Loans to Irrevocable Trusts

Loans to Irrevocable Trusts

Loans to Irrevocable Trusts

How Can I Inherit a Home & Keep the Low Property Tax Base?

Perhaps a lot of regular middle class folks out there waiting for an inheritance aren’t aware of it – but since 2016 many of us in the business of dealing with middle class heirs, waiting for an inheritance in trust or in an estate, involved in an unusually large number of conflicts between heirs or beneficiaries… Frequently turning ugly and downright out of control. 

As you can guess, these conflicts typically revolve around the subject of money… Frequently, in an estate scenario, one or more siblings insist on selling the home they have inherited from Mom or Dad, to generate “fast cash” – often in heated opposition to co-beneficiaries inheriting the same home, for example, who insist on retaining that property, as the emotional or sentimental value for them far exceeds the cash value. 

Hence, this often fires up a serious conflict within the family group.  Or – one or two heirs claim they should be receiving a much larger percentage of the family inheritance, which is frequently based on the sale of inherited property, as cash assets are often very modest in middle class estates these days.

Over the past four or five years, we can clearly see a significant increase in these family squabbles… often, for example, in 17 out of 20 estate or trust situations we often see in-fighting like this, that frequently destroys sibling relationships.  Or perhaps conflicts over the issue “to sell or not to sell” inherited family property, or even conflicts over the assessed value of that property… is merely the match that ignites emotional conflicts that were there under the surface to begin with.  It’s no surprise that we often see at least one or two inheritors, per estate or trust, that want  to keep their inherited home, with one or two, or more, beneficiaries pushing to sell the house as soon as possible. 

It’s very common these days to see siblings lock horns almost immediately, when the subject of selling their inherited home is raised. With additional battles flaring up over who should be receiving the larger share of cash assets – or “who” gets “what”  percentage of the home the family is inheriting.  home left by a beloved parent.  We see this pattern repeated over and over again; the same words, similar disputes and similar claims.

A Trust Loan Solution to Family Conflicts

In California, Prop 58 loans to irrevocable trusts often act as a solution to many family conflicts revolving around sibling disagreements over whether or not the family should  retain or sell inherited property from parents.  With a trust loan working in conjunction with Proposition 58 – a process referred to as Prop 58 loans to irrevocable trusts – you can then buyout  beneficiaries    and  end up owning  your inherited property by yourself.

Interestingly enough, siblings who insisted on selling out actually end up receiving more cash then if there had been no trust loan funded and outside buyers had become involved; so those siblings can move forward with their lives, leaving you in peace. Interestingly enough, most families that call  a trust lender to get this type of funding started and accomplished, know next to nothing about the process of Prop 58 loans to irrevocable trusts. 

Residential and commercial property owners should research and learn all about the benefits provided by trust lenders furnishing loans to irrevocable trusts to enable the buyout of property shares from sibling co-beneficiaries; along with CA Proposition 13 transfer of property, plus locking in a low property tax base rate in conjunction with Proposition 58 – all associated with a transfer of parents’ property and transfer of parents property taxes.

Homeowners in every state should understand what inheriting property taxes is all about, how to keep parents property taxes with property tax transfer of all sorts – and why parent to child transfer, or parent to child exclusion, is so profoundly important at the base root of property tax relief in California… and hopefully in other states as well, if motivated folks begin sending letters and emails to their representatives in Washington, and if, by a miracle, this catches on and actually sprouts results. 

Living in a state with low property taxes can provide a major benefit, rather than a liability, to your life. Even if many homes are pricey perhaps to begin with… lowering property taxes on them, to a number you can really feel, can have a profound affect on your lifestyle, and maintain the quality of your life, to where you need it to be.

Goods and services and real estate can be pricey in states like Connecticut, Texas, California, New York, New Jersey, Massachusetts… these are all expensive states, in terms of day to day living… However, getting a “life-toll” such as property taxes down to a manageable level can change your entire outlook on your life, eliminating that particular financial struggle.

Moreover, the concept of paying yearly taxes on something you purchase and then keep for many years, might be flawed to begin with. What other large purchase you may make continues to charge you fees such as taxes, after the initial [large] purchase? A boat? Plane? Car? Motorcycle? None. Only real property. Perhaps the whole concept of taxing real estate after the initial purchase could use some fresh, new examination.

