Transferring Property Taxes in California

Your Source for Timely, Accurate News on Transferring Property Taxes in California and Information on Trusts & Estates, for California Proposition 13 and Prop 58

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 and Proposition 58.  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 keep taking advantage of the ability to avoid property tax reassessment when inheriting property taxes… with the lawful right to transfer parents property taxes, for home-owning beneficiaries.  In other words, to keep parents property taxes, and property tax transfer, as low as it should be… regardless of overall value, size or location.

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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The Trust Loan Proposition 58 Process – Interview with Abraham Ordaz, Account Representative at Commercial Loan Corp

California Proposition 58 Parent to Child Property Tax Transfer Trust Loan Specialist

On Oct. 2nd, 2020, Property Tax Transfer Trusts sat down with Account Representative Abe Ordaz from Commercial Loan Corp, in Newport Beach, California; to discuss his routine with trust and estate attorneys, trust administrator and beneficiaries, explaining the trust loan / Proposition 58 funding process…

Property Tax Transfer:  Abe, thank you so much for sitting down with me today to chat about your work at Commercial Loan Corp and how you assist clients when it comes to using California Proposition 58 to transfer a parents low property tax base to a child who is inheriting a home.

Abraham Ordaz: Sure, my pleasure.

Property Tax Transfer:  Abe, who do you generally speak to when it comes to taking calls from prospects?

Abraham Ordaz: I speak to a variety of involved parties when it comes to helping a client transfer a parents low Prop 13 property tax base from a parent to a child. Often times the conversation begins with a Trust Administrator or a Trust Beneficiary who is interested in using Prop 58 to transfer a property tax base from a parent to a child on an inherited property. After that initial conversation it is common for me to also have a conversation with the Trust & Estate Attorney who is assisting them with the distribution of the trust or estate. On occasion they do not have an attorney who is currently working with them and I am able to refer them to one in their area who is familiar with the Proposition 58 Parent to Child Property Tax Transfer process and who can help them secure their property tax transfer benefit. At Commercial Loan Corporation we have helped hundreds of clients by providing them with a loan to an irrevocable trust so that an equal distribution can be made and they can meet the requirements set by the California Board of Equalization to qualify for the Proposition 58 property tax transfer benefit.

Property Tax Transfer: Are your clients and attorneys usually familiar with trust loans, and how they work with the California Proposition 58 process?

Abraham Ordaz: Many of the Attorneys that I work with are familiar with the Proposition 58 process, as well as Proposition 13 and the need for a trust loan to equalize a distribution when a trust or estate does not have sufficient liquid assets. In fact, many of my clients are referred to me by their trust and estate Attorney. We are one of the only California Trust and Estate Lenders who will lend directly to an Irrevocable Trust with no personal guarantee from the acquiring beneficiary and we are the only California lender that I am aware of that specializes with these types of transactions to help clients secure their Proposition 58 property tax benefit. That is the reason why I receive so many Attorney referrals.  The Attorney wants to make sure that their client is in good hands and that the process is done correctly so that the client will qualify for the Prop 58 parent to child exclusion from property tax reassessment. Often times we help clients save more than $6,000.00 per year in property taxes on an inherited home. 

Property Tax Transfer: Abe, that is fantastic that you have developed such great relationships with Trust & Estate Attorneys.  Do you usually provide them with an estimate on how much you would be able to save their clients when it comes to property taxes?

Abraham Ordaz: Yes, we provide a free cost benefit analysis for each client. It tells them exactly how much we expect their client to save in property taxes each year as opposed to if their property were to be reassessed. At that time we also provide them with a free quote for the trust loan so that we can make sure it is in their best interest. In most cases it is of great benefit and we generally save our clients over $6,000 per year in property taxes by helping them keep a parents low Prop 13 property tax base.

Property Tax Transfer:  That’s significant. Do you get into the various particulars with Proposition 58, and  how that works in concert with loans to trusts?

Abraham Ordaz: Yes, we break everything down into very simple terms so that the Proposition 58 property tax transfer and trust loan process are all easy to understand. That is one of the reasons why so many Trust and Estate Attorneys who deal with California Proposition 58 love to work with us. 

Property Tax Transfer:  Got it. Abe, how do you help your clients who are interested in keeping a parents low property tax base on an inherited home understand how the trust loan and Proposition 58 parent to child transfer benefits work, keeping the initial inheritance property transfer taxes down, buying out siblings’ property ownership shares, and so on?  Yet keeping it very simple.

