Property Tax Consultant

Residential Property Tax Consultant

Michael Wyatt’s very busy consulting and advisory firm in Corona, California, Michael Wyatt Consulting, works with attorneys, CPAs, financial planners, real estate brokers and their clients; who have real property and require assistance with a property tax issue. Mr. Wyatt believes that each and every client is unique, and comes to his firm with unique real property requirements. No one is a simple number on a list at Mr. Wyatt’s firm. All real estate services are designed to customize every client’s real estate needs and solutions, with decades of experience behind every analysis, insight & service.

For 25 years, Mr. Wyatt functioned successfully as a star appraiser for the Orange County Assessor’s Office – and was consistently given the most difficult commercial, retail, office, industrial, residential and apartment project appraisal assignments. As Operations Manager, Mr. Wyatt served as a senior Commercial & Residential Review Appraiser. Michael Wyatt provided valuation and legal assistance to the Assessor’s Office top management and staff on current Assessor Office guidelines and procedures, with respect to property tax laws, appraisal best practices and techniques.

Michael Wyatt Consulting annually reviews clients’ real estate values. The firm studies and forms strategy for proposed real estate transactions, along with ensuring property tax assessment avoidance. Mr. Wyatt conducts comprehensive real property research, reviews real estate deeds and other instruments for accuracy prior to recording; and serves as a liaison between clients and the Assessor’s Office – maintaining smooth, issue-free communications, coordination and cooperation with Assessors and other essential governmental agencies.


Part one of the interview with Michael Wyatt, a California Property Tax Consultant


Property Tax Transfer: Mr. Wyatt, thank you so much for speaking with us today.

Michael Wyatt: Very glad to be able to do it. 

Property Tax Transfer: Can you tell us how you view Proposition 58, and how you explain this unique property transfer tax break to new clients?  You must have to teach certain clients about what’s involved to keep parents property taxes, avoiding property tax reassessment and what they need to focus on in order to transfer parents property taxes to themselves when inheriting property, and what’s involved with California property tax transfer, and  inheriting property taxes…

Michael Wyatt: You let them know that the Proposition 58 tax benefit entitles children of parents leaving them property to preserve the low Proposition 13 maximum 2% tax base. A California property tax transfer.  However, a lot of people don’t fully understand that you have to apply for the benefit. It’s not automatic. And it doesn’t apply to the principal home.

 Property Tax Transfer: What about explaining restrictions on this tax break?

Michael Wyatt: You have to explain to them that they get the assessed value tax benefit only if it’s a non principal home. You get the assessed value waved if for example it‘s a million dollar property… You get the million excluded – but the overage is reassessed… A lot of people don’t know that. The creators of the trust get this benefit.

Property Tax Transfer: Exactly how do you define “children” of the parent leaving property?

Michael Wyatt: The definition of ‘a child’ or “children” is typically the adult children of a decedent…But this also refers to step-parents. Step-parents can also transfer property to a step-child… Mom is a step parent and can still get the benefit. In laws get the benefit as well. You don’t have to be blood relatives.

Property Tax Transfer:  Michael Wyatt Consulting frequently works with the popular trust lender Commercial Loan Corporation, providing clients with trust loans. Beside talking to them about the California property tax transfer, how do you describe California Proposition 58, and that whole process to prospects or clients, that are sort of inexperienced with all this?

Michael Wyatt: We basically introduce the trust lender, for example Commercial Loan Corporation, as a private money lender that loans to irrevocable trusts, that applies for and works in tandem with California Proposition 58… for beneficiaries who are looking to sell their real property shares – for the purpose of facilitating “non pro-rata distribution”… So every heir gets an equal share of the entire overall estate – however, not necessarily of every asset.

Property Tax Transfer: So what happens if beneficiaries go to a conventional lender, like Wells Fargo?  Where there is no trust loan loan, no loans to to irrevocable trusts; no  tax benefits associated with property tax transfer or parent to child transfer (commonly known as parent to child exclusion), so on and so forth.  

Michael Wyatt: If there is a family that goes to a conventional, pricey lender like Wells Fargo for instance – they will always require adult children, beneficiaries that want to sell an inherited property, to ‘go off-title’, and that always triggers present-day tax reassessment. And that spells an expensive 66.66% tax hike!

Property Tax Transfer: Yes. Going “off-title”, taking your name off the title, always shifts you into a very expensive scenario. And if you use the Commercial Loan Corp. trust loan?