Speaking of trust liquidation, California is still the only state in America where you can avoid property tax reassessment at current rates; capped at 2% taxation basically as long as you own property inherited from parents initially… thanks to the 1978 CA Proposition 13.  Plus, the component involving Prop 58 and  “trust liquidity” is particularly  popular with middle class beneficiaries who want to sell the property shares they have inherited from a parent, and walk off with even more cash than if they had sold out to an outside buyer.  Conversely,  Proposition 58 trust loans are just as popular with members of families inheriting property from parents, who wish to buyout their siblings, co-beneficiaries, that are looking to sell their inherited shares.

California business and residential property owners, in addition to having the right to keep parents property taxes, and transfer parents property taxes upon inheriting property, and then inheriting property taxes at the low Prop 13 two-percent tax rate maximum – can maintain a parental property tax transfer basically forever, as a Parent-to-Child Transfer, or Parent-to-Child Exclusion, as long as all requirements for Proposition 58 have been met. Californians can even apply for the same tax break on a secondary property inherited from parents.

If you’re a California property owner who is looking to buyout siblings who insist on selling their inherited property, while retaining the same inherited property from parents with a trust loan, avoiding property tax reassessment from that point on – you can find content that covers this in-depth, along with information on how to get approved for Proposition 58, on a state government Website like the California State Board of Equalization, which is found at  https://www.boe.ca.gov/proptaxes/faqs/propositions58.htm  

A lot of folks research these issues and delve more deeply into California property tax relief, on multiple levels, at established niche  Websites such as Commercial Loan Corp…  or a free resource blog like this one, Property Tax Transfer.  Trust loans working in accord with Proposition 58 or Prop 193 make it possible for heirs and beneficiaries to sell shares of inherited property, a beneficiary buyout of sibling property shares, or as realtors put it, “the transfer of property between siblings”, and “lending money to an irrevocable trust“ – typically from an irrevocable trust loan lender.

The fact is, we need to understand all about our rights, with respect to using a 6-figure loan to an irrevocable trust — not only as a way to buyout co-beneficiaries, but also as a tax break that locks in a low property tax base in line with CA Proposition 13 parental property tax transfer. 

Every property owner in every state in America should be more familiar with current changes to property tax relief laws in California; including the pesky little details that support the invaluable system that allows homeowners and commercial property owners to buy out co-beneficiaries’ mutually inherited property — focusing on the tax laws that makes sibling-to-sibling property transfers work in California.  Someday, perhaps in every state in America, if we want to make property taxes fair and equal to all property owners in this country.

How Does the Prop 58’s Parent to Child Exclusion Work?

California Parent to Child Property Tax Exclusion

California Parent to Child Property Tax Exclusion

Importance of Retaining Proposition 58 & Property Tax Relief

Regardless of what critics of Proposition 58 and Prop 13 have to say in Op-Eds and Editorials in California newspapers… No matter how many times opponents of California property tax relief attempt to completely unravel and decimate invaluable property tax breaks protected by Prop 13 and Prop 58, during a Coronavirus pandemic no less – popular support for property tax relief in California holds… For commercial property owners and homeowners alike.

Despite a win here and there by opponents to property tax relief in California… supporters of watering down critical tax breaks such as the “Parent to Child Exclusion” win a battle here or there chiefly as a result of tricky, deceptive marketing; with slippery snake oil tax measures like Proposition 19 in 2020.

We just narrowly missed a statewide disaster, with the proposed property tax measure Proposition 15 almost passing, which would have resulted in egregious property tax hikes, raising taxes on apt building and office building landlords, commercial shopping center owners and store properties being rented out to hundreds of thousands of commercial tenants all across the state.  

This would have forced commercial and business property owners in all 58 counties in California to raise prices on all goods and services – simply to survive.  Moreover, this would have been the beginning of the final unraveling of the 1978 Proposition 13 tax relief package. The door to worse things to come, so to speak, would have been opened.  Fortunately, the door was closed.  At least for now.

The fact is, if Proposition 15 had passed in Nov. of 2020 everything you buy or rent in the state of California, even online, would have gone sky high.  So, clearly, this was a near miss of a total statewide economic melt-down. As it happens, the other deceptive property tax promoted in 2020, sponsored by the CA Legislature and the California Association of Realtors among others, Proposition 19, did in fact pass.  The lesser of two evils, so to speak.