Abraham Ordaz: I start with the basics of Proposition 58 and the California Board of Equalization requirements for a Parent to Child Property Tax Transfer. I then help them determine how much their trust or estate will need in order to make an equal distribution. After that we review all the numbers together and I answer any questions they may have on the process. Next we get their Attorney involved so that they can handle all of the legal aspects of the Proposition 58 parent to child exclusion and provide us with all of the required information for the trust or estate. Lastly, we provide them with the funds needed so that an equal distribution can be made in order for them to meet that qualification requirement for Prop 58. The Attorney or Property Tax Consultant then helps them submit their property tax transfer request to the County Assessors office so that they can secure their parents low property tax base.  

Property Tax Transfer:  At the end of the day it’s really just all about saving money on property taxes for clients, isn’t it. It’s a complex process, but the motivations remains very simple, doesn’t it?

Abraham Ordaz: Yes, bottom line, it’s a simple matter for these clients and lawyers.  It’s all about how we can help clients save money on property taxes – to keep their family home. I help explain all this clearly to the heirs that want to keep their inherited property. 

Property Tax Transfer: Yes I see.  Abe, how do you explain why the trust is so crucial to this entire process?

Abraham Ordaz: Typically when attorneys ask about the trust loan process – I tell them our loan goes directly to the trust… and follows the property.  Conventional lenders want to take to take the property out of the trust – but once the property is taken out of the trust, this often triggers a reassessment…  So if you took a cash loan from a traditional bank for example – you’d end up putting the property in the beneficiary’s name and thus get reassessed at current property value. Which in most cases raises the property tax rate significantly. If  the property was purchased say 20 years ago, the property tax would be significantly higher today. 

Property Tax Transfer:  Got it.  Abe, do you get into the customer service aspect at all?  I understand that a very special kind of customer service is critical to this process, to be successful, so to speak, with each family.  

Abraham Ordaz: Yes… Customer service is the most important aspect to our business and we try to be our best version of ourselves for every client regardless of the size of the loan. Everyone is treated equally and respectfully.  Everyone that joins the Commercial Loan Corp family, as it were, is a V.I.P. client!

Property Tax Transfer: That’s very interesting and a rare thing to find these days in this business climate. Well, we want to thank you so much for sitting and chatting with us today.  We really appreciate it.

Abraham OrdazIt’s my pleasure. Thanks for having me.

PART THREE: If Every State in America Had Property Tax Relief Similar to California…

California Property Taxes

Property Tax Relief for Residential & Commercial Property Owners in Every State ~ Regardless of Net Worth and Property Evaluation

It’s crystal clear to many of us that every state in the United States could propose, and pass into law, a property tax system with property tax relief measures resembling California’s Proposition 13 and Proposition 58.

As in California, states with governors that actually care about the citizens in their state; or, more specifically, residential and commercial property owners in their state – could also make use of loans to irrevocable trusts from licensed trust lenders, to provide a unique, effective way to deal with property-based sibling conflicts – or simply to mitigate crippling property tax hikes.

Again, as in all 58 counties in the state of California, with the advent of these property tax breaks, middle class family members in all states could walk through life happier, feeling a tiny bit wealthier perhaps, with a first-time sense that there is, in their state, a fair-minded property tax system in place; that regular working families can benefit from, similar to property tax relief in California — and not just V.I.P. tax breaks for wealthy property owners. 

So middle class property owners, estate heirs and trust beneficiaries would end up with a win-win inheritance or estate experience… Regardless what state they are in, what their net-worth is, or how much their inherited real estate is valued at.  As in California, property tax relief would exist in an even playing field, in all states for all property owners, for all heirs and beneficiaries who are inheriting real property.

Howard Jarvis and his team of property tax relief proponents originated California Proposition 13 property tax breaks, which later spawned Proposition 58 tax benefits, including the ability to keep parents property taxes, while avoiding property tax reassessment… However they did not realize, in their own time, was that the property tax measures they had invented, actually reflected the property ownership and fair-minded taxation controls that the founders of this country had in mind from the  very beginning.

Property Tax Relief Patriots 

Yearly uncontrolled, unpredictable, crippling property tax hikes every year – that sees elderly widows being evicted, and aging retirees and veterans living on fixed incomes foreclosed on, and thrown onto the street – was certainly NOT what the founders and rebellious patriots had in mind over two hundred years ago, when they fought their way out from under egregious taxation imposed by a certain British king.