Michael Wyatt: Well, if the family in question uses the Commercial Loan Corp, cLoanC.com, a company we have been using for years… the loan they provide is to a trust, and not to beneficiaries; so there is no title, and no crippling 66.66% property tax reassessment. 

Property Tax Transfer:  Got it.  Can you give us an example, sir?

Michael Wyatt:  Well, for example, there might be three siblings… beneficiaries – and a house to inherit.  And this is always important to remember.  If you’re one out of the three siblings that wants to keep the inherited house,  you are definitely  looking at a 66.66% property value tax reassessment – if you’re operating without a loan to a trust, or you’re using your own cash; or getting money from a  very pricey institutional lender – typically with multiple restrictions and extremely strict terms. 

> Click Here to Continue to Part Two of the  Interview…

Michael Wyatt can be contacted at (951) 264-6152 for question  on retaining a parents low property tax base. You can reach the Commercial Loan Corporation at (877) 464-1066; or simply go to https://cloanc.com with questions on a loan to a trust, irrevocable trust, or a property in probate plus numerous other related issues.

Part Two: Propositions 58, 13 & 193 – Critics and Benefits – with Guest Real Estate Exec Devin R. Lucas

California Proposition 13 and 58

California Proposition 13 and 58

Conversation with Mr. Devin Lucas continues, from Page One…

Property Tax Transfer: Mr. Lucas, what is your opinion of Prop 13 critics, and we assume opponents of Proposition 58 as well, who continue to tell the media that the so-called split-roll measure is a great solution to local government  tax revenue shortages, and supposed pension under-funding?

Devin Lucas: Well, just because the local government thinks if they raise commercial property taxes that more revenue will flow into their coffers – this is silly. They’re not considering the fact that in the end the public will have to pay for the fact that commercial landlords and business property owners will raise rents on their commercial tenants. They’ll also be hiring less people.

Property Tax Transfer: So how does that work?

Devin Lucas: If businesses, stores, supermarkets, are  paying higher taxes – this will increase prices on everything – all goods and services purchased by consumers every day would go  consistently up, year after year, as their rents go up.  It’s ridiculous for split-roll supporters to think that magically all of a sudden they’ll have so much more money coming in and that will solve all their problems.

Property Tax Transfer: So who pays for all this in the end?

Devin Lucas: The public will pay for this in the end!  Even if their home taxes remain the same by avoiding property tax reassessment – all their daily expenses, day to day cost of things they need to live. They still need to buy bread and food and gas, don’t they? If that gas station owner’s property taxes go up, his gas prices will go up. He has to raise his prices to compensate for his increased taxes, right?

Property Tax Transfer: A business owner doesn’t actually have any specific obligation to raise his prices on everything…

Devin Lucas:  He has to survive! You know, that gas station owner’s property taxes can go up from $20,000 to $300,000… and who will suffer? With consumer goods, gas, utilities, clothes, food, basically all living expenses, all prices on goods and services going up? Consumers, of course. In the final analysis,consumers will suffer.

Property Tax Transfer: Thank you so much, Mr. Lucas, for talking with us today.  We greatly appreciate your time.

Devin Lucas: Thank you. Take care.

 

We trust Mr. Lucas’ forewarning will be heeded, so that California does not find itself slipping backwards, and in many ways forwards – into an entirely new set of unpleasant tax increases with a whole new series of jarring consumer goods and services price hikes, that would most likely occur, crippling many Californians who are just getting by, or perhaps are already saddled with numerous debts.

Devin Lucas, and seemingly most Californians, appear to believe it would be preferable to maintain Proposition 13 as is, leaving the consumer side alone, while keeping Proposition 58 as is, to be able to keep parent to child transfer of property low on taxes, avoiding property tax reassessment  or parent to child exclusion from present-day property tax reassessment.

California home owners feel very strongly about being able to maintain their parents property taxes… Without question, CA supports low rate property tax transfer; to be able to transfer parents property taxes, keeping their parent’s low rates intact… Just as Californians have grown accustomed to, when inheriting property taxes associated with inheriting a home and/or land from their parents, at any financial level. All in all, CA supports low rate property tax transfer simply by avoiding property tax reassessment at  present-day tax rates.  That’s all Californians want. Nothing complicated.  It’s really quite simple.