Although not perfect, there is still enough room within the property tax system in California so beneficiaries inheriting property from parents, and homeowners, can still make good use of Prop 13, of Proposition 58 and the “Parent to Child Exclusion”…  Beneficiaries can still take advantage of trust loans and the ability to buyout co-beneficiaries if they wish to sell off their inherited ownership in inherited property… plus lock down a low Proposition 13 property tax base.  So Proposition 13 remains, for the moment, troubled… but intact.

The right to avoid property tax reassessment is crucial for California’s economic well being. It means beneficiaries can still make use of Prop 58 and irrevocable trust loans to buyout co-beneficiaries wanting to sell off inherited property.  It means residents can inherit and keep parents property taxes, and can transfer parents property taxes. Inheriting property taxes from parents at a low base rate is critical for middle class homeowners. Otherwise, selling off inherited property becomes unavoidable and inevitable.

Middle class heirs, new home owners, frequently are not able to pay current market-value property tax rates – in a hyper expensive state… in the midst of an out-of-control pandemic, where nearly 7 million people in this state are out of work or under-employed, or are still working from home at a 50% salary level.  Not to mention the astronomical costs associated with illness and the loss of life, for family members.  Items that healthcare insurance refuses to pay for.

The folks supporting the realtor community, CA Association of Realtors, politicians running the State Legislature, and organizations such as the California NAACP State Conference, California Senior Advocates League, California Statewide Law Enforcement Association, Californians for Disability Rights, and the Congress of California Seniors simply must begin to look at middle class families and working family life more realistically.  You’d think they would be,  however they apparently did not read the fine print, and were hoodwinked into voting for Prop 19 in Nov of 2020.

By simple good luck homeowners and beneficiaries can still make use of Prop 58 and a trust loan process to buyout inherited property from siblings while locking down a low Proposition 13 protected property tax base.  Had those organizations read the fine print, they would have noticed that certain tax relief protections they took for granted were under direct attack – such as the ability for eligible homeowners to transfer their tax assessments within counties and to homes of equal or lesser market value;  To retain the right for folks age 55 and older, or people with disabilities, to keep the same number of times they are able to transfer their tax assessments;  To be able to transfer tax assessments on inherited homes, including inherited properties not used as primary residences, to be transferred from parent-to-child or grandparent-to-grandchild – without any issues or problems.

California still retains Proposition 13 property tax breaks, and  beneficiaries can still make use of Prop 58 and trust loan funding.  However, had Proposition 15 been successful, and had the Proposition 19 people gotten everything they had wanted – loading all these new proposed property taxes on top of regular working people would have had an extremely negative affect on the majority of the population of California.

Based on their recent efforts, how do the folks running the state of California, in the Legislature, think that adding the property taxes they had wanted to add would affect all these working families? Do they even consider how further unraveling property tax relief would affect the California economy as a whole?

Does it ever occur to the politicos in the Legislature that going further in the direction of eliminating property tax breaks, as they would like to do, would literally be a social and financial disaster for the state as a whole?

The Governor and his friends need to give this some serious thought.

 

Lowering Property Tax Rates for All Homeowners During the Pandemic

Lowering Property Tax Rates

Lowering Property Tax Rates

In California, Governor Gavin Christopher Newsom signed an executive order on May 6th, 2020, to extend the deadline for homeowners who were scheduled to pay their property taxes on April 10th – and to extend business property owners’ deadline of May 7 to complete and file their business property statement. This was supposed to “provide relief for taxpayers suffering financial hardship due to COVID-19”.  Moreover, Governor Newsom referred to his offer to taxpayers as “property tax relief…”

To be clear, we neither support nor oppose the governor of California here at Property Tax Transfer.  But when we hear something this blatantly disingenuous coming from any politician, we simply must question it.  Property tax relief is property tax relief.  Property tax relief is Proposition 13 or Proposition 58… Genuine property tax relief in California is the lessening, or  lowering, or complete elimination of – property taxes.  What Governor Newsom is referring to is not property tax relief… It’s  property tax deferment.  Putting off payment for a few months.  We would appreciate it very much if political leaders in California would not use such an important term as “tax relief” falsely.