Different, yet similarly effective measures is essentially what a certain successful patriotic landlord named Howard Jarvis accomplished when he and other supporters of property tax relief fought for Proposition 13, for the ability to avoid  property tax reassessment under present day rates; for parent to child transfer or parent to child exclusion when benefiting from parents’ property tax transfer. They won the right of CA Proposition 13 transfer of property, and won the ability to transfer parents property taxes and keep parents property taxes, when inheriting a home and/or land and when inheriting property taxes associated with their inheritance.  They managed to put authentic property tax relief in place in the great state of California, in 1978 — not just for V.I.P.s and the wealthy (as current critics falsely claim), but for the middle class, and all Californian property owners .

Therefore, if we want to benefit from a long-term, reliable system of property tax relief measures, and get out from under yearly, frequently debilitating property tax – we’re going to have to educate ourselves on what type of property tax relief system each state requires; and go about discussing these property tax relief measures with approachable government representatives, approximating what  Mr. Jarvis had accomplished, with the help of other property tax relief patriots, 42 years ago.

PART TWO: If Every State in America Had Property Tax Relief Similar to California…

California Transfer Parents Property Taxes To A Child

All things considered, there is no good reason residential, commercial and industrial property owners in every state in the United States  shouldn’t have property tax relief, modeled after California tax relief.  And not wind up in a nightmare with the tax people as they did in California. with widows  and elderly veterans and retirees living off fixed incomes being evicted from their homes on a regular basis… prior to 1978.  

This is really where the major problem is with many middle class estates, along with estate taxes often enough. Without property tax benefits, as California has had since 1978, so many beneficiaries in so many different estate, inheriting property from parents, simply can’t afford the upkeep and property taxes on their inherited home, and frequently are forced to sell their parents’ property. Often against their will.

There is a lot of talk among real estate attorneys and property tax advisors in states other than California about adopting some sort of property tax shelter to help middle class Americans in a genuine fashion, long-term.  Instead of consistently bleeding the general public dry year after year, decade after decade… while multi-millionaires and billionaires pay less and less taxes by raising the national debt by a trillion or two.  Especially during so-called conservative administrations, which generally lean towards assisting the wealthy with tax cuts   while ignoring tax relief needs of the middle class and working classes. Moreover,  particularly in the midst of a global Pandemic, where we have millions our of work, no federal leadership, and 30 or so states in the Midwest and Deep South in deep trouble with Coronavirus health and economic issues piling up, with no end in sight.  What better time than now to pass national property tax relief, benefiting all states.

To out it bluntly, it’s time that the middle class have their day, and get to enjoy genuine property tax relief to free up some more cash so they can enjoy their lives a bit more, with a little less financial stress. However, the trick is to enlist the interest of the public itself, as well as certain name brand  politicians, which would, if they had some intelligence and common sense, endear them to their constituents forever.

If, by any chance you reside in California, and you happen to be a beneficiary inheriting property from your parents, consider yourself to be very lucky. Instead of buckling under to family conflicts revolving around property issues, you’d be able to buyout siblings’ property shares, while retaining a low Proposition 13 protected base property tax rate – plus always  take advantage, anywhere in the state, of your right to avoid property tax reassessment; to transfer parents property taxes, and keep parents property taxes when inheriting property taxes.

This is why so many property tax advisors and real estate lawyers in various locations believe every single state should have a property tax measure similar to CA Proposition 13, Proposition 58 & Prop 193.  The California model is a perfect prototype to mirror for effective, seamless property tax breaks;  including the right to transfer parents property taxes, inheriting property taxes and the ability to keep parents property taxes for all property tax transfer scenarios involving parent to child transfer or parent to child exclusion from present day property tax rates…  involving beneficiaries of family trusts – most importantly, avoiding property tax reassessment.  To mirror Proposition 58 type of benefits, states without property tax relief would need to also adopt the ability to help beneficiaries buy out sibling property – as realtors call it, “transfer of property between siblings” or “sibling to sibling property transfer”, or buying out siblings’ share of a house.  And beneficiaries everywhere, if they are aware of it, rarely disagree.

