Your Source for Timely, Accurate News & Info on California Prop 58 & Proposition 13; Transferring Property Taxes, and Unhampered Use of Parent to Child Transfer of Properties ~ for Trusts & Estates
Most CA property owners back Prop 13, and Proposition 58. And it’s worth pointing out that California Proposition 13, also called The People’s Initiative to Limit Property Taxation, voted into law as an amendment of the Constitution of California – is, after 42 years, even more popular today as it was when Californians voted it into law on June 6, 1978. (Interestingly enough, the same date memorializing the Normandy landings, D-Day on June 6, back in 1944.)
As a matter of fact, CA Proposition 13 was championed early on, and driven successfully through numerous political obstacles, by the famous Howard Jarvis Taxpayers Association… whose courageous and inspired CEO, Mr. Jon Coupal, took over the Chief Executive reigns in 1999, and is largely responsible for leading the charge for accelerated property tax relief in California, right up to the present.
There are many reasons that most CA property owners back Prop 13, Proposition 58, and usage of the parent to child transfer of all types of real property in California. Financial analysts tell us, in no uncertain terms, that Proposition 13 has saved California taxpayers over $528 billion – saving the average middle class California family more than $60,000 to-date… and counting.
A clear-cut majority of home owners in California still support Proposition 13, and Proposition 58, for parent to child transfer of property, parent to child exclusion from property reassessment, or Proposition 193 involving grandparent to grandchild property transfers, when inheriting property taxes – which has, after 1986, enabled families with home owners to transfer real property from parent to child, and keep parents property taxes, without being reassessed at present day tax rate increases.
|In fact, as CEO Jon Coupal and his Taxpayers Association tells us – California Proposition 13 has made all residential, industrial and commercial property owners’ taxes in California far more reliable, predictable and reasonable than they ever have been…|
As long as California property owners want to take advantage of property tax relief… with the use of unhampered parent to child transfer of properties; and the ability to avoid property tax reassessment when inheriting property taxes… with the lawful right to keep parents property taxes — the public will find a way to retain these property tax breaks, despite constant efforts to unravel or water-down critical property tax relief elements voted into law in 1978 with Proposition 13, and in 1986 with Proposition 58.
In other words, Californians will fight hard no matter what, to keep their property tax breaks, to keep parents property taxes; to protect property tax transfer, no matter how many times opposing political parties try to destroy property tax relief in the state of California.
|Property tax transfer is discussed here, in various posts, within this blog. Or, click here for more info and Q & A on Proposition 58 (and Proposition 193)…|
Even though most CA property owners support Proposition 13, as well as Proposition 58 and 193 – opponents of Prop 13 and Prop 58 appear to be, when all is said and done, after more cash from tax payers in California. A stubborn minority that simply opposes property tax relief, such as special interest politicians in the pocket of certain powerful people in select sectors of the real estate business.
Moreover, we shouldn’t forget financially and politically driven local and state government employee union bosses, plus some poorly informed independent realtors and educational system administrators with tunnel vision… A few mainstream newspapers like the SF Chronicle and LA Times, with an interest in big-bucks real estate advertising – and of course your hard core local government tax collectors – who are simply after more hard cold cash from tax payers in California… plain and simple.
The critics of these property tax relief initiatives still seem to be laboring under the long-held misconception that there would be more cash coming into the real estate business, and into state coffers, were it not for the lack of present-day real property value reassessment associated with Proposition 13 and Prop 58… directly affecting California tax revenue.
Frankly, after examining the facts driving these property tax issues, it is plain to see, for anyone that is really looking… that these long held misconceptions that critics of property tax relief cling to so tightly, and in fact exactly that – nothing but misconceptions.
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This “parent to child exemption” has saved so many beneficiaries, homeowners and commercial property owners, thousands of dollars; making it possible to put a few dollars away in the bank every year, with the ability to avoid property tax assessment… and transfer parents property taxes at a reasonably low base rate — having the right to keep parents property taxes at the low tax base they were accustomed to paying; i.e., inheriting property taxes that remain low.