Now, it is entirely possible that the Governor actually wanted to forgive payment completely for certain taxpayers. And under the severe conditions imposed on all of us due to the Coronavirus health crisis and resulting job losses, and lower income suffered by millions of workers in the state – the governor could very possibly have been besieged by political colleagues, and talked out of tax relief – into  tax deferment…  However, why not hold out and insist on giving taxpayers a real break through enhanced Proposition 58 and Proposition 13  – or actually forgive most of these property taxes completely for one  year, or at least discount them considerably?  According to state economists, it would not even have amounted to one quarter of the tax cuts the federal government gave to the wealthiest Americans two years ago!

Many economists have asked, why is it that  a few hundred billionaires and multi-millionaires recently received hundreds of thousands of dollars in tax cuts as “tax-welfare” and “corporate-welfare”, so to speak.  Yet, in the midst of an unprecedented health crisis, resulting in the worst job loss disaster since the Great Depression – 160 million middle class and working class property owners received nothing even close to the trillion dollar tax cuts afforded to just a handful of mega-wealthy families only a couple of years ago.

Many financial analysts in California have pointed out that the folks in power in this state did not mind shelling out trillions then – yet now on a state level, when middle class taxpayers desperately need an obvious financial boost such as a property tax cut, or property tax break, the best our state government can do is come up with an essentially useless  tax deferment proposal, and no actual tax cut… or tax relief.  These analysts do have a point.

Local government apologists claim that the $140 billion in property taxes that California typically receives every year is urgently needed right now to pay for essential pandemic services – to cover the cost of public health departments in 58 counties; to cover public hospitals; and – to pay for the school system, which is always sort of tacked on, as if they can’t find that money anywhere else. Local California government agencies insist that they stay open only due to funding that is largely based on… property taxes.

State agencies wrote a letter to the Governor, stating, “Delaying such a large infusion of general funds for two to three months would have a serious impact on their ability to provide these services.” They did not even want to go along with the proposal for deferment that the governor suggested! 

Some folks in the press wisely asked – is not keeping millions of Californians (many whom are elderly, and living on a fixed income) from being evicted and completely losing their home not anessential pandemic service”?

Gov. Newson has forced businesses to shut down, and most certainly will again, understandably and with good intentions – sending workers home to try to slow the spread of Covid 19. Admittedly, the pandemic is out of control in California, as it is in many red states. Folks in all these states want their “freedom”… and so it looks like they are therefore free to avoid wearing masks, free to contract Coronavirus, and free to infect others.

The Governor, ignoring this mass appeal for freedom, closed down businesses back in May anyway.  As a result,  many homeowners were not able to pay their property taxes. Companies all across California have closed to comply with Governor Newsom’s shutdown order to slow the spread of the Coronavirus that causes COVID-19 respiratory complications.   Yet if you’re going to close down those companies, hopefully temporarily, and send workers home at half or no pay – wouldn’t it make sense to then give those workers a significant financial break, as in increased property tax breaks… somewhere along the line, somehow? Such as Coronavirus Prop 58 and Proposition 13 property tax relief!

Certainly homeowners and beneficiaries inheriting property from parents can still get a trust loan to buyout co-beneficiaries, and lock down a low property tax base… but reinstating Proposition 58, in terms of the changes Prop 19 has brought about, and adding more teeth to existing property tax breaks that can save Californians significant amounts of cash every month… Would be so relevant during a pandemic, that it’s almost absurd to have to bring it up — when it’s not even in discussion in the Congress or  the Senate.  Not to mention the California Legislature.

So… when the governor calls a two or three month property tax deferment “property tax relief”… it’s no wonder that taxpayers reacted negatively.  Property tax relief refers to lowering the amount to be paid.  Not deferring the payment date!

Governor Newsom told us recently that more than 1.6 million Californians have filed unemployment insurance claims, which the state is struggling to organize and process, to get those checks out. It’s fine to send folks that are out of work unemployment checks – they have paid into that every working week.  But wouldn’t it make even more sense to give them all a property tax break, eliminating Proposition 19 restrictions in light of the Covid outcomes? Preferably forever… But at least as long as the Covid virus rages?

Proposition 58’s Parent to Child Exclusion in 2021

Proposition 58's Parent to Child Exclusion in 2021

Proposition 58’s Parent to Child Exclusion in 2021

It is both crucial and about time for homeowners and commercial property owners in California to step back and take little time to read up on property tax breaks available in all 58 counties in the state – to fully understand exactly how property tax relief works now; how it’s still possible to transfer your current tax-basis to children or grandchildren. With the Proposition 19 property tax measure having revised crucial Proposition 58 property tax relief protections; in place since 1986.

