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?

California Proposition 58 & Proposition 19 Lenders

California Proposition 58 and Proposition 19 Lenders

California Proposition 58 and Proposition 19 Lenders

We all know it’s a period of time right now in America of great uncertainty, insecurity and stress… affecting many families, creating enormous tensions, frequently financial…  Even affecting family estates, when a parent passes away; and where ‘will contests’ can be a real problem for families – for example, sibling-A believing she/he should be getting more than sibling-B;  so on and so forth.  We see a lot more of this sort of family conflict lately, over the past few  years, than ever before.

Although we do, thankfully, have solutions in California to prevent such conflicts from descending into disaster. Some of these solutions are tied into getting approved for CA Proposition 58 so heirs can avoid property tax reassessment; as well as classic CA Proposition 13 property tax breaks, for California property owners looking to work around new Proposition 19 property tax obstacles that force homeowners to move into inherited property within one year or lose their “Parent to Child Exclusion”. This can be a stunning loss of property tax relief; unless we meet it head on, and are able to  successfully work around it. 

It seems it’s still possible to take advantage of the property tax transfer benefit from parents, with the ability to keep parents property taxes while avoiding property tax reassessment of course. Despite newly passed obstacles, we can still transfer parents property taxes when inheriting property – bottom line, inheriting parents property taxes at a low base rate the way Proposition 13 was intended!  

Firms like Commercial Loan Corp can help solve estate conflicts between beneficiaries; making it possible for us to buyout siblings with a “sibling to sibling property transfer”, siblings who want to sell their inherited property shares, while allowing us to keep the same mutually inherited property from parents – with a trust loan, at that low base rate.  As long as we get approved for Proposition  58, heirs can avoid property tax reassessment, as the California State Board of Equalization explains.  Or possibly at a niche property tax info blog like this one, Property Tax Transfer

As long as everyone gets the cash they were expecting with a trust loan, and/or end up with a nice low property tax base… everyone ends up in a win-win happy sibling scenario. As long as the ‘will contest’ can be resolved to some degree, and direct communications between siblings doesn’t completely fall part.

These conflicts have often dominated family structures, so much so that some family groups actually splinter apart… with some family members literally leaving California for ever.  Additionally, Southern California home prices are currently at record levels, which doesn’t help. 

Because of hyper expensive home pricing many people are moving from California to nearby states where cheaper real estate can be found, in decent middle class or lower middle class neighborhoods; including Texas, Nevada, Arizona, and in some cases Oregon and Washington, according to Jordan Levine, an economist at the CA Association of Realtors (C.A.R.), who says California residents leave to get out from under general California inflation and an increasingly expensive overall lifestyle that many middle class families simply cannot afford to sustain – in terms of buying a home, feeding a family, maintaining numerous cars and insurance plans, health coverage expenses; schools; you name it. 

It is ironic that C.A.R. (California Association of Realtors) produces a report describing elevated living expenses in the state of California, while they are in fact the chief sponsor supporting the recent Proposition 19 property tax measure, watering down  property tax relief for California home owners… contributing to the higher cost of living in the state… Obstructing the way heirs can avoid property tax reassessment by unraveling the “Parent to Child Exclusion” or Parent-to-Child Exemption, as realtors like to call it.

As a matter of fact, this past August, the median home price in California was up more than 12% from a year earlier, according to CoreLogic/DQNews. Experts say the median home price is being impacted by an increase in luxury homes along with the flexibility of remote working options, which also allows people to move away from places like Los Angeles or San Francisco, to nearby states, in rural areas where families can get more space and amenities for far less cost than in many populated areas in California.

California real estate is often significantly more expensive than other, nearby, states. But then again, so is property in states like New York, or Chicago, in Oregon,  Maryland or Massachusetts. However. At least in California, homeowners and beneficiaries inheriting property have been fortunate enough to have property tax breaks at their disposal since 1978 such as Proposition 13, maintaining a low property tax cap of 1% to 2 % max.

Moreover, since 1986 Proposition 58 has positively impacted property transfers and naturally property tax transfer, avoiding property tax reassessment on inherited property while inheriting property taxes from parents.  This  has actually saved homeowners in California tens of thousands of dollars over the years.  Hundreds of thousands, literally, over decades.

In fact, thanks to Proposition 58, trust loan based estate funding transactions save beneficiaries $6,000 to $8,000 or more on average, per family, every year.  No, it’s not millions… But for a regular middle class family it is definitely significant.   And if homeowners can’t access this type of benefit, it will hurt them financially year after year.

So even if we can buy a house more cheaply in a relatively inexpensive state like Ohio, or Idaho, South Dakota, North Carolina, or Wisconsin, for example… All comparatively less pricey than average property in many areas in California — we end up spending more anyway every year in property taxes in those other states. So we end up spending more every year anyway.

Property tax transfer, known as a parent to child transfer or parent to child exemption, will always be low, at 2% or less – if we continue to be able to avoid property tax reassessment.  With new property tax laws in place, if we miss that 12-month deadline to move into inherited property – then we’re right back in the financial vice known as “current market value”…

And, bless the California politicos who negotiated for us against the Legislature to at least retain enough of Proposition 58 so as long as we do get in under the wire, within that first 12-months after our decedent passes away… with 6-figure trust loan approval, we can, as beneficiaries, buy out co-beneficiaries’ shares of inherited property, which realtors call “sibling to sibling property transfer”, or ”transfer of property between siblings” and end up owning our own property anyway, without the problem of sharing real estate with siblings we’d rather not own property with.