Otherwise — very few middle class homeowners could afford to keep an inherited home. They’d have to sell out, given that most of these estate heirs or trust beneficiaries have their own home to maintain and pay taxes on! Or, beneficiaries can still go to a blog or Website that is deeply focused on Proposition 58 and Proposition 13, trust loans and estate property tax reduction like, for example Property Tax Transfer Trusts.
Or you can conduct research on some other sites focused on Prop 58 and unique, consistently effective uses of intra-family trusts as trust loans, generally to buyout property shares owned by co-beneficiaries of the same estate or trust — along with locking in a low property tax base by avoiding CA property tax reassessment at current, typically high market values, such as https://cloanc.com/tag/california-prop-58
Exactly why many of us think other states, particularly expensive states, should be looking into property tax relief for all property tax transfer scenarios, involving property tax breaks like the parent to child transfer of inherited property, similar to tax breaks avoiding CA property tax reassessment at current market value.
Realistic examples of high-tax states that desperately need property tax relief are, for example, states like Massachusetts, or New York, Texas, or Pennsylvania… States like this should all have a property tax exclusion or exemption to protect middle class homeowners from property tax evaluation at current market rates… giving residential and commercial property owners the right to avoid property tax reassessment every year. Establishing lower property taxes for all property owners, including landlords; which would affect apt. building and commercial store rentals all across any major state… thereby impacting the finances of middle class residents and commercial property owners in an extremely positive fashion.
The surprising reality in California is the fact that so many homeowners do not understand property tax transfer, nor do they understand the use of trust loans and trust lenders, when inheriting a property you want to keep, and need a trust loan to pay off beneficiaries who had insisted on selling their shares in the inherited property, to equalize cash for them in the process, so they don’t need to sell, often below fair value, to a third party.
People that do not understand any of this need to do a little research, on info blogs like this one; or on Websites that delve into Proposition 58, and how property tax transfers and trust loans work, such as the Trust and Estate Loans Website… or at one of the transaction oriented sites like Commercial Loan Corp This gives nervous beneficiaries a great deal of accurate information to help them avoid estate conflicts with co-beneficiaries… typically siblings. So for once, the inheritance and estate process becomes a win-win experience for all concerned! If you need assistance with a Trust or Estate Loan, you can reach Commercial Loan Corporation at 877-464-1066. They can assist you with the process and answer any questions you might have on the topic of Parent to Child Exclusion from Reassessment and transferring the property taxes from a parent to a child when a trust is involved.
It’s time we ask ourselves – exactly what kind of affect will CA Proposition 19 most likely have on California?
There is a lot more to this than meets the eye. As of June 6, 1978 California has been the one state in America with direct access to a low tax base model, becoming accustomed to the classic Prop 13 property tax cap… working in tandem with the 1986 Proposition 58 protected property tax transfer & parent to child exclusion, making it possible thanks to Proposition 58 for homeowners & commercial property owners to avoid property tax reassessment at current market rates. Basically forever, as long as they retained the property they inherited.
Proposition 19 has now cut deeply into critical Proposition 58 property tax benefits, closing the door on the parent to child exclusion (i.e., parent to child exemption), if a property owner is not able, for whatever reason, to move into their inherited home within a year after the passing of the parent that has left the house and/or land to his or her heirs.
Proposition 58, and of course Prop 13 tax relief, as well as trust loans to buyout co-beneficiaries while locking in a low tax base, has been a life saver for so many estate heirs and trust beneficiaries in California. Life everywhere is hard these days for middle class residents, and California is an especially expensive state to live in. Moreover, inheriting a home from a parent is a major asset, and being able to save thousands of dollars on property taxes during the initial property transfer, and yearly, certainly adds value to the good fortune provided by these property tax breaks.
A quote from the Los Angeles Times summed it up succinctly on Oct. 19, 2020:
“ …a qualifying homeowner who owns a home with a taxable value of $200,000 that is worth $600,000 on the market would pay roughly $2,200 in property taxes now. If the homeowner moves to a $700,000 house, the homeowner would pay $3,300 a year in property taxes under Proposition 19. Without the initiative, the same homeowner would pay $7,700 annually…”
Of course they forgot to mention that this property tax “initiative” must be implemented strictly within a year after the decedent passes away. Or the door to the tax break slams shut.
