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

California Real Estate

California Real Estate

As the Coronavirus crisis worsens and deepens month after month, and the death toll rises, crunching up the economy in every state, like a giant invisible lawn mower, paralyzing the real estate market, and shredding other businesses, throughout California and the entire country… With millions of Americans filing for unemployment every week – property owners in every state in America should be looking closely at how property tax relief is accomplished in California, inheriting property taxes from parents; how these types of tax breaks would benefit folks in other states.

At least in California there is a cure for conflicts between sibling  beneficiaries – usually revolving around who wants to sell an inherited home, versus who insists on retaining that property, given emotional and sentimental ties.  And these sibling conflicts can get very, very ugly. 

However, when you mix these “sell or keep” inherited property issues with normal up & down sales cycles in the real estate market as a whole… with shrinkage in home sales being blamed on seniors retaining property, supposedly “all elderly and wealthy”,  and with Proposition 13 taking the lion’s share of the blame – with the focus on avoiding property tax reassessment, taking advantage of parent-to-child transfer of property, inheriting property taxes from parents; or parent-to-child exclusion as realtors refer to it (meaning exclusion from present-day tax rates).  Clearly, these illogical allegations do not add up. 

It’s clear to most Californians (with the exception of the folks that write for the San Francisco Chronicle and the Los Angeles Times; and the special interest politicians that they support) that the 1978 Howard Jarvis supported CA Proposition 13 property tax relief serves the wealthy and middle class alike – and might be just the thing American home owners need right now, floundering in the throes of an unprecedented Pandemic, to take some financial pressure off most Americans, who obviously are not wealthy.

Property tax relief would be especially important and helpful to  residents of other states who have been furloughed at zero, or 50%, salary due to the Pandemic… Or who are unemployed, yet still must pay property taxes on time, with no payment plan allowed, under duress, without a Proposition 13 or Prop 58 type of tax break to help them out in a time of great need.

In states other than California, home owners whose property is not free and clear, who are paying off a mortgage right now plus paying off high property taxes – are particularly in severe trouble as the virus rages across America and the world.  With a lack of federal leadership in the United States causing even greater economic difficulties  and personal tragedy.   

Naturally, from the point of view of California home owners and business owners, keeping their property tax rate at a low and  predictable 2% maximum cap is as American as apply pie – and most property owners questioned will agree this type of tax relief should be passed into law in every single state in America.  No questions asked. 

Moreover, it’s obvious to most Californians that renters in California also benefit from Proposition 13… And agree that if the Split-Roll property tax were passed  in California and business property owners including landlords lost their property tax breaks  afforded by Proposition 13, we’d see rents go sky-high all across the state, from San Diego and Los Angeles, up to San Francisco and Santa Barbara.

And despite what various  newspapers in California say in Editorials about Proposition 13 – this is not a rich person’s tax shelter.  It’s strictly an “everybody” tax relief measure. 1978 Proposition 13 (not to be confused with the “coincidental” Proposition 13 Split-Roll business and commercial property tax) holds property taxes down every year to a 2% cap, thankfully, or  a great deal of Californians would not be able to afford to hold on to inherited property from parents. 

Now that the Covid 19 virus crisis is on the rise again, then off, then on again… unpredictable and burning through the job based economy like a giant Los Angeles brush fire gone out of control – it’s obvious that every state in the  union needs to have property tax breaks like the CA Proposition 13 parent-to-child exclusion, as realtors call it… as well as property tax transfer tax-relief made possible by the 1986 California Proposition 58 tax shelter, where  beneficiaries of trusts and heirs of estates inheriting property taxes from parents will often opt for a loan to an irrevocable trust, and end up paying low taxes on property tax transfer from parents – having the right to transfer parents property taxes to themselves, upon inheriting property taxes from their Mom or Dad. Plus the ability to keep paying low yearly property taxes for as long as they retain that inherited property, as well as secondary inherited properties, if they are inherited as well.. 

What other state makes property tax relief like this possible?  In a word… none.  Why is property tax relief available in California, and  yet nowhere else in America?  This is exactly what Americans need right now, in a recession that looks more and more like a depression that is a direct byproduct of a Pandemic no one was prepared for, and that leaders were late in the game to address.

>> Click Here for Part Three…