Thankfully, although the timeline has now become more challenging, we can, as California inheritors and homeowners, still take advantage of tax breaks made possible by Proposition 58 and Proposition 13, in concert with an irrevocable trust — and buyout siblings,  so we can take over our own home at a nice low property tax base, more or less equivalent to the tax base enjoyed by our parents. Property tax relief in California may be a bit rocky right now… but it’s still there, if we use it carefully and judiciously.  And keep both eyes on that calendar!

Loans for Irrevocable Trusts

Loans for homes in an irrevocable trust

Loans for homes in an irrevocable trust

According to financial leaders who own firms that provide loans for irrevocable trusts and property tax relief programs, in concert with Proposition 58, Prop 193, and Proposition 13 – typically saving  homeowners over $8,500 in extra taxes every year – the news is that property owners in California should consider accomplishing any property transfers to heirs, that may be planned either as a sale, a gift or an inheritance, or a hybrid – prior to or by Feb. 15, 2021…

Feb. 15th being the final day one can access original Proposition 58 or Prop 193 property tax break benefits – to save money on the initial transfer, plus thousands of dollars on yearly property taxes, as the tax assessor comes around to collect, so to speak.  

To reiterate, as you probably already know, Proposition 58 allows parents in California to transfer property to their children without triggering a property tax reassessment. And as you most likely are aware, you must be the son or daughter of a parent that resides, and owns property, in California – in order to qualify for a “parent to child exclusion” (also referred to as a parent to child exemption) – from reassessment, in terms of the current market value of family owned real property.

Conversely, Proposition 193 allows grandparents to transfer property to their grandchildren, with a “grandparent to grandchild exemption” – without having to worry about current market property tax reassessment.  It’s worth noting that the Proposition 193 exclusion is workable only if the Proposition 58 exemption cannot be used.  In other words, to put it bluntly, parents of the grandchildren in question must be deceased.  That may sound harsh, however it is important to know the facts.

To be safe and secure, experts are telling us right now to be aware of certain changes to the Proposition 58 “parent to child exclusion” tax break – and to remain aware of time as a serious factor. We are told that we should view Feb. 15, 2021 as a formal deadline for completing a family property transfer or intra-family trust for a trust loan – not for paperwork signatures, or a postmark date. With potential county closures mounting up, the completion of this sort of transaction in person could very well continue to be a challenge, and backlogs affecting paperwork sent through the mail could be an issue at some point.  

As of February 16, 2021, family property transfers must be used as a primary residence, to avoid property tax reassessment at current market value; maintaining the invaluable right to avoid property tax reassessment.  Fortunately, Californians will still be able to take advantage of a property tax break as long as they are using inherited property as a primary residence, within a year of the passing of the decedent who is leaving the property to his or her children; typically as an inheritance.    

However, we do need to be aware that it is the next generation of property owners, in the future, that may incur higher property taxes due to new tax laws, or shall we say a revised version of the same   property tax break protected by CA Proposition 58.  The point being, with new changes to property tax law in California, with the right to avoid property tax reassessment being challenged and even partially unraveled, it has  become more important than ever to consult or work with Prop 58 and property tax relief experts that are knowledgeable in all trust loan, Proposition 58 and Proposition 13 matters… who maintain a grasp of property tax law changes, and how those shifts impact beneficiaries and property owners in the state of California.    

Home ownership for middle class Americans has mushroomed and developed at a breakneck pace, as the gold centerpiece that represents The American Dream…. Yet it is property tax breaks, and property tax relief for the middle class in the state of California – that has kept that dream alive.

Parent to Child Transfer

Parent to child real estate transfer

Parent to child real estate transfer

It’s time we ask ourselves – exactly what kind of affect will CA Proposition 19 most likely have on California?

There is a lot more to this than meets the eye. As of June 6, 1978 California has been the one state in America with direct access to a low tax base model, becoming accustomed to the classic Prop 13 property tax cap… working in tandem with the 1986 Proposition 58 protected property tax transfer & parent to child exclusion, making it possible thanks to Proposition 58 for homeowners & commercial property owners  to avoid property tax reassessment at current market  rates.   Basically forever, as long as they retained the property they inherited. 

Proposition 19 has now cut deeply into critical Proposition 58 property tax benefits, closing the door on the parent to child exclusion (i.e., parent to child exemption), if a property owner is not able, for whatever reason, to move into their inherited home within a year after the passing of the parent that has left the house and/or land to his or her heirs. 

Proposition 58, and of course Prop 13 tax relief, as well as trust loans to buyout co-beneficiaries while locking in a low tax base, has been a life saver for so many estate heirs and trust beneficiaries in California. Life everywhere is hard these days for middle class residents, and California is an especially expensive state to live in.  Moreover, inheriting a home from a parent is a major asset, and being able to save thousands of dollars on property taxes during the initial property transfer, and yearly, certainly adds value to the good fortune provided by these property tax breaks. 

A quote from the Los Angeles Times summed it up succinctly on Oct. 19, 2020:

…a qualifying homeowner who owns a home with a taxable value of $200,000 that is worth $600,000 on the market would pay roughly $2,200 in property taxes now. If the homeowner moves to a $700,000 house, the homeowner would pay $3,300 a year in property taxes under Proposition 19. Without the initiative, the same homeowner would pay $7,700 annually…”

Of course they forgot to mention that this property tax “initiative” must be implemented strictly within a year after the decedent passes away.  Or the door to the tax break slams shut. 