Yet, adding absurdity yet again to redundancy, the Los Angeles Times once again repeats the one, almost comical, example of “families taking advantage” of this sort of property tax relief, using your right to a parent to child transfer exemption… indicating repeatedly that there are numerous examples of inherited homes and Prop 13 as well as Prop 58 tax breaks being used by all these rich folks as money making outrages , renting our inherited properties on the beach for $16,000+ per month, and never using it as a primary residence.
Yet it truly is comical that after 40 years we still have not heard about one other specific family in California engaged in this sort of money-making practice, but “Jeff Bridges and his siblings”. Now, we’re certainly open to hearing about other families involved in property tax transfer activities like this, inheriting property taxes from parents at a super low base rate every year, just to be a beachfront landlord raking it in every year from other rich people who are addicted to sun and surf. Yet no other family name ever surfaces.
And again and again we hear about this one family, the Bridges, taking advantage of Proposition 13 by renting out luxury homes to wealthy residents… once again in the LA Times in Oct. of 2020,
“The provision has since been dubbed “the Lebowski loophole” after The Times found that “The Big Lebowski” actor Jeff Bridges and his siblings had advertised a beachfront home in Malibu inherited from their parents for nearly $16,000 a month in rent despite an annual property tax bill that’s a fraction of that amount.”
So is the LA Times telling us that they simply cannot come up with one other family that inherits a luxury property like this and then makes a killing every year renting it out?
These property tax benefits are indeed genuine, and actionable for mostly middle class families. Not rich movie stars like Jeff Bridges. The parent to child transfer exemption has always been there for middle class home owners and beneficiaries… since 1986, and actually since 1978 with the advent of Howard Jarvis’ Proposition 13.
The ability to avoid property tax reassessment, to exercise your right to a parent to child transfer exemption, even for a modest secondary property from parents, really can be a life saver for middle class residents who are not rich, and need every break they can lay their hands on. This conspiracy theory that gives Californians the impression that these tax breaks are mainly for wealthy property owners is completely false. If anything, you could call it a middle class tax break, period… and you’d be 100% truthful.
Now all of a sudden that tax break is gone unless you move into your inherited property within one year of having inherited it. Is this simply to upset the Bridges family? And if you don’t move into your inherited home as a primary residence within one year you will lose your property tax transfer benefits… you will lose your parent to child transfer exemption. You won’t be able to transfer parents property taxes, there will be no inheriting property taxes fro parents. If you miss that 12-month deadline your ability to keep parents property taxes will evaporate completely. And if you don’t think this is real, guess again.
Critics of property tax relief in California, proponents of Proposition 19, repeatedly tell us, “Fine! What’s the big deal anyway? You can move into inherited property within a year and then enjoy your right to avoid property tax reassessment forever! So what’s the problem:” Well… the problem is that perhaps some beneficiaries can’t make that move so easily within year one. Perhaps this is not the most realistic tax revision ever voted into law.
Over 650,000 new homeowners, beneficiaries, took advantage of a Proposition 58/Prop 13 tax break over the past ten years; that gave them the right to maintain their parents’ low property tax base upon inheriting a home from a parent. How many heirs or beneficiaries inheriting a home this way over the next ten years will lose inherited property because they will not be able to move into their inherited home smoothly, without problems, as a primary residence within 12 months?
No one knows exactly. However, we can safely say – a lot! More revenue for the Legislature. More homes on the market for realtors. More cash to pay off unfunded state government pensions. That, we know.
There are a myriad of reasons why Proposition 19 will turn out to be inconvenient and awkward at best – to be, at worst, an unnecessary tax measure that will effectively fray the fabric of the estate and property inheritance system in California. For example:
• Ones’ job may be an extra 60, 90, whatever, hours away on the freeway getting to work from this new inherited home from mom or dad – and then back again after work.
• Perhaps a spouse also may have significant travel issues, to and from work, regarding distance to and from a new home.