Beneficiaries, as well as residential, industrial and commercial property owners in every state in America need to research these forms of property tax relief at resource blogs like “Property Tax Transfer”;  as well as  Websites that focus on California Proposition 58, on the property tax transfer process, and on how trust loans from trust lenders work, to help beneficiaries buy out sibling property, from start to finish… outlining how the unique combination of a trust loan with Proposition 58 serves to equalize the  distribution  of  cash for trust beneficiaries… at Websites like “Trust & Estate Loans”… 

Or perhaps at a well known, premium trust lender’s Website that delves into the actual nuts & bolts of the Proposition 58 / trust lending process, for example at the popular, first-class Commercial Loan Corp. Website; which is, arguably, the most visited Website of it’s kind in this specific lending category.

This gives beneficiaries enough information to successfully avoid estate conflicts between siblings; with some beneficiaries insisting on selling inherited property, and some wanting to keep their inherited property, at a low long-term property tax base. 

>> Click Here to go to Part Three…

PART ONE: If Every State in America Had Property Tax Relief Similar to California…

California Proposition 58 Property Tax Transfer

Considering every state in America, if we were to project into the future and take into account all the ways we could avoid wasting money as a  result of inheriting  property from our parents… If you were expecting property as an inheritance – what would you do to make sure you were inheriting a home you could afford to keep? 

Nothing comes to mind?

What if every state in the union embraced the same sort of property tax breaks that California has employed since 1978… when Proposition 13 was voted into law so every residential, industrial and commercial   property owner would be able to avoid property tax reassessment. 

Subsequently, CA Proposition 58 was passed in 1986, enabling the transfer of property between siblings, making it possible to buyout your siblings’ property shares, plus insuring that you keep parents property taxes, basically forever – maintaining a low Proposition 13 guaranteed property tax base, capped at  a 2% maximum rate – all with the help of a loan to an irrevocable trust. 

Sounds simple, however it’s not quite as simple as it sounds. You need a reliable trust lender to help you, and you must qualify for all  the requirements necessary to be approved for Proposition 58 – in order to take advantage of it. 

Given the stunning unraveling of the job-based economy over the past several  months in the United States, due to all the lay-offs and so-called “furloughs” resulting from the Coronavirus crisis – as of August 2020 there are over 51 million lost jobs nation-wide, and more than 6.7 million unemployed in California alone… although what percentage of that is  temporary or permanent – we don’t yet know.

Frankly, the danger that the loss of millions of jobs poses to the country, not to mention the startling lack of engagement exhibited by the federal government, only exacerbates the health crisis.  Therefore, it’s clear to most of us that it’s high time lawmakers in Washington begin to put in place some permanent financial guardrails to help working class and middle class households lower expenses to some degree, to hopefully free up some spending cash for those that are out of work, with no resolution yet in sight. 

One such guardrail would be to free up additional personal spending cash by lowering property taxes on the middle class, whose spending habits, historically, keep the economy flowing.  It would make a great deal of sense right now, with no end to the Coronavirus challenges in sight, to not defer certain taxes – but to completely eliminate them! 

Most likely,  the least risky form of taxation to lower right now would be property taxes, as we have a successful property tax relief model in California to mirror in all the other states – preventing politicians from claiming that it probably wouldn’t work out, so why bother… why try.   Clearly, property  tax relief has worked out, and continues to be a successful system, in California. 

It would certainly help to prop up a flagging middle class besieged by an unprecedented Pandemic, and corresponding recession, to put in place residential and commercial property tax breaks similar to Californian property tax relief measures made possible by CA Proposition 13, enabling property owners, in the wake of  transfer of property measures, to avoid property tax reassessment every year… Making sure to transfer parents property taxes when  inheriting property and inheriting property taxes from parents… in other words inheriting property taxes that equal the lowest taxes your parents paid after 1978. 

Prior to 1978, property taxes were unpredictable and way too high in California… until trust  beneficiaries and heirs of estates were given “parent to child transfer”, or “parent to child exclusion” as real estate attorneys refer to it.  

Interestingly enough, since 1986 California trust loans have been used to resolve seemingly unsolvable inherited property conflicts between siblings; working alongside CA Proposition 58. Once approved, Prop 58 helps heirs to buyout sibling property through trust liquidity – siblings that are intent on selling their property shares… Generally called a beneficiary buyout of sibling property shares, sibling to sibling property transfer, or a transfer of property between siblings – siblings looking to sell their property shares wind up with more liquidity in trust than if they had sold out directly to an outside buyer.  Conversely, folks looking to keep their inherited property can avoid property tax reassessment at present day rates, going forward; retaining the same low property tax base their parents had. 