Yet, adding absurdity yet again to redundancy, the Los Angeles  Times once again repeats the one, almost comical, example of “families taking advantage” of this sort of property tax relief, using your right to a parent to child transfer exemption…  indicating repeatedly that there are numerous examples of inherited homes and Prop 13 as well as Prop 58 tax breaks being used by all these rich folks as money making outrages , renting our inherited properties on the beach for $16,000+ per month, and never using it as a primary residence. 

Yet it truly is comical that after 40 years we still have not heard  about one other specific family in California engaged in this sort of money-making practice, but “Jeff Bridges and his siblings”.  Now, we’re certainly open to hearing about other families involved in property tax transfer activities like this, inheriting property taxes from parents at a super low base rate every year, just to be a beachfront landlord raking it in every year from other rich people who are addicted to sun and surf. Yet no other family name ever surfaces. 

And again and again we hear about this one family, the  Bridges, taking advantage of Proposition 13 by renting out luxury homes to wealthy residents… once again in the LA Times in Oct. of 2020, 

“The provision has since been dubbed “the Lebowski loophole” after The Times found that “The Big Lebowski” actor Jeff Bridges and his siblings had advertised a beachfront home in Malibu inherited from their parents for nearly $16,000 a month in rent despite an annual property tax bill that’s a fraction of that amount.”

So is the LA Times telling us that they simply cannot come up with one other family that inherits a luxury property like this and then makes a killing every year renting it out?

These property tax benefits are indeed genuine, and actionable for mostly middle class families.  Not rich movie stars like Jeff Bridges.  The parent to child transfer exemption has always been there for middle class home owners and beneficiaries… since 1986, and actually since 1978 with the advent of Howard Jarvis’  Proposition 13.

The ability to avoid property tax reassessment, to exercise your right to a parent to child transfer exemption, even for a modest secondary property from parents, really can be a life saver for middle class residents who are not rich, and need every break they can lay their hands on.  This conspiracy theory that gives Californians the impression that these tax breaks are mainly for wealthy property owners is completely  false.  If anything, you could call it a middle class tax break, period… and you’d be 100% truthful. 

Now all of a sudden that tax break is gone unless you move into your inherited property within one year of having inherited it.  Is this simply to upset the Bridges family?  And if you don’t move into your inherited home as a primary residence within one year you will lose your property tax transfer benefits… you will lose your parent to child transfer exemption.  You won’t be able to transfer parents property taxes, there will be no inheriting property taxes fro parents.  If you miss that 12-month deadline your ability to keep parents property taxes will evaporate completely.  And if you don’t think this is real, guess again. 

Critics of property tax relief in California, proponents of Proposition 19, repeatedly tell us, “Fine! What’s the big deal anyway? You can move into inherited property within a year and then enjoy your right to avoid property tax reassessment forever!  So what’s the problem:”  Well… the problem is that perhaps some beneficiaries  can’t make that move so easily within year one. Perhaps this is not the most realistic tax revision ever voted into law.

Over 650,000 new homeowners, beneficiaries, took advantage of a Proposition 58/Prop 13 tax break over the past ten years;  that gave them the right to maintain their parents’ low property tax base upon inheriting a home from a parent.  How many heirs or beneficiaries inheriting a home this way over the next ten years will lose inherited property because they will not be able to move into their inherited home smoothly, without problems, as a primary residence within 12 months?

No one knows exactly.  However, we can safely say – a lot!  More revenue for the Legislature.  More homes on the market for realtors.  More cash to pay off unfunded state government pensions.  That, we know.

There are a myriad of reasons why Proposition 19 will turn out to be inconvenient and awkward at best – to be, at worst, an unnecessary tax measure that will effectively fray the fabric of the estate and property inheritance system in California. For example:

     Ones’ job may be an extra 60, 90, whatever, hours away on the freeway getting to work from this new inherited home from mom or dad – and then back again after work.

•     Perhaps a spouse also may have significant travel issues, to and from work, regarding distance to and from a new home.

•     School for children can easily be an issue, if an inherited home is in a new school zone.  All familiarity, neighborhood friends,  teacher relationships, social relationships – all gone, if they’re near where you lived previously. This can cause all sorts of issues for children.

•     A beneficiary could be disabled; and prior to moving abruptly within a year, may need to start fixing up an inherited home to accommodate disabilities – generally costing a good deal of money to implement physical changes of this kind, ramps, safety measures in various rooms, etc.

     Many beneficiaries are senior, which would make such an abrupt move very difficult at best – and for many, downright impossible.

     There is also the matter of selling your inherited house, most likely for a good deal less than it’s probably worth due to Covid issues affecting many California properties; over the next decade.

     Lastly, and ironically, all this hub-bub regarding additional presumed mountains of revenue from new Proposition 19 driven property taxes will, if Jon Coupal and the Taxpayers Association are correct, serve mainly to pay for unfunded state government pensions.  Perhaps a small fraction for the schools system… But that’s about it.

So, as we originally indicated – there is a lot more to this issue than meets the eye.

Inherit A Home And Keep The Property Tax Base

Inherit Property and The Property Tax base

Inherit Property and The Property Tax base

The Los Angeles Times, in their inimitable fashion, put it like this on Oct. 19, 2020:   

About 650,000 California homeowners over the last decade received a tax break that allows them to maintain their parents’ low property tax payments when they inherit their homes…

The provision has since been dubbed “the Lebowski loophole” after The Times found that “The Big Lebowski” actor Jeff Bridges and his siblings had advertised a beachfront home in Malibu inherited from their parents for nearly $16,000 a month in rent despite an annual property tax bill that’s a fraction of that amount.

Proposition 19 would eliminate this property tax break for investment homes and commercial properties, meaning that heirs who inherit their parents’ properties would pay taxes based on market value. With some limitations, children who move into homes inherited from their parents would be able to retain the tax break.

Interesting how the Times gives credence to deceptive wording, while confusing the so-called benefits of Proposition 19.  They parse the actual Prop 19 rules and regs, and purpose in fact…twisting the facts to read, “Proposition 19 would eliminate this property tax break for investment homes and commercial properties…”  Prop 19 does not now exist to eliminate investment homes and commercial properties.  It exists to eliminate the parent to child exclusion, or parent to child exemption… unless you change your life  and move into a new inherited home within a year. 

Interesting that The Times chooses to leave out the fact that inherited property  will be sold off at a loss by inheritors who may not be able to move into inherited property within a year… because middle class homeowners, 95% of the folks affected by this new tax law, won’t be able to afford the new property taxes without the parent to child exemption being utilized within that year one after mom or dad dies.

Instead of telling it like it is The Times tells us, “With some limitations, children who move into homes inherited from their parents would be able to retain the tax break.”  Sure, “some limitations” meaning those folks inheriting property must uproot themselves and set up a  new life within 12 months, plus sell the home they are living in, or give up their inherited home at a financial loss. And maybe they can’t just up and leave their current residence, sell it, and move to a new home that was owned by their parents, that perhaps does not suit them and their family. For a number of reasons. 

Proposition 19 doesn’t exist to eliminate greedy real estate investors… It exists to push middle class home owners out of the way, to force them to sell inherited property if they can’t uproot themselves and move into their inherited home within a year while figuring out a way to sell their own home. In a market hampered by Covid, where maybe it’s not so easy to sell that home they’ve been living in.  These are not investment sharks and real estate hustlers, as the Los Angeles Times is falsely hinting at.  These are regular middle class home owners.

This new tax law affecting property tax relief in California was put in place to generate more money for realtors and the CA Legislature.  Directly impacting consumers.  Regular folks, like you and I.  Not to eliminate “property tax breaks for investment homes and commercial properties”.   That is, we’re sorry to say,  a false characterization.

Abruptly, the entire state found out at the last moment, prior to the November vote, that C.A.R. had launched Proposition 19, along with the California Legislature, which passed by a few votes; due mainly to an extremely clever, albeit a bit deceptive, marketing campaign – confusing voters while hiding the fact that Prop 19 exists to kill parent to child exclusion benefits, bit by deceptive bit.  Don’t be fooled, completely unraveling the parent-to-child exemption is their eventual goal.  Not giving residential and commercial property owners the ability to avoid property tax reassessment every year.

This type of tax break frees property owners from chronic stress based on unpredictable property taxation that is typically high for middle class incomes. This form of property tax relief makes life in general more secure and more affordable for middle class and even upper middle class residents. Rich folks we don’t really need to worry about. They’ll be fine either way. This type of tax relief allows beneficiaries to keep parents property taxes, and of course gives them the ability to transfer parents property taxes when inheriting property; avoiding property tax reassessment, keeping their tax base low through CA Proposition 13.

What is truly incredible to many of us is the ability for a beneficiary in California to use Proposition 58 to get a special loan providing cash to co-beneficiaries through an irrevocable trust, for middle class beneficiaries who want to smooth out cash obstacles (often referred to as “equalizing liquidation”) when it comes to conflicts between siblings who want to sell property versus family members who prefer to keep inherited real property… an invaluable property tax benefit.  Which is exactly why it’s so important to understand how and why Prop 19 exists to kill parent to child exclusion benefits at some point in the future… This is the C.A.R. and CA Legislature’s first baby step in that direction.

All states, forever grappling with this Covid crisis, should be heading towards tax breaks for regular middle class people, and not wasting the country’s time with absurd tax law benefiting a few wealthy corporations, a couple of hundred billionaires and multi-millionaires, with huge tax cuts they do not really need; and corporate welfare for immense companies that would be just fine without it. While a couple of hundred million Americans struggle by generally without tax breaks or tax loopholes of any kind to help them put away some extra cash in the bank every year.

In fact, all states need a Proposition 13 and Proposition 58, to help middle class families get by every year. That’s why beneficiaries or heirs in every state who are expecting real property, or are leaving real property to their own heirs, should conduct some careful research on blogs and Websites that focus on inheritance matters, to get more familiar with Proposition 58 and trust loans, on beneficiary issues and CA Proposition 13.  They should study informative niche blogs like this one…  as well as other niche  Websites that cover property taxes in depth… that delve into California Proposition 13, 58 and 193, as well as how trust loans can help beneficiaries.

All resident should learn more about why Prop 19 exists to kill parent to child exclusion benefits, bit by bit; how to keep parents property taxes and how to transfer parents property taxes, inheriting property taxes, or property tax transfer, parent to child transfer and parent to child exclusion – for residential properties of course; however, also for business oriented sites and commercial properties… that take full advantage of Proposition 58 — making use of trust loans to buyout inherited property from siblings, such as simply to get the facts straight on the transfer of property between siblings, how to buy out siblings share of a house; what makes sibling to sibling property transfer work; and how loans to irrevocable trusts help co-beneficiaries get cash while avoiding the necessity to sell their share of the inherited property.

Then, once they get your pitch together, folks in all states can tell their congressional representatives to get moving on passing property tax law for middle class home owners, not just rich folks that live in lovely upscale neighborhoods!