It’s critical for property owners, no matter what their total property value or net worth is, to:

a) take full advantage of property tax relief as it is in 2021 going forward;

b) make sure the changes to Prop 58 “Parent to Child Exclusion” are well understood… that property inherited from a parent is either moved into as a primary residence, within 12-months after the remaining parent passes;

c) make sure they plan on selling their inherited property at a  break-even price or at a profit, if they are not able to move in as a primary residence within 12-months;

d)  insure that, if selling out to an outside buyer is not a preferred option, they understand how to enlist the help of a seasoned trust lender, such as the Commercial Loan Corp in Newport Beach… to get approved for Proposition 58, and to be able to take full advantage of loan funding to an irrevocable trust – used in conjunction with Prop 58 – in order to buyout property ownership from a co-beneficiary, or several siblings, waiting to inherit the same inherited home.

All of this entails learning how to operate successfully under the auspices of CA Proposition 19, passed in Nov of 2020; affecting property tax relief benefits that have been taken for granted by Californians since 1986, and if you factor in key property tax breaks from Proposition 13, having the right to property tax transfer, to avoid property tax reassessment to attain and keep a low property tax  base – since 1978.

It is also important to acknowledge that the majority of “Parent to Child Property Transfers” occur after both parents are gone; and to fully understand how Proposition 58 helps regular middle class homeowners and business property owners in the state of California, and not fall prey to conspiracy theories that claim property tax relief is only for the wealthy. 

The date of passing of the last (surviving) parent is used as the date of transfer for beneficiaries (offspring, or “children”, typically grown children of decedents leaving property to their heirs or beneficiaries).

The average trust beneficiary takes roughly a year and a half to settle an estate after a lone surviving parent passes away, leaving liquid assets and/or real property to heirs or beneficiaries. It is also important to remember that during this time the children of decedents are responsible for continuing to pay the property taxes on their parent’s home and any other property in question. 

Under California law, Proposition 58, Proposition 193 and Proposition 13 (which may also be combined with Proposition 60 and Proposition 90) allows  a parent or grandparent to transfer their current tax-basis to their children or grandchildren. You can still transfer your current tax-basis to heirs in California, it’s just not as ‘free and easy’ as it has been. These benefits can still apply to a gift, a sale, an inheritance, or a hybrid of these property transfers.

More specifically, Proposition 58 and Proposition 193 allow a parent or grandparent to gift or sell their real property during their lifetime, or gift their property at death, to their child or grandchild, and concurrently transfer their Proposition 13 tax basis, and other Proposition 13 benefits, along with the property, thus saving the child or grandchild potentially thousands of dollars per year for as long as they own the property. So not only can you transfer your current tax-basis to beneficiaries,  your beneficiaries who are inheriting property  are also allowed to combine benefits provided by Proposition 58 with a loan to an irrevocable trust, to buyout inherited property shares from siblings who are co-beneficiaries.

Prop 19 was promoted as a way to: “Increase funds for firefighters and wildfire containment programs; to eliminate unfair tax loopholes used by East Coast investors, celebrities, wealthy non-California residents, and trust fund heirs…” again, citing conspiracy theories publicized by critics of property tax relief in California. 

Looking at this legislation in-depth reveals that it also eliminates property tax increase protections for many more California property owners. “East Coast Investors” is a thinly disguised euphemism suggesting that it’s not really about your right to transfer your current tax-basis — it’s about thousands of voracious outside investors “gobbling up properties” on the beach or wherever, and renting them out at egregious prices to rich visitors and vacationers.

Not so. In fact, these property tax measures would affect mostly local residents inheriting property from their parents, not families from nearby states – as critics of property tax relief are claiming – with no evidence whatsoever to back up their claims. No evidence and no proof… simply free-floating conjecture.

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

California Property Taxes

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 THREE: Coronavirus Crisis in California Motivating State Politicians to Push Unpopular “Split-Roll”Commercial Property Tax

California Property Tax

California PropertyTax

The Proposition 15 “Split-Roll” property tax would force many California businesses, owned by business property owners and renters alike, to literally go out of business, or relocate to a state that actually  welcomes business investment and doesn’t believe in stifling businesses with egregiously high commercial property taxation.   

