The realtors that Taxpayers Association CEO Jon Coupal mentioned in Part One of this article, committed critics of Proposition 13, enabling home owners to avoid property tax reassessment, and Proposition 58, enabling property tax transfer and parent to child transfer of real property – with the ability to avoid property tax reassessment, and to receive a 3rd party trust loan or estate loan, which is needed for an equal distribution to be made. These critics of Prop 13 and Prop 58 often conduct inaccurate and frequently wildly overblown interviews in high-profile California newspapers and online media.
These critics of Proposition 13 and Proposition 58 repeatedly point out that California state and local city government budgets in general and pensions in particular are vastly under-funded, when the opposite is actually the case… With public services suffering in the bargain. Yet critics repeatedly insist, year after year, that CA Proposition 13 tax relief and the Proposition 58 property transfer tax shelter, for California residential and commercial property owners, is the main cause of local and state government under-funding. Yes, Californians transfer parents property taxes, and avoid property tax reassessment. However, this is certainly not the cause of under-funding for public services.
Critics still can’t seem to see or accept the big picture, or accept that Californians transfer parents property taxes. It is their right. And it is California property owners’ absolute right to avoid property tax reassessment – the ability for home owners’ to keep parents property taxes, upon the transfer of parents property taxes associated with the transfer of real property from parent to child, or grandparent to grandchild.
Commonly referred to as parent to child transfer (of a home and/or land), this boils down to folks inheriting property taxes associated with an inheritance featuring property, for example – also known as parent to child exclusion (from property value reassessment). Critics insist that California government budgets are being starved of cash; and that government pensions, for example, are vastly under-funded – strictly due to property tax relief benefits.
Naturally, that opinion is just as inaccurate as certain realtors and politicians pointing out that Proposition 13 and Proposition 58 are the entire reason behind an apparent home sale shortage in the state. Prop 13 may contribute to a slight degree to the shortage of homes for sale in the state, however rising cost of living, sluggish salaries and expensive mortgages are more often than not the reason for a flat real estate market. Moreover, there is no proven statistical data that proves anything to the contrary.
As for the pension argument, this is also inaccurate, on the face of it. If there are any local government pensions that are under-funded, it’s due to over-spending on local government salaries and benefits, as well as long term projects generally attributed to political or industrial special interests, Certainly not residential property tax shelters. The facts actually point in a different direction, as many of these California government pension plans are statistically some of the most expensive, and in some cases the most expensive and elaborate government pensions in the country.