Proposition 19 and the one-year deadline
California Proposition 19, effective February 16, 2021, narrowed the rules for transferring a parent's low property tax basis to an inheriting child. Under current law, a child can preserve the parent's assessed value only if they move into the inherited home as their primary residence within one year of the transfer. If multiple siblings inherit the home, only one can claim the exclusion, and they must first buy out the other siblings' interests.
The savings from preserving the exclusion can be enormous. A parent who bought a home in 1980 for $120,000 may have an assessed value of $200,000 today, while the home's market value has grown to $1.2 million. Annual property taxes at the low assessed value might be around $2,400. Annual taxes after reassessment at market value could exceed $12,000. That is a difference of nearly $10,000 per year, year after year, for as long as the heir owns the property.
A Prop 19 equalization loan from North Coast Financial lets one heir buy out the others quickly, meeting the one-year deadline and filing the BOE-19-P form with the county assessor. We fund these loans in 8 to 14 business days. Use the calculator below to estimate the savings for your family's specific property.
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These are estimates assuming constant assessed value, tax rate, and market value. Actual savings will vary based on annual reassessment limits, future market changes, and county-specific rates. Consult a property tax advisor for a precise analysis.
Call 760-722-2991 to Discuss an Equalization LoanHow an equalization loan works
When two or three siblings inherit a parent's home and one wants to keep it, the keeping sibling must pay the others for their shares. If the keeping sibling does not have the cash on hand, an equalization loan secured by the property provides the funds. The loan is funded quickly, the co-heirs are paid, sole title passes to the keeping sibling, and the BOE-19-P form is filed with the county assessor before the one-year deadline.
The keeping sibling then either refinances the equalization loan into a conventional mortgage once they qualify, or repays it from other sources. The property tax savings over time typically far exceed the cost of the equalization loan, making it one of the most financially sound short-term loans a California heir can take.
North Coast Financial funds Prop 19 equalization loans throughout California. Rates run from 9.5% to 10.95% with origination of 1.25 to 1.95 points, no prepayment penalty, no appraisal fee, and no lender document fees. Minimum loan $30,000. Call 760-722-2991 to get started.