It’s refreshing to know that there are seasoned real estate professionals like Mr. Devin Lucas around, that do not approve of complicating matters with a confusing and unpopular “Split-Roll” property tax measure that bears the same name as the wildly popular 1978 Proposition 13 property tax shelter… Yet it is slated not to continue capping property tax rates, but to block the cap on property tax reassessment of commercial properties and industrial facilities all across California; thereby accomplishing the exact opposite affect – a tax hike   on businesses, with far-reaching consequences, that property owners in California have expressed extreme dislike and disfavor for.

Besides the clear cut popularity of Proposition 13, Californians of all incomes, residing in all areas, middle class to wealthy, have said repeatedly in surveys and polls that they’d also  prefer to leave Proposition 58 and Proposition 193 untouched, so loans to trusts, from trust lenders, are always available to citizens, whether it be a small trust loan,  or large loans to irrevocable trusts for families or for entrepreneurs – simply to help sustain a middle class or upper middle class lifestyle, household or business… whenever it’s needed.

Not that much has been written about Proposition 58 (a parent to child transfer of real property, or parent to child exclusion from avoiding property tax reassessment on any property at all) as well as Proposition 193 (grandparent to grandchild transfer of a home and/or land) so Click Here for more info on Proposition 58 and the ability to avoid property value reassessment on inherited real estate… For specific information on a related subject, property-based trust loans – Click Here.

Lucas Real Estate, property brokerage and real estate law, can be found at https://lucas-real-estate.com, if you or your family requires services such as Real Estate Sales; Real Estate Purchases; Family & Private Transactions / Propositions 58 and 193 (i.e. selling or gifting to children & grandchildren); Trust, Estate and Probate Sales / Trust Administration and Management for Real Property;  1031 Exchanges; plus numerous other residential and commercial real estate services for Californians.

Part One: CA Proposition 13, 58 & 193 – Critics and Benefits; with Guest Real Estate Exec Devin R. Lucas

California Proposition 13 and 58

California Proposition 13 and 58

Our California property tax relief Blog had the privilege of interviewing well known realtor  Mr. Devin R. Lucas, CEO of Lucas Real Estate,  in Newport Beach,  California, on March 13, 2020.

Mr. Lucas is a seasoned real estate professional who is not only well versed in California real estate sales and purchases, but also provides  professional assistance with Family Transactions / Propositions 58 and 193 (i.e. selling or gifting to children, grandchildren, etc.); Trust, Estate, Probate Sales & Private Party Sales;  Management of Real Property; Landlord / Tenant Matters; and a host of other critical real estate services.

We found Mr. Lucas’ point of view unique, in that his take on tax relief afforded by the 1978 CA Proposition 13, is quite favorable, unlike some in the real estate business.  We should also note that we are not referring to the new 2020 Proposition 13, that has been accused of “tricking California consumers…” into believing the new Prop 13 is the same Proposition 13 tax shelter measure passed into law on June 6, 1978.  The original, genuine Proposition 13 initiative enabled property owners to avoid property tax reassessment at current tax values, and to keep parents property taxes when it comes time to transfer parents’ property… and, obviously, to transfer parents property taxes, naturally.

Inheriting property taxes was never so stable and predictable as when Proposition 13 went into effect in 1978, and when Proposition 58 passed in 1978, protecting tax relief for offspring going through inherited, gifted or sold property tax transfer.

In fact, this new Proposition 13 “Split-Roll” may ruin parent to child transfer of inherited real estate.  It is a totally different measure that has now been revised and put in front of voters, to try to eliminate tax relief benefits for industrial & commercial facilities and business properties in California.

This new property tax measure commonly referred to as Proposition 13 “Split-Roll” may ruin parent to child transfer of beloved, inherited homes and land that often reflects the love and caring aging parents have for their adult children.  This tricky tax would most likely create what many financial advisors and tax analysts call a “slippery slope”; sinking California back into an unstable tax system; with arbitrary,   unpredictable property tax increases; and the general insecurity and economic malaise among residential, commercial and industrial property owners that follows, as it did so many years ago, before 1978.

 

Property Tax Transfer: Mr. Lucas, thank you for speaking with us today.  We appreciate  you taking the time to chat for a few minutes.

Devin Lucas: My pleasure.

Property Tax Transfer: Is there anything viable or helpful with this new 2020 Proposition 13, and the so-called “split-roll tax initiative” being promoted by opponents of the 1978 Proposition 13 tax relief initiative and, by attrition, the 1986 Proposition 58 property tax transfer measure?