• School for children can easily be an issue, if an inherited home is in a new school zone. All familiarity, neighborhood friends, teacher relationships, social relationships – all gone, if they’re near where you lived previously. This can cause all sorts of issues for children.
• A beneficiary could be disabled; and prior to moving abruptly within a year, may need to start fixing up an inherited home to accommodate disabilities – generally costing a good deal of money to implement physical changes of this kind, ramps, safety measures in various rooms, etc.
• Many beneficiaries are senior, which would make such an abrupt move very difficult at best – and for many, downright impossible.
• There is also the matter of selling your inherited house, most likely for a good deal less than it’s probably worth due to Covid issues affecting many California properties; over the next decade.
• Lastly, and ironically, all this hub-bub regarding additional presumed mountains of revenue from new Proposition 19 driven property taxes will, if Jon Coupal and the Taxpayers Association are correct, serve mainly to pay for unfunded state government pensions. Perhaps a small fraction for the schools system… But that’s about it.
So, as we originally indicated – there is a lot more to this issue than meets the eye.
The Los Angeles Times, in their inimitable fashion, put it like this on Oct. 19, 2020:
“About 650,000 California homeowners over the last decade received a tax break that allows them to maintain their parents’ low property tax payments when they inherit their homes…
The provision has since been dubbed “the Lebowski loophole” after The Times found that “The Big Lebowski” actor Jeff Bridges and his siblings had advertised a beachfront home in Malibu inherited from their parents for nearly $16,000 a month in rent despite an annual property tax bill that’s a fraction of that amount.
Proposition 19 would eliminate this property tax break for investment homes and commercial properties, meaning that heirs who inherit their parents’ properties would pay taxes based on market value. With some limitations, children who move into homes inherited from their parents would be able to retain the tax break.“
Interesting how the Times gives credence to deceptive wording, while confusing the so-called benefits of Proposition 19. They parse the actual Prop 19 rules and regs, and purpose in fact…twisting the facts to read, “Proposition 19 would eliminate this property tax break for investment homes and commercial properties…” Prop 19 does not now exist to eliminate investment homes and commercial properties. It exists to eliminate the parent to child exclusion, or parent to child exemption… unless you change your life and move into a new inherited home within a year.
Interesting that The Times chooses to leave out the fact that inherited property will be sold off at a loss by inheritors who may not be able to move into inherited property within a year… because middle class homeowners, 95% of the folks affected by this new tax law, won’t be able to afford the new property taxes without the parent to child exemption being utilized within that year one after mom or dad dies.
Instead of telling it like it is The Times tells us, “With some limitations, children who move into homes inherited from their parents would be able to retain the tax break.” Sure, “some limitations” meaning those folks inheriting property must uproot themselves and set up a new life within 12 months, plus sell the home they are living in, or give up their inherited home at a financial loss. And maybe they can’t just up and leave their current residence, sell it, and move to a new home that was owned by their parents, that perhaps does not suit them and their family. For a number of reasons.
Proposition 19 doesn’t exist to eliminate greedy real estate investors… It exists to push middle class home owners out of the way, to force them to sell inherited property if they can’t uproot themselves and move into their inherited home within a year while figuring out a way to sell their own home. In a market hampered by Covid, where maybe it’s not so easy to sell that home they’ve been living in. These are not investment sharks and real estate hustlers, as the Los Angeles Times is falsely hinting at. These are regular middle class home owners.
This new tax law affecting property tax relief in California was put in place to generate more money for realtors and the CA Legislature. Directly impacting consumers. Regular folks, like you and I. Not to eliminate “property tax breaks for investment homes and commercial properties”. That is, we’re sorry to say, a false characterization.
Abruptly, the entire state found out at the last moment, prior to the November vote, that C.A.R. had launched Proposition 19, along with the California Legislature, which passed by a few votes; due mainly to an extremely clever, albeit a bit deceptive, marketing campaign – confusing voters while hiding the fact that Prop 19 exists to kill parent to child exclusion benefits, bit by deceptive bit. Don’t be fooled, completely unraveling the parent-to-child exemption is their eventual goal. Not giving residential and commercial property owners the ability to avoid property tax reassessment every year.