The California Legislative Analyst’s Office has repeatedly warned state and local politicians that if this new property tax ballot initiative passes the entire state will most likely experience increases with respect to business operating costs all across California… and that this is also likely to influence business owners in terms of deciding whether or not to spend good money after bad in this state, or to simply pack it up and call it a day… and relocate to another state.   This is, one might say, not an attractive picture to envision for such an important state as California. 

This Split-Roll tax that California politicians want does not include any form of accountability or watchdog measures to protect California taxpayers…  There are no cost controls, no fixed requirements to produce transparency in order to avoid corruption or illicit over-spending while no one  is minding the store! 

These Split-Roll property tax supporters, typically critics of property tax relief at all costs, even removed a stop-gap on administrative expenses — so government management staffers can waste this new tax cash on overhead such as salary increases, lavish benefits and vacations, and such… with no limits or checks and balances whatsoever.  Let’s face it, something is entirely wrong with this picture.

Moreover, this property tax initiative will change the official tax assessor’s process of review for all types of properties — from a solid objective system to an arbitrary up and down mess, as we had prior to 1978 in California.  That sort of arbitrary, unpredictable tax system will lead to subjective, unpredictable property assessments. Endless, expensive legal appeals; and a rising tide of overspending on the bureaucratic side.

Let’s face it, additional property tax revenue at this level is not even needed… California taxpayers have payed into and built a Mount Everest high mountain of state and local tax cash since Proposition 13 began.  More than $240 billion just this year alone!  Next year, our competent Governor Newsom predicts a budget surplus of $21 billion!

Since Proposition 13 passed in 1978, local tax revenue (adjusted for inflation) has gone up by nearly 55%. That equals approximately $90 Billion in new spending requirements, even after another 17 million residents are added to the mix, along with accelerated cost of living in California.

These property tax revenues are not needed to accomplish what must be accomplished in this state.  California has all-time high revenues coming in, plus a significant surplus.  The type of surplus, for example, Bill Clinton would have solidified, were it not spent by the spendthrift administration that followed him.  A similar surplus formula is in motion in California as well, since the state’s local inbound government revenue is at a record high level. 

In fact, when Proposition 13 was passed into law in 1978, allowing heirs of estates and trust beneficiaries to transfer parents property taxes, with a parent to child transfer, upon inheriting property from parents, hence inheriting property taxes at a low base rate – local property tax assessments were over $6 Billion!  In fact, California state economists now confirm that local property tax has increased by over $19 Billion over the past ten years; starting at $50 billion in 2008–2009 during the  recession, to nearly $69 billion by 2019.

At any rate, beneficiaries and heirs of estates were all of a sudden   able to keep parents property taxes instead of suffering devastating tax hikes from arbitrary reassessment.  In fact, being able to avoid  property tax reassessment altogether.  While maintaining parents’ low Proposition 13 property tax rate and in 1986 with the advent of Proposition 58 and being able to buyout property shares inherited by  co-beneficiarties, being able to retain that low tax base forever after any property tax transfer from parents, which estate attorneys still refer to as a parent to child transfer or “parent to child exclusion” — which you are also most likely familiar with by now.       

Point being — an egregious property tax increase in California in Nov. 2020 from a Split-Roll tax, through the decidedly deceptive stripping down of  the 1978 Proposition 13 tax cap protection for commercial property owners — avoiding property tax reassessment for business and commercial as well as manufacturing facilities, office buildings, malls, multi-rental properties, so on and so forth.

Basically, this type of property tax relief unraveling is just simply not needed by local California government revenue collectors, in order to maintain a sound economy going forward, for the state of  California.

>> Click Here: to Continue to Part Four…

 

PART FOUR: Coronavirus Crisis is the Last Thing the California Real Estate Market Needed!

Corona Virus and Real Estate

Corona Virus and Real Estate

In the final analysis, we must admit that the Coronavirus crisis is in fact the very last thing we needed in California – given the chronic problems with the job-based economy, and conflicts within various markets – the troubled agriculture business and the real estate market, just to begin with. 