Many of us wonder when it got to this point in this country, when virtually the only way you can have a genuinely comfortable, safe, secure life is if you are fabulously wealthy – and nothing below that or in between.

Why Does the CA Legislature Want to Remove Tax Breaks for Residential & Business Property Owners?

 

It’s no surprise to anyone in California that if commercial property owners, landlords, business and industrial facility owners ever have their property taxes increased by any tax measure like Prop 15 – rents will go up for business tenants and apt. dwellers.  Most goods and services in the state will go up, increasing the cost of living and negatively impacting 40 million consumers in the state of California.  Companies that can’t abide higher taxes will soon leave California, to more empathetic states, and they will take their jobs with them.  If Proposition 15 ever returns, or comes back with another name, with more deceptively effective marketing.  It is indeed a mystery as to why the Legislature in California would want to impact the entire state in this fashion.  They claim it’s to fund the school system.  According to Jon Coupal at the Taxpayers Association and other analysts and state economists, this is merely a thinly disguised ruse to pay for a few hundred unfunded local government staff pensions. Either way… is it worth it, to impact 40 million Californians this way?

 
It appears that Proposition 19 will now become tax law in California. Removing the so-called parent to child exemption, also called parent to child exclusion or parent to child transfer; destroys a critical property tax relief benefit from homeowners… No longer allowing residential property owners to avoid property tax reassessment every year – which effectively destroys property tax relief in the state of California.           
 
Another related process that may well be affected by Proposition 19 are trust loans, used in conjunction with Proposition 58.  These days, called intra-family loans to trusts to minimize property taxes, with one small, successful boutique firm in Newport Beach, Commercial Loan Corp, opening this historically exclusive,  restricted elite-door for families of all incomes and backgrounds – formerly open only to V.I.P.s and mega-wealthy families – now open to  all middle class and upper middle class  California residents.  Where visionary CEO Kerry Smith’s concept for trust loans are used in conjunction with Proposition 58, to buyout a co-beneficiary’s inherited property; also referred to as a sibling-to-sibling property transfer; while  locking in a low property tax base. Keeping property taxes inherited from parents, plus fulfilling the need to equalize cash going to co-beneficiaries who wish to sell the same inherited property to outside  buyers… walking away with less than if bought out by a trust loan organized by co-beneficiaries.
 
In California, Proposition 58 protects families that owe thousands of dollars in property taxes, while they organize and resolve related issues, typically over a 17 or 18 month period, settling an estate after the passing of the decedent leaving property to his or her heirs. Under Proposition 58 (voted into law overwhelmingly in 1986), a home and up to $1 million of assessed value of other real estate are excluded from reassessment when transferred between parents and children. This keeps the property tax assessment the same as if the property was still owned by the surviving parent.
 
People should research and get more familiar with these great tax breaks, at Websites like the BOE site at https://www.boe.ca.gov, covering Proposition 58; Or, informational Blogs and Websites like this free resource Blog, that focus on Prop 13 and Prop 58 as well as trust loans working in concert with the right to buyout a co-beneficiary’s inherited property; on business  Websites like Trust and Estate Loans or  Proposition 58 / Trust Loan specialists such as Commercial Loan Corp.  Folks need to get their facts straight, and begin calling and emailing  their political representatives, to get them working on property tax relief like they have in California!                                   

To be fair, every single state in America should have property tax breaks like this – not just for wealthy folks and massive companies… but for everyone… regular middle class Americans. What is so difficult to understand about this? Are working class people in states other than California going to keep voting in the interests of billionaires, which is OK, but against their own best interests? Against property tax breaks for middle class or working class families? Now that makes no sense.
 
The fact of the matter is, especially during an endless pandemic, every state needs property tax breaks like they have in California, Proposition 13 tax relief benefits, the ability for beneficiaries that are inheriting residential or commercial property from parents to avoid property tax reassessment for the rest of their life if they hold on to that property — and even a secondary property as well. Proposition 13 has saved California taxpayers over $500 billion – saving the average middle class family over $60,000… since 1978.

People ask, what is so crucial about CA Proposition 58;  important enough to stop a Proposition 19 tax upheaval to unravel Prop 58 and Prop 13 parent to child transfer ability, the parent to child exemption or exclusion. Which every state should have in one form or another. That’s the point here. Tax relief allowing you to save on the transfer of property from parent to sibling and sibling to sibling.
 
Using property tax relief solutions as an income-saving device for home owners makes it possible for beneficiaries to buyout another sibling’s share of inherited property; when getting a trust loan from a trust lender. Trust lenders advance you a loan of, for example, $400K, $500K, $700K, whatever you need to buyout a co-beneficiary’s inherited property; while at the same time you get to retain a low property tax base guaranteed by Proposition 13. Every state needs this badly right now.  Especially with Covid-19 upending the US job-based economy. Every state needs CA Proposition 58 and Prop 13 type of transfer of property tax benefits and discounted rates.
 
Residents of all states should be communicating with their political representatives, to tell them all states in the US should be able to keep parents property taxes during property tax transfer, with parent to child transfer, or as attorneys call it, “parent to child exclusion” (from present day tax evaluation).  Why should California be the only state in the union that enjoys genuine property tax relief?

To find out, or to confirm, who your Senators are, make use of the search tools at https://www.senate.gov/senators/index.htm or go to https://www.senate.gov/general/contact_information/senators_cfm.cfm Or to confirm who represents you and your family in Congress, you can go to – https://www.house.gov/representatives/find-your-representative or you can use the search tools at https://www.govtrack.us/congress/members    These Websites make the investigation process extremely easy… Whereas years ago it was almost impossible to figure all this out.