This type of tax break frees property owners from chronic stress based on unpredictable property taxation that is typically high for middle class incomes. This form of property tax relief makes life in general more secure and more affordable for middle class and even upper middle class residents. Rich folks we don’t really need to worry about. They’ll be fine either way. This type of tax relief allows beneficiaries to keep parents property taxes, and of course gives them the ability to transfer parents property taxes when inheriting property; avoiding property tax reassessment, keeping their tax base low through CA Proposition 13.
What is truly incredible to many of us is the ability for a beneficiary in California to use Proposition 58 to get a special loan providing cash to co-beneficiaries through an irrevocable trust, for middle class beneficiaries who want to smooth out cash obstacles (often referred to as “equalizing liquidation”) when it comes to conflicts between siblings who want to sell property versus family members who prefer to keep inherited real property… an invaluable property tax benefit. Which is exactly why it’s so important to understand how and why Prop 19 exists to kill parent to child exclusion benefits at some point in the future… This is the C.A.R. and CA Legislature’s first baby step in that direction.
All states, forever grappling with this Covid crisis, should be heading towards tax breaks for regular middle class people, and not wasting the country’s time with absurd tax law benefiting a few wealthy corporations, a couple of hundred billionaires and multi-millionaires, with huge tax cuts they do not really need; and corporate welfare for immense companies that would be just fine without it. While a couple of hundred million Americans struggle by generally without tax breaks or tax loopholes of any kind to help them put away some extra cash in the bank every year.
In fact, all states need a Proposition 13 and Proposition 58, to help middle class families get by every year. That’s why beneficiaries or heirs in every state who are expecting real property, or are leaving real property to their own heirs, should conduct some careful research on blogs and Websites that focus on inheritance matters, to get more familiar with Proposition 58 and trust loans, on beneficiary issues and CA Proposition 13. They should study informative niche blogs like this one… as well as other niche Websites that cover property taxes in depth… that delve into California Proposition 13, 58 and 193, as well as how trust loans can help beneficiaries.
All resident should learn more about why Prop 19 exists to kill parent to child exclusion benefits, bit by bit; how to keep parents property taxes and how to transfer parents property taxes, inheriting property taxes, or property tax transfer, parent to child transfer and parent to child exclusion – for residential properties of course; however, also for business oriented sites and commercial properties… that take full advantage of Proposition 58 — making use of trust loans to buyout inherited property from siblings, such as simply to get the facts straight on the transfer of property between siblings, how to buy out siblings share of a house; what makes sibling to sibling property transfer work; and how loans to irrevocable trusts help co-beneficiaries get cash while avoiding the necessity to sell their share of the inherited property.
Then, once they get your pitch together, folks in all states can tell their congressional representatives to get moving on passing property tax law for middle class home owners, not just rich folks that live in lovely upscale neighborhoods!
Many of us wonder when it got to this point in this country, when virtually the only way you can have a genuinely comfortable, safe, secure life is if you are fabulously wealthy – and nothing below that or in between.
It’s no surprise to anyone in California that if commercial property owners, landlords, business and industrial facility owners ever have their property taxes increased by any tax measure like Prop 15 – rents will go up for business tenants and apt. dwellers. Most goods and services in the state will go up, increasing the cost of living and negatively impacting 40 million consumers in the state of California. Companies that can’t abide higher taxes will soon leave California, to more empathetic states, and they will take their jobs with them. If Proposition 15 ever returns, or comes back with another name, with more deceptively effective marketing. It is indeed a mystery as to why the Legislature in California would want to impact the entire state in this fashion. They claim it’s to fund the school system. According to Jon Coupal at the Taxpayers Association and other analysts and state economists, this is merely a thinly disguised ruse to pay for a few hundred unfunded local government staff pensions. Either way… is it worth it, to impact 40 million Californians this way?
To be fair, every single state in America should have property tax breaks like this – not just for wealthy folks and massive companies… but for everyone… regular middle class Americans. What is so difficult to understand about this? Are working class people in states other than California going to keep voting in the interests of billionaires, which is OK, but against their own best interests? Against property tax breaks for middle class or working class families? Now that makes no sense.