Since 2016, we could clearly see a  downwards cyclical trend in California, revealing shrinking home sales.  And for whatever reason, we’re experiencing a peculiar growing trend, featuring  conflicts between siblings and other family members within estates and trust funds, typically with real estate.. with less and less cash each year that goes by. 

These conflicts between sibling beneficiaries typically revolve around inheriting real property, with one or more heirs and/or beneficiaries wanting to take more than their fair share of inheritance assets… Moreover, we see a lot of sibling conflict  revolving around the question of who will retain inherited property, or will beneficiaries looking to sell that property to an outside buyer win that battle of wills…. Taking the estate into an area involving parent to child exclusion, and transfer of property between siblings, or buying out a siblings’ share of a house, also known as buying out siblings’ property shares or sibling-to-sibling property transfer.

Interestingly enough, it is only in the state of California where you have property tax relief which actually looks like tax savings set up specifically to deal with economic problems brought about by the Pandemic – in every state… Put forth and passed by Lawmakers that actually care about the well being of the American people. 

CA Proposition 13 and Proposition 58 would actually be excellent tax break solutions for folks in every state right now, with a relentless Pandemic causing death and mayhem, both with our health, and with our job based economy.  This type of property tax savings for American home owners would be right on time – where you can keep parents property taxes, transfer parents property taxes, while inheriting property taxes at a low 1978 Proposition 13 base rate… Having the ability to use Proposition 58 property tax transfer benefits, with parent to child transfer or, as lawyers call it, “parent to child exclusion” – covered on trust lender Websites…   Property owners in every state should be learning more about these types of tax benefits, on official Websites such as the official California State Board of Equalization site; or at one of the free, well researched, well vetted niche California tax relief resource blogs like this site.  

It’s important to learn how trust loans work alongside reliable  Proposition 58 or Proposition 193 property transfer tax break benefits, making it possible to establish and retain a low Proposition 13 tax base with parent to child exclusion guaranteed; upon any  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 with a solid, reliable reputation.

Learning about these tax breaks, and how they work with trust loans or without… will strengthen residential and commercial property owners’ ability to communicate  the right data points to their so-called representatives in Washington… with the hope that one of these days, sooner than later, we’ll start to see property tax relief being established in every state in this country, just as they have in the state of California. 

And yet  now with all the problems in the real estate market brought about by the Coronavirus Pandemic, with home sales on the wane as potential buyers cancel house viewings, or flat out decide against risking a large down payment and pricey monthly mortgage payment due to fears that they may lose their lucrative  white collar job in the very near future… Or that their investments in the stock market or in CDs may plummet any day soon.

With the Coronavirus crisis literally paralyzing the real estate market, and the retail as well as service industries in California; and elsewhere, doing exactly as it wishes to do with us essentially, as we continue to flounder.  With absentee leadership and misinformation costing thousands of fatalities, and an economic disaster getting more and more serious by the day. 

Looking at this issue realistically, we’re now talking about 45 million people filing for Unemployment. 2,415,000  jobs lost just in April 2020 alone as an example, and similar losses before and thereafter, as months go by and the virus deepens it’s effect on our way of life.  With tens of millions of people out of work.  We’re now talking about almost double the number of Americans unemployed during the Great Depression, which was over 25 million.  Let’s look at California, given the plunge of the real estate market due, to a large degree, to the Coronavirus crisis.  

California home sales fell to the lowest level since the last “Great Recession” as the housing market suffered the full impact of the Coronavirus Pandemic in May and sales remained below 300,000 for the second straight month, the California Association of Realtors informed us recently.   May 2020 home sales in California decreased 13.9% from 277,440 in April and down 41.4% from 12 months ago, when 407,330 homes were sold within that year. It was the second straight month that home sales dropped below 300,000 units. Additionally, the past year’s plunge was the largest drop in home sales since the Recession beginning in November 2007, contributing to a sales drop of 12.9%

It’s odd that experts are warning us that California could see a 20% increase in homelessness if this current economic downturn continues month after month. We may see as many, if not more,  evictions and foreclosures in California than we had during the last  “Great Recession”.   Not only that, with bread lines continuing to mushroom all across America; teeming with Americans in long lines of cars… apparently in their 6th or 10th or 12th week of unemployment, what would help residential and commercial property owners would be property tax relief similar to how it’s done in the great state of California. 