That’s the real genius of the property tax relief system in California… and the bottom line gift for middle class home owners and non-wealthy landlords in California – the legal right to avoid property tax reassessment. 

The magic of trust loans from trust lenders is that they make it possible, when working in concert with Proposition 58, to equalize cash to beneficiaries – in other words Prop 58 helps heirs to buyout sibling property – if they’re looking to sell an inherited property held up by beneficiaries of the same trust that are looking to keep the same inherited home and/or land…

For once, this would force estate property conflicts to end up as win-win scenarios for heirs of estates or trust beneficiaries in states other than California.  And we’re talking about beneficiaries who generally do not get along terribly well, as is illustrated by the frequently hard-nosed conflicts associated with their inherited property issues… where one or two want to keep their inherited home…  while several wish to sell… One wants to evaluate the property at one amount, the others at a different amount. Many families, typically the siblings, just can’t agree on anything.

And yet other families agree on everything in these estate or inherited property matters…. So you just never know.  However, typically there are some problematic conflicts to address.  And that’s where a trust lender tends to come into the picture – as we have said, to “equalize cash” for  those who wish to sell, while setting  a low base tax rate for siblings who are set on keeping the home inherited from beloved parents. 

>> Click Here to go to Part Two…

A New Threat Arises ~ Critics of Property Tax Relief Look to Unravel CA Proposition 58 with (2020) Prop 19

Vote No Proposition 19

A Threat to Proposition 58, Parent to Child Exclusion, Arises

If they were keeping both eyes open, most property owners in California were looking, tentatively, for signs on the horizon of any new threat to the popular property tax break known as the “parent to child exemption, or “Prop 58 parent to child exclusion”… Meaning, exclusion from having your home, or any other property, reassessed every year at current property tax rates.  Being that this exclusion is the the main foundation  that property tax relief in California is built on, if you were serious about dismantling property tax relief in this state, it would be likely that you’d go after this critical tax break in earnest.

So naturally, at the last moment, when everyone thought they might have  “dodged the bullet” in terms of efforts to dismantle Proposition 13 or Proposition 58 one more time, relentless critics of California Proposition 13 and Proposition 58 decided to add one more measure to the mix, to remove the parent to child exclusion allowed under Proposition 58, from California home owners… A measure they are calling Proposition 19.  Very short sighted! 

These measures also kill off our right, in conjunction with Proposition 58, to get a loan to an irrevocable trust and keep a low property tax base forever, from parent to child transfer, also called parent to child exclusion or parent to child exemption… with the ability to transfer  property between siblings or buyout siblings’ share of inherited property.  Proposition 15 kills off landlords’ tax breaks and so have fun watching your rent go sky high, landlords will have no choice to stay in business!  In fact everything will go up in price, all goods and services as we have said many times. 

Proposition 19 kills the exemption we just mentioned, the CA Proposition 13 protected parent to child transfer… in other words transfer of property between family members… No more ability to transfer parents property taxes (in other words, their low tax rate becomes your own low tax rate). Inheriting property taxes will be no more, and you’ll be spending over $6,000 more every year in property taxes.  No joke.  You won’t be able to keep parents property taxes any more, property tax transfer will be no more… no more ability to avoid property tax reassessment.  That’s the killer.                          

No longer being able to avoid property tax reassessment would be a truly devastating event for home owners who depend on extra spendable cash freed up by the money they save from the lack of property tax reassessment.  Losing the parent to child exclusion, in an already hyper-expensive state, would devastate millions of Californians.  Not to mention the possibility of the so-called Split-Roll or “Proposition 15” commercial property tax, which would certainly add to the devastation by raising industrial and commercial property taxes, including apt. building landlords, forcing landlords to raise rents on residential and business tenants…

Or we could talk about trust beneficiaries or estate heirs losing their ability to get  a loan for hundreds of thousands of dollars to an irrevocable trust to buyout siblings who are intent on selling their share of a beloved inherited home, along with establishing a low property tax base made possible by Proposition 13, working in tandem with Proposition 58.  And the list goes on. 

Without being partisan or subjective – it’s fairly clear to any reasonable person that would herald in grave economic disturbance, and even disaster, for the entire state, where middle class  and working class people are concerned.   Obviously, many residents in Malibu or  Beverly Hills or Santa Barbara would not be feeling the pinch.  However, we’re not talking about the 1%.   