Now, it’s simply a quick search and you have  all the info you need to move forward and start telling your representatives in Washington how they should be doing their job!


PART THREE: Property Tax Relief Fights for Its’ Life in California…

As we all know, the Coronavirus crisis is not abating in many states – causing severe and consistent unemployment, and overall economic uncertainly.   Certain states are floundering more than others, without any federal support of any kind, even PPE – thereby costing tens of thousands of families the lives of loved ones. 

With millions of jobs initially put on hold – jobs that were placed on  “furloughed”  status or were standard “lay-offs”… are still in question, as far as resurgence is concerned.  Regrettably, it’s impossible to determine the exact number of jobs lost, as some return: whereas others do not.  Therefore, constant fluctuations make permanent calculations difficult to nail down. 

Making matters even more challenging, the federal government historically calculates “unemployment rates” by adding up the number of workers signing up for unemployment checks;  and deduce an unemployment rate in this fashion. However, once workers stop getting  unemployment checks they somehow magically disappear off the grid.  As if they somehow were never in the system.

It would be safe to say that unemployment, nationally and statewide, remains at critical levels.   And yet California is still the only state in the union that provides middle class residential and commercial property owners with genuine property tax breaks.  

And this is exactly what every state in America needs right now, with unemployment and Covid still spiraling out of control.  Lowering property taxes would surely loosen up some cash to help working families buy food and maintain some decent health coverage, plus put some money away for emergencies. 

If we were able to get property tax measures passed in most states, similar to the mega-popular tax breaks California home owners and commercial property owners enjoy, the overall positive cumulative affect on American tax payers would be significant. Folks would be able to easily transfer parents property taxes, and keep transfer parents property taxes, or buyout while inheriting property taxes at a low base rate. 

Especially in times like this – shouldn’t we all have access to property tax relief like this?  An intra-family loan to a trust, using Proposition 13 and Proposition 58 type of property tax transfer benefits and tax breaks, with parent to child transfer or as law firms refer to it – parent to child exclusion, or exemptions.

Do some research and push your Beltway representatives in Congress to put together some bills like California has passed to help home owners and commercial property owners.  And you can use the Covid crisis for added motivation.  This is covered on  informative, accurate niche Websites such as Commercial Loan Corp.  

An intra-family loan to a trust in conjunction with Proposition 58, or Prop 193, makes it possible to maintain a low property tax base basically forever upon a beneficiary buyout of sibling property shares, or as realtors call it, “the transfer of property between siblings”, and “lending money to an irrevocable trust“ – typically from an irrevocable trust loan lender.

While you’re at it, take a look at the CA State Board of Equalization to find out how all this works, or research niche info blogs such as  this one, Property Tax Transfer…  Plus other sites focused on property tax breaks for Californians. And let’s be frank… Living in that state, although there are great benefits, is admittedly expensive – in relation to many other states. 

States like New York, Texas, New Jersey, Connecticut, Massachusetts… are all expensive states to reside in.  With zero property tax relief or significant tax breaks of any kind – unless you’re a multi-millionaire or billionaire.  Then you get nothing but legislated V.I.P. tax cuts. However,  firms like Commercial Loan Corp, or Paramount Property Tax Appeal,  provide V.I.P. property tax breaks or V.I.P. personal business and  property tax reduction to everyone…. regardless or income or overall net worth. 



PART TWO: Property Tax Relief Fights for Its’ Life in California…

A couple of things worth mentioning, as we’re on the subject of replacing political noise with fact-based information…

The Coronavirus driven mortgage  foreclosure and credit card default catastrophes are coming, given the tens of millions of people that are unemployed nationally… with millions unemployed in California alone.  Let’s not forget that. And the CA Legislature wants to raise property taxes in the middle of a pandemic?

Making matters even scarier for people, there is talk about  eliminating the payroll tax,  unraveling Medicare, and Social Security so those programs are defunded by 2023.  Not a particularly good idea in the midst of a Covid-19 pandemic, where we saw 84,000 people infected in one day last week.  Does California really need a tax hike on property, in a time like this?

We’d have to say no. We don’t need a Proposition 19 to unravel crucial elements making up the foundation of property tax relief in California… And we don’t need a Proposition 15 to take away much needed tax breaks for already struggling landlords and commercial property owners in the state of California. Frankly, we also do not need politicians politicizing the Coronavirus crisis, and we don’t need PR and disinformation from the federal government. 

What we do need, however, are some ways to help home owners, and renters, spend less while unemployment rages – and afterward as well. We need a permanent property tax relief system in place in the United States, just like they have in California, to genuinely help Americans spend less and save more. Making sure, for example, that we have the ability to transfer parents property taxes, when inheriting property taxes, so we can avoid property tax reassessment. Without present value tax assessment taking a large bite out of our savings every year. 

And of course on top of parent to child transfer protections, we need, just like Californians have – the legal right to transfer parents property taxes when inheriting property taxes; with the ability to keep parents property taxes, in other words property tax transfer that maintains everyone’s property taxes at a predictable low base level, say 2% no more, with iron clad parent to child transfer of low property tax rates when we inherit property from our parents or parent – or, as attorneys call it, “parent to child exemption”.  Exclusion from present day property tax evaluation… avoiding property tax reassessment.  As they do in California.

Also, with the ability to buyout siblings’ property shares with a trust loan, through Proposition 58, always insuring we keep our parents low property tax rate; avoiding property tax reassessment. Also, being able to buyout sibling’s share of an inherited house – as realtors call it, “transfer of property between siblings” or “sibling to sibling property transfer”.  

Californians take these property tax relief measures for granted! Buying my brother’s share of our house or the transfer of property between siblings; Buying out siblings’ share of a house; Buying out property shares through cash to a trust loan from a trust lender, such as Commercial Loan Corp, for example. Imagine that. Meanwhile,.

Most Americans don’t even know what these terms even mean, or what Proposition 13 or Proposition 58, or trust loans, even signify. Just do some initial research on sites like https://cloanc.com/category/prop-58 to learn up on trust loans with Proposition 58 or Prop 193 – keeping a low tax base upon 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.

Just take a careful, thoughtful  look at CA State Board of Equalization, at https://www.boe.ca.gov/ or do some easy research on info blogs like https://propertytaxtransfertrusts.com simply to get the basics down, so you know what you’re talking about when you talk to snooty staffers answering calls at your representative’s office in Washington DC.

>> Click Here to go to Part Three…

PART THREE: Surviving CA Proposition 19 & Proposition 15 ~ Intended and Unintended Consequences, Losing Parent to Child Exemption

California Proposition 19 2020

California Proposition 19 2020


Well respected newspapers and noted organizations have weighed in on this issue, such as the California Assessors Association: Representing the state’s 58 county assessors, they are urging a “NO” vote on Proposition 15. The CAA insists it does not believe the hundreds of new, specially trained staff will be ready or able to fulfill expectations of all duties within the 3-year run-up to full statewide execution of Proposition 15.

The California Assessors Association also has very little confidence in the state government’s ability to manage huge changes to the tax system that Proposition 15 would bring; and very little faith in the state’s ability to organize and pay for the costs of implementation.  The CAA has also expressed great doubt in the state’s ability to yield anything near the billions of dollars anticipated by the California State Legislature, and their friends at C.A.R. who helped spearhead the tax measure to unravel Proposition 58, a highly destructive tax measure they’re calling Proposition 19.

Other parties in California have weighed in on these complicated issues, and we’d like to share some of those views with you here:

The Desert Sun Editorial Board: “…we see this [Proposition 15] as a dangerous move right now as COVID-19 continues to wreck state and local government finances and remains a deep threat to any economic revival. Already, many businesses have shuttered their commercial spaces due to health orders. Many of those have already announced the financial damage they’ve suffered means they’re closed for good. Raising taxes now is the last thing struggling businesses and our millions of currently unemployed or underemployed workers need, and likely will send many that still hope for a financial future to seek greener pastures in other states.

What seems clear is that the main backers of this measure — Realtors and the firefighters union — stand to gain greatly in the forms of expected increased home sales and related sales commissions and the measure’s dedication of some of the state’s ultimate new tax proceeds specifically to firefighting efforts.”

Tahoe Daily Tribune: “The non-partisan Legislative Analyst’s Office (LAO) estimates that the repeal of the inter-generational transfer protections will result in tens of thousands of California families getting hit with higher property taxes every year. The LAO acknowledges that Prop. 19 imposes an additional tax burden in the hundreds of millions of dollars.

The other part of Prop. 19 is intended to make voters forget about the huge tax increase by expanding the ability for older homeowners to move to a replacement home and transfer their base-year property tax assessment from their previous home to the new property. While this “portability” expansion has some merit, voters just rejected a virtually identical provision in 2018, when it was Proposition 5.”

Reason.org: “Overall, Proposition 19 is a complex vehicle for squeezing a relatively small amount of incremental revenue from property taxpayers. California property taxes raise an enormous amount of revenue in an inequitable manner as the state pursues ways of increasing property tax revenue from those properties not protected by voter initiatives.”

Marinij.com: (Bay Area News Group editorial board) “California’s property tax system is a mess. Proposition 15, the “split roll” measure on the Nov. 3 ballot, attempts to fix it. Unfortunately, it only makes matters worse. There are serious inequities in California’s property tax system that should be addressed. But Prop. 15 misses the mark. Vote no.”

Laist.com: “Prop 15 would burden commercial property renters, consumers and business owners alike, opponents say. Even though developers who own millions in property would stand to directly lose the most from this proposition, they could very well pass on the tax burden by raising rents for tenants. And although agricultural land is exempt from new tax hikes, farm fixtures — such as barns, dairies, fruit trees and more — are not exempt, which agricultural advocates say leaves farmers vulnerable.”

Metnews.com: “The Legislative Analyst’s Office (LAO) estimated that the repeal (from Proposition 19) of the intergenerational transfer protections guaranteed by Proposition 58 and Prop 193 would, if passed, cause somewhere between 40,000 to 60,000 families in California to be crippled economically by egregiously higher yearly property taxes. Obviously, most middle class families would be forced, sadly, to immediately sell an inherited home left to them by a surviving parent.”

NAACP: “Proposition 15 will push our prices up, and our businesses out! This property tax increase will end up on us…”

abc7.com: “The massive tax increase will prompt companies to flee California at a time when businesses are already struggling…”

These media outlets are expressing sensible, well thought out sentiments regarding the advent of proposed measures Proposition 15 and Proposition 19. Both seek to unravel  invaluable property tax relief benefits unique to California, contained in Proposition 13 and Proposition 58; not mirrored anywhere else in America. The question is — how will California survive the loss of the parent to child exemption protecting parent to child property transfer taxes; losing protections for heirs inheriting property taxes in general… plus a tax hike on business and commercial property owners… effectively raising the cost of all goods and services in the entire state of California, in all 58 counties.  