This is precisely the tax relief model that should be reviewed by Congress as a serious non partisan, non political Emergency Disaster Relief Measure… being that California the only state in America where you can still  avoid property tax reassessment at current rates; capped at 2% taxation, thanks to the original 1978 CA Proposition 13.

Websites that focus on California Proposition 58, on property tax transfer and on how trust loans from trust lenders work for estates   with property conflicts between siblings… equalizing distribution of cash, as real estate attorneys put it – so all beneficiaries walk away feeling they got what they wanted, and that it was win-win for all concerned.  This would give beneficiaries and home owners alike enough info on property tax transfer and parent to child exclusion, and property tax relief in general, to put their demands in writing to Congress…  and demand property tax relief as part of the Coronavirus Stimulus Package!  It would certainly make a great deal of sense right now, no question about it.

Proposition 13 & 58 Tax Relief Still Popular with Californians, Despite Critics

Is Proposition 13 & 58 in demand despite critics… Without hesitation, the answer is yes. On June 6, 1978, 42 years ago, California voters passed Proposition 13 with 65% of the total vote. And to this day, interestingly enough, 65% of “likely voters” in California still support this tax relief initiative.

This popular and unique property tax break immediately froze California home owners’ real estate tax rate at 1% of the assessed value of their property – i.e., the assessed value on the day they bought the property.

So if you were a California resident at that time, you clearly saw that taxes on your home and land were no longer reassessed at current market value – and no longer went up more than 2% in total. And home owners in California are fortunate enough to be benefiting from the same formula 42 years later.

Moreover, the ability local governments had to raise money for city and town running budgets, including school funding – by arbitrarily raising real estate taxes whenever they felt it was needed – was all of a sudden severely restricted. And restrictions remain popular with consumers to this day.

The only parties perhaps not so thrilled with these restrictions and everything else associated with Prop 13 are political parties motivated to destroy Proposition 13 regardless how many critical protections for commercial and industrial properties are  guaranteed by Proposition 13, not to mention raising their commercial property taxes by billions… Plus certain individuals involved within the political arm of the educational system in California… as well as conventional executives, realtors, brokers, and other functionaries involved in the real estate market.

Click Here: For More Discussion on Critics of Proposition 13, at the Taxpayers Association… and on the stability home owners, renters & businesses have from Proposition 13, being able to avoid property tax reassessment; plus the positive affect Prop 13 has on local CA government – bearing in mind robust tax revenues pouring into local government coffers since Proposition 13 was passed.

Unfortunately, these folks in the California real estate business will simply have to continue riding the merry-go-round affecting the real estate market, with up-and-down sales cycles.  Let’s face it, they have had their mega profitable bull years, and now they’ll just have to learn how to cope with a bear market for a few years.

And pinning the blame on Proposition 13 and Prop 58, as well as blaming  “elderly home owners who don’t wish to put their house on the market”, simply isn’t going to fly. The shrinking numbers of homes becoming available to buy and sell is a natural business cycle.  And that’s just the way it goes.

Proposition 13 & 58 in demand despite critics?  It certainly is…

Click here for more on polling data and the vast popularity of Prop  13 in California, among middle class and upper middle class home owners of all ages…

With so many property owners inheriting property taxes – yet urgently needing to transfer parents’ property taxes so they can keep parents property taxes the way they are, and not fall prey to egregious tax increases. Hence, that 65% to 70% approval for Proposition 13 in California will only go up, and up, as the  reality of the real job market and the real job-based economy in general becomes clearer and hits home, in stark direct contrast to the sunny unrealistic TV news stories people are subjected to every night on CNN and MSNBC and network news,  citing the “strongest economy is 50 years!” while ignoring the millions of under-employed people with PHD’s waiting on tables and bar-tending…

Or, we’re forced to listen to uninformed politicians  breathlessly decrying the “lowest unemployment numbers in decades”, based solely on how many people are signing up for unemployment checks, while completely ignoring the millions of workers no longer receiving unemployment checks, who have fallen into the cracks and disappeared off the grid.

Perceiving all this realistically, and personally experiencing the ups and downs of real estate in one of the key property states in the union, middle class Californians realize the importance of saving every dollar they can – and this is where Proposition 13 and Prop 58 and 193 step in and provide such critical, often life-saving, support in this regard.

Please feel free to provide your thoughts below.  We are always interested in your comments and ideas, and will continue to publish your interesting feedback: