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.
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