A Prop 19 equalization loan gives the sibling who wants to keep the family home the funds to pay off the others, fast enough to file the BOE-19-P claim before the deadline and lock in the low property tax rate that could save the family hundreds of thousands of dollars over the coming decades.
This page is for informational purposes only
It does not constitute legal, tax, or financial advice. Please consult a qualified California attorney and tax advisor before making decisions about inherited property.
How Prop 19 Equalization Works
When a parent dies and leaves California real estate to children, Proposition 19 (effective February 16, 2021) allows one child to inherit the property without a full reassessment to current market value, but only if that child actually moves into the property and uses it as their primary residence, and files a Claim for Reassessment Exclusion for Transfer Between Parent and Child (form BOE-19-P) with the county assessor within one year of the transfer date.
If those two conditions are met, the property tax assessed value stays at the parent's low rate, subject to a cap that allows the exclusion only up to $1,000,000 above the current assessed value.
When multiple siblings inherit the property together, the one who moves in needs to buy out the others first. The buyout payment establishes who owns the property, and the filing locks in the low tax rate. The equalization loan provides the cash to make those payments happen fast enough to meet the deadline.
Why Timing Matters So Much
The one-year clock starts from the date the property is legally transferred, not from when the estate closes or when you finally have time to focus on it. In trust cases, the transfer typically occurs when the successor trustee distributes the property to the beneficiaries. In probate cases, it occurs when the court approves final distribution.
Families regularly lose the Prop 19 exclusion not because they do not want it, but because the estate process took longer than expected and suddenly the deadline is two months away. At that point, you need a lender who can actually fund in weeks, not a bank that needs three months of processing time.
We fund in 8 to 14 business days
That is enough time even when the clock is running. Contact us as early as possible, but do not assume it is too late without calling first.
A Worked Example With Real Numbers
Here is a typical California scenario.
Maria and her two siblings inherit their mother's home in Santa Ana. The property was purchased in 1978 and has been governed by Proposition 13 ever since. For property tax purposes, it is assessed at $210,000. The current market value is $950,000.
The Santa Ana Scenario: Maria and Two Brothers
Maria applies for a Prop 19 equalization loan. We appraise the property, confirm the loan-to-value fits within guidelines, and fund $634,000 in 10 business days. Maria pays her brothers. She moves into the property and files the BOE-19-P with the Orange County assessor within the one-year window.
The new assessed value under Prop 19, accounting for the cap, settles at approximately $360,000. Annual taxes come to roughly $4,320. On an equalization loan that costs $55,000 to $70,000 all in for one year of financing, the math makes the loan a clear winner for most families.
Our Process
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Day 1: Initial review and term sheet
You call or submit an inquiry. We review the basic facts: property location, estimated value, current assessed value, number of co-heirs, and amount needed. If the numbers work, we issue a preliminary term sheet within 24 hours.
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Days 2 to 4: Application and valuation
You submit the full application and supporting documents. We conduct our in-house BPO valuation and open title.
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Days 4 to 8: Underwriting
We complete underwriting using the valuation and title results. No surprises at this stage if the initial review went smoothly.
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Days 8 to 12: Closing and wire
Loan documents are prepared and signed. Escrow closes. Funds wire to the departing beneficiaries. You are now positioned to file the BOE-19-P and lock in the low tax rate.
After you hold clear title, typically when the trust is wound down or probate closes, you can refinance the equalization loan into a conventional mortgage at a lower rate.
Rates and Fees
We publish our rate range here rather than asking you to call first.
| Item | Range |
|---|---|
| Interest rate (per year) | 9.5% – 10.95% |
| Origination points | 1.25 – 1.95 points |
| Appraisal (in-house BPO) | No charge |
| Lender document fee | No charge |
| Prepayment penalty | None |
| Title and escrow | Standard California rates |
On a $600,000 equalization loan, origination at 1.5 points is $9,000. Monthly interest at 10% is $5,000. If you refinance after 10 months, total financing cost is approximately $59,000. Compare that to $141,000+ in 20-year tax savings, and most families find the loan pays for itself in four to seven years.
What Documents You Will Need
- From the trust or estate: The trust agreement (or relevant sections) or Letters Testamentary, showing the trustee's authority over the property and the distribution instructions.
- Property information: Current property tax bill, address, any existing mortgages.
- Buyout agreement: A written agreement among the co-heirs on the buyout amounts, even if it is just an email exchange.
- Identification: Government-issued ID for the borrower.
- Evidence of residency plan (optional): Not required for loan approval, but useful to have for the BOE-19-P filing. Keep your moving documents and utility setup records once you move in.
Frequently Asked Questions
What if I cannot move in exactly when the loan funds?
The BOE-19-P requires you to establish primary residency and file within one year of the transfer date, not the loan funding date. Moving in a few weeks after funding is fine as long as you are comfortably within the one-year window. If you are close to the deadline, talk to your attorney about any grace provisions.
Is there a cap on how much the Prop 19 exclusion covers?
Yes. The exclusion applies to up to $1,000,000 above the current assessed value. For properties where the gap between assessed and market value exceeds $1,000,000, part of the gap is still reassessed. We can walk through the specific math for your property during the initial conversation.
Can I use this loan if the property is in probate rather than a trust?
Yes. Probate estate properties qualify. The loan structure is slightly different, secured by the estate's interest rather than the trust's, but the process and rates are similar.
What if one sibling refuses to accept the buyout?
We cannot fund a contested buyout. All departing beneficiaries need to agree before we can proceed. If a co-heir is refusing, a partition action or mediation may be necessary first.
Can I lock in the Prop 19 rate even if the property needs work before I can move in?
The county assessor's primary concern is that you establish the property as your primary residence and file the BOE-19-P within the year. Minor renovations or preparation work while you are still within the one-year window generally do not disqualify you. Verify with your county assessor and attorney.
The One-Year Window Does Not Wait
If you are within reach of a Prop 19 deadline, the earlier you start the application, the more options you have. Call us and we will get back to you within a business day.
Call 760-722-2991