People ask, what is so crucial about CA Proposition 58; important enough to stop a Proposition 19 tax upheaval to unravel Prop 58 and Prop 13 parent to child transfer ability, the parent to child exemption or exclusion. Which every state should have in one form or another. That’s the point here. Tax relief allowing you to save on the transfer of property from parent to sibling and sibling to sibling.
To find out, or to confirm, who your Senators are, make use of the search tools at https://www.senate.gov/senators/index.htm or go to https://www.senate.gov/general/contact_information/senators_cfm.cfm Or to confirm who represents you and your family in Congress, you can go to – https://www.house.gov/representatives/find-your-representative or you can use the search tools at https://www.govtrack.us/congress/members These Websites make the investigation process extremely easy… Whereas years ago it was almost impossible to figure all this out.
Now, it’s simply a quick search and you have all the info you need to move forward and start telling your representatives in Washington how they should be doing their job!
As we all know, the Coronavirus crisis is not abating in many states – causing severe and consistent unemployment, and overall economic uncertainly. Certain states are floundering more than others, without any federal support of any kind, even PPE – thereby costing tens of thousands of families the lives of loved ones.
With millions of jobs initially put on hold – jobs that were placed on “furloughed” status or were standard “lay-offs”… are still in question, as far as resurgence is concerned. Regrettably, it’s impossible to determine the exact number of jobs lost, as some return: whereas others do not. Therefore, constant fluctuations make permanent calculations difficult to nail down.
Making matters even more challenging, the federal government historically calculates “unemployment rates” by adding up the number of workers signing up for unemployment checks; and deduce an unemployment rate in this fashion. However, once workers stop getting unemployment checks they somehow magically disappear off the grid. As if they somehow were never in the system.
It would be safe to say that unemployment, nationally and statewide, remains at critical levels. And yet California is still the only state in the union that provides middle class residential and commercial property owners with genuine property tax breaks.
And this is exactly what every state in America needs right now, with unemployment and Covid still spiraling out of control. Lowering property taxes would surely loosen up some cash to help working families buy food and maintain some decent health coverage, plus put some money away for emergencies.
If we were able to get property tax measures passed in most states, similar to the mega-popular tax breaks California home owners and commercial property owners enjoy, the overall positive cumulative affect on American tax payers would be significant. Folks would be able to easily transfer parents property taxes, and keep transfer parents property taxes, or buyout while inheriting property taxes at a low base rate.
Especially in times like this – shouldn’t we all have access to property tax relief like this? An intra-family loan to a trust, using Proposition 13 and Proposition 58 type of property tax transfer benefits and tax breaks, with parent to child transfer or as law firms refer to it – parent to child exclusion, or exemptions.
Do some research and push your Beltway representatives in Congress to put together some bills like California has passed to help home owners and commercial property owners. And you can use the Covid crisis for added motivation. This is covered on informative, accurate niche Websites such as Commercial Loan Corp.
An intra-family loan to a trust in conjunction with Proposition 58, or Prop 193, makes it possible to maintain a low property tax base basically forever upon a beneficiary buyout of sibling property shares, or as realtors call it, “the transfer of property between siblings”, and “lending money to an irrevocable trust“ – typically from an irrevocable trust loan lender.
While you’re at it, take a look at the CA State Board of Equalization to find out how all this works, or research niche info blogs such as this one, Property Tax Transfer… Plus other sites focused on property tax breaks for Californians. And let’s be frank… Living in that state, although there are great benefits, is admittedly expensive – in relation to many other states.
States like New York, Texas, New Jersey, Connecticut, Massachusetts… are all expensive states to reside in. With zero property tax relief or significant tax breaks of any kind – unless you’re a multi-millionaire or billionaire. Then you get nothing but legislated V.I.P. tax cuts. However, firms like Commercial Loan Corp, or Paramount Property Tax Appeal, provide V.I.P. property tax breaks or V.I.P. personal business and property tax reduction to everyone…. regardless or income or overall net worth.
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