Devin Lucas: Let me tell you something. The government has enough money.  They don’t need to go after home owners.

Property Tax Transfer: Understood. Can you tell us what rings true for property owners, where Proposition 13, Proposition 58 and 193 are concerned?

Devin Lucas: For existing property owners… the key thing is that you can buy a property and have stability, knowing that your taxes won’t go up more than they should…   This creates a sense of security.

Property Tax Transfer: It does. Do you think there is any validity to the claim that because of Proposition 13, and Proposition 58, older  home owners are less likely to put their house on the market?  Thereby helping to shrink  the real estate market to some degree?

Devin Lucas: Well, people do stay longer in a house if they can avoid property tax reassessment. And yes it does benefit some older people. But, hey.  It’s not just a property, it’s your home. Why shouldn’t you want to stay in that home.

Property Tax Transfer: Why do so many tax analysts in California talk about the dangers of raising commercial and industrial property taxes with the 2020 split-roll tax measure?

Devin Lucas: Look… If you double taxes on landlords, rents will go up. By keeping property taxes low, rents stay low.  Look at it this way, if I sell consumer goods, and my rent doubles I’ll have to increase prices on all the consumer goods I sell. Right? It’s simple. Consumers pay in the end. That’s what a split-roll tax will result in.

Property Tax Transfer: How would a property tax increase from the split-roll tax affect landlords?

Devin Lucas: Landlords will pass increases on to their tenants that own a  business, right? Those business owners will increase their prices; salaries freeze or go down; hiring freezes… When property taxes for business owners go up $10,000 to $200,000 or $20,000 to $300,000 – what d you expect?  That’s what commercial tenants will do – pass on the costs to customers – the public.

>> For Part Two, Click Here…     

Blog Feed: Property Tax Transfer & Trust Loans – Transferring Property Taxes While Avoiding Property Tax Reassessment

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Property Tax Transfer

California Property Tax Transfer

There are, as we all know, numerous reasons that California property owners support Proposition 13 and California Proposition 58.  Proposition 13, passed by voters on June 6, 1978 protects individual consumer and corporate owners of residential and commercial real property from current property tax reassessment, with the exception of completion of new property construction and/or a change in property ownership.  Proposition 58  was approved as a California constitutional amendment by voters on November 6, 1986 – to exclude transfers of real property between parents and children from property tax reassessment.  Moreover, CA trust loans keep parents property taxes low, insuring that an even distribution can be made.

Generally, this gives adult offspring the ability to keep parents property taxes – in other words, to retain a parent’s lower Proposition 13 protected property tax rate. This frequently results in families saving literally thousands of dollars every calendar year. Moreover, these activities open up opportunities for  companies like the Commercial Loan Corporation to help  California beneficiaries and heirs who are middle class, not particularly wealthy, to qualify for Proposition 58 property tax benefits, by providing bridge loans to trusts and probate estates in order for an even distribution to be made for these heirs and beneficiaries. This is precisely how trust loans keep parents property taxes low in California.

Since 1978, Proposition 13 has saved California taxpayers over $528 billion – which has saved every taxpayer in California more than $60,000.  The 1978 Proposition 13 tax shelter finally provided residential and commercial property owners in California with tax relief that has proven, year after year and decade after decade, to be reliable, predictable and secure.

California home owners and renters all enthusiastically support Proposition 13, being able to reliably avoid  property tax reassessment at current tax levels; as well as Proposition 58, with respect to parent to child transfer of property, and parent to child exclusion from property reassessment…  and Proposition 193, involving grandparent to grandchild property transfers, when inheriting property taxes – which has collectively enabled families to comfortably transfer real property from parent to child, and keep parents property taxes, without being reassessed with constant  property tax increases.

Renters in California support Proposition 13, due to the fact that most residential and business renters are aware that as long as their landlord’s property taxes remain low, their rent is likely  not to go up.  Whereas if landlords’ taxes in California go up – we can predict with mathematical certainly that business  rents will follow.  Landlords will more or less have no choice but to increase their tenants’ rents.

Naturally, this would affect stores, gas stations, offices, industrial facilities, and so on – and that would ultimately affect the cost of food, of business goods and services; of gas;  so forth and so on.  Everything would go up.  And consumers would be hit hard.   Which is basically why renters in California support Prop 13, even if they’re not property owners themselves. In fact — why mostly everyone in California with a sense of community and fairness wholeheartedly supports California Proposition 13, 58 and 193.