This brainchild of C.A.R. and the CA Legislature is, if you step back and think about it, not only brazen but also short-sighted, as they are actually looking  to fund special interests with revenue from property taxes — right smack in the middle of a Pandemic.  With over 6.7 million Californians having signed up for unemployment checks, these critics of property tax relief want to remove these universally popular property tax breaks protected by  Proposition 13 and Proposition 58.  Benefits that middle class and working class California families have become  accustomed to, and depend on. 

Proposition 58 Particulars

Most Californians are familiar with Proposition 58 and the Prop 58 parent to child exclusion. As you know, California Proposition 58 serves to protect folks who owe $8,500 or more in additional property taxes, while they settle their affairs. Prop 58 also allows beneficiaries who wish to keep inherited property in their family to buyout co-beneficiaries’ property shares, through a trust loan, and helps those looking to keep their inherited home also keep a low Proposition 13 protected property tax base their parents paid. And everyone goes away happy, win-win, all the way around.

In 1986, to protect families from massive property tax hikes, voters passed Proposition 58, revising the California constitution to ensure transfers of property between parents and children could be executed with the right to avoid property tax reassessment. Under Proposition 58 property of any value, plus additional property with up to a million dollars of assessed value, can be transferred between parents and children without reassessment.

However, the chief sponsor of ACA-11 (Proposition 19) the California Association of Realtors (C.A.R.) came along and decided to spoil all these critical win-win protections. C.A.R. assembled enough signatures to get their initiative on the ballot. Apparently, C.A.R. is motivated by their monetary interest in drumming up new home sales, regardless of the fact that the measure creates a multi-billion-dollar tax increase statewide, will throw the entire middle class California economy into chaos, already in turmoil due to the Covid-19 health and unemployment crisis…

The 2020 Proposition 19 would look to repeal the 1986 Proposition 58 parent to child transfer (property tax break) and impose reassessment of inherited or transferred property within families. The one exception being if the property was used as the principal residence of the beneficiary to whom it was transferred, and that exclusion is even capped.

Unintended or Intended Consequences?

The Legislative Analyst’s Office (LAO) estimated that the repeal of the “inter-generational transfer protections” guaranteed by the Prop 58 parent to child exclusion, and Proposition 193 grandparent to grandchild exemption would, if passed, cause somewhere between 40,000 to 60,000 families in California to be crippled economically by higher yearly property taxes.

Obviously, most middle class families would be forced to immediately sell an inherited home left to them by a surviving parent. Thus, a serious imposition has been placed on the “right to choose” for countless middle class families… simply so realtors can sell a few more homes on the market.  The trade off does seem to be rather uneven.  If Proposition 19 passes, all those beneficiaries in California will be expected to move in to their parent’s home and make it their primary residence within one year of their surviving parent’s death. 

The basis for this measure is unrealistic on its’ face, for a number of reasons… Many beneficiaries are already home owners, and pay out a fair amount of cash every month already to maintain their own mortgage and/or property upkeep. Moreover, if a beneficiary has a large family, and his or her parent’s home is not spacious enough – what alternatives are left for these folks?

If Mom or Dad’s home is situated a long distance away from a beneficiary’s place of work, and/or the spouse’s workplace – and perhaps inconveniently far away from their children’s school, adding possibly an additional 60 or 90 minutes on the freeway each way, back and forth every day… What options will these families have to look to? 

Critics of property tax relief in California are proposing somewhat unrealistic measures that, although they may look good on paper from a financial perspective,  they fail to incorporate realistic issues and scenarios that exist for regular people with regular lives. 

So vote your conscience in November.  We suggest you vote “No to Proposition 19”.

Information and Trust Loan Funding

For more details on the C.A.R. originated Proposition 19 effort to turn back the clock on property tax relief in California, you can go to CaliforniaProposition58.org

For more information on trust loans working in concert with Proposition 58, go to Commercial Loan Corp   Or to apply for a trust loan and speak to an account representative, go to “Apply for a Trust Loan”…  Simply to read up on Prop 13 and Prop 58 parent to child exclusion, as well as on critics of property tax relief in California,  plus the Covid-19 effect on real estate throughout the state – please go to the article: Coronavirus Crisis is the Last Thing the California Real Estate Market Needed!

 

 

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