The timing of these proposed tax measures, increasing taxes on California residents in the midst of a national pandemic, no longer allowing tax breaks for heirs inheriting property taxes…  does seem rather irresponsible and poorly considered, as Prop 15’s tax hike on commercial property owners and landlords would in effect raise the cost of everything in this state, due to higher rents imposed on stores and businesses everywhere in the state, not to mention apartments for folks who rents as opposed to owning property in California. 

So everyone loses.  Everyone, that is, except for the realtor community…. and the firefighter’s union, who is important, no doubt about it.  However, not so important that everyone else in the state of California should be behind the eight ball financially when everything — all goods and services from A to Z, so we mean when everything shoots up in price, 20%, 25%, 30% or more, depending. However, we’ll see what the vote brings in November. 

Perhaps Maybe California will get lucky, Prop 15 and 19 will be defeated, and heirs inheriting property taxes will still be able to avoid property tax reassessment.  And all this noise will be blown away like leaves in the wind.

PART TWO: Surviving CA Proposition 19 – Losing The Parent to Child Exemption

Surviving California Prop 19

California Prop 19


Let’s be clear.  Critics of property tax relief in California are typically well educated, bright, and articulate… and write awfully convincing Op-Ed’s in the San Francisco Chronicle and the Los Angeles Times. 

Yet, for whatever reason, these critics of property tax relief never produce  examples of how or why Proposition 13 is “so unfair” – with the exception of shifting sand anecdotal evidence, without genuine case study data or specific historical events to point to.  Other than the rather deceptive Lloyd and Jeff Bridges family tale of their one beach- front property used as a secondary property to rent out to wealthy tenants.

In fact it’s almost laughable that the Bridges family story is approved by supposedly responsible editors repeatedly, in numerous high-profile California newspapers. Always without backup evidence or case study data pointing to other examples of this type of usage of Proposition 13 and Proposition 58, by other wealthy or middle class Californians.  They can’t seem to come up with a credible follow up example, or any example, of this  sort of rental activity. 

Yet critics of property tax relief did manage to come up with Proposition 19, to take down the parent to child exclusion, associated with the parent to child transfer, that is the foundation of property tax relief for home owners in this state.  Those same home owners, and  beneficiaries inheriting property from parents are wondering how this Proposition 19 measure will affect Proposition 58, in terms of establishing a low property tax base, as well as getting a trust loan to buyout siblings inheriting the same property. 

There is a great deal of anxiety in California in terms of how Proposition 58 will stand if Proposition 19  is voted into law, with respect to locking down a long-term, even lifetime, low property tax base when receiving an intra-family trust loan associated with the transfer of property between siblings or  sibling to sibling property transfer.  If Proposition 19 does pass, most current beneficiaries want to know if getting a trust loan to buyout siblings will be the same, in terms of process; or will the process be different, more difficult, or perhaps even easier.  Buying out a siblings’ share of a house, getting a trust loan to buyout siblings post Proposition 19, is an important issue for most residents of  California.

Meanwhile, despite these nuts and bolts details, we’re still forced to listen to these relentless critics of Proposition 13 and Proposition 58, dispensing non fact-based anecdotal narratives to convince the public how “one-sided” and “massively abused” property tax relief is in California. How it’s only for rich, mainly elderly, home owners.  Or for the rich and famous… like the Bridges. 

Yet we still don’t hear any actual names attached to this supposed “long list of abusers of Proposition 13” to back up these claims behind the push to pass Proposition 19.     Obviously, this is a false representation of a proven property tax relief system that benefits more middle class home owners than anyone else in California.  Which makes perfect sense, if you think about it, as there are so many more middle class people in California, and elsewhere, than rich people! 

Although lately, to backup Proposition 15, to take away property tax breaks from business and commercial property owners, we are occasionally hearing about corporations, not people, always trotted out as, “…companies like Chevron and Disneyland…” (never mentioning any other company) “…that sit on valuable property, generating a huge profit every year – yet never paying taxes on their land in terms of present day reassessment”.  OK, we’re willing to listen.  But never with any actual figures or data to backup the claims. 

So even if a few corporations take advantage of Prop 13 tax relief measures that have  been in place in all 58 counties in  California since 1978, millions of middle class home owners will see their rents sky-rocket if Prop 15 passes… and commercial property owners, and apt. landlords just getting by, as well as family-run industrial businesses that own modest income bearing facilities – all use Proposition 13 fairly and properly, and benefit greatly from it.  Just as it should be.  So we’re going to punish these few perhaps greedy companies by crippling all business property owners in California? 

Without these tax breaks from Proposition 13 and Prop 58, without people like Howard Jarvis and Jon Coupal; Kerry Smith and Michael Wyatt who have fought for these tax breaks for California residential and business property owners…  very few middle class Californians, which is most of the state, would have been able to keep inherited property.  Landlords have been able to keep rents at moderately reasonable rates due to low commercial property taxes. So on and so forth. And this business about schools desperately needing funding – is yet again another half-truth.

Sure, some of the revenue from new, accelerated property taxes will go to schools… but nowhere near what is being promised, or rather vaguely indicated. The lion’s share we are told would go to pay for unfunded state-govt. pensions. And probably other state government purposes such as pay raises, generous benefits and vacations, and so on… plus special interest public works and building projects, no doubt.  And schools will pick up what’s left on the table after all that. 

Intended… and unintended… consequences.

>> Click Here to go to Part Three…