Monthly Archives: February 2020

How Has California Proposition 13 Evolved Over the Years?

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Before 1978, rising California property taxes were escalating out of control. Since 1978, Proposition 13 dramatically lessened the accelerating anxiety that was negatively affecting middle class California home owners, who were, at that time, constantly worrying that their property taxes were going to continue going up.  Now, children keep parents property taxes in CA… and anxiety over property taxes has abated considerably. Prop 13 has evolved over the years, and has continued to provide positive tax relief for California home owners; industrial properties, and companies…

Click Here: to see how this is reflected in a recent PPIC.org survey (co-managed by Associate Survey Director) mirroring likely voters and/or real property owners in California.

To everyone’s relief, things changed when California Proposition 13 began protecting property owners and city or town local governments right away from financial insecurity largely caused by unpredictable property tax increases; as well as unexpected economic boom-bubbles and bursting bubbles within the real estate market.

That type of unpredictable financial stress hurt a lot of people in California; and often forced families to leave the beloved home they had grown up in… Unpredictable, rising property taxes caused a great deal of growing anxiety and fear among many middle class home owners, both young and old – often causing parents and grown children to reside far apart, against their wishes; frequently forcing families to downsize, or move to less desirable area; often doubling or even tripling the commute time to work. These issues do add up, and frequently affect quality of life.

From 1978 forward… as Proposition 13 took hold, this fear and disruption abated and decreased to a large degree… and California became a much happier, more secure state for home owners to live and raise families in.

Proposition 13 also put in place a much more reliable property tax revenue system that has grown roughly 7% per year since Proposition 13 has been in effect, and economists estimate revenue from property taxes will soon grow to a record high $74 billion.

All in all, Proposition 13 began and has remained a win-win proposition for Californians, along with Proposition 58 in 1986… strengthening family bonding and overall net worth, and providing an enormous blanket of peace of mind for home owners of all stripes, cultures, ages and incomes…. as well as those looking to become happy home owners.  Click here for more discussion on these positive affects, from both Proposition 58 and Prop 13.

Moreover, the ability to avoid property tax reassessment also works in concert with the need many home owners have for immediate funds from a trust loan, bearing in mind the ability for trust lenders to extend loans to irrevocable trusts, regardless of beneficiaries’ income status,  credit score or income.  Especially for new home owners, it’s critical to be able to keep parents’ property taxes, when inheriting property taxes that might otherwise be unmanageable.

Avoiding property tax reassessment is invaluable within the unique process of keeping real property “in the family”, by enabling real estate, home & land transfers, from parent to child  or child to parent – without present day tax value reassessment.

And now, although children keep parents property taxes in CA. and this tax relief goes unquestioned by home owners, California Proposition 193 has expanded this tax relief even further, allowing grandchildren to be excluded from reassessment when real property is transferred from grandparents to grandchildren. This shores up the close-family circle nicely.

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

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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:

CA Proposition 13 & Prop 58 Popularity Vastly Outweighs the Critics

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Another feature of Proposition 13 that is popular with Californians is the fact that all state taxes – and that includes real estate taxes of course – must be approved by a majority of two-thirds (2/3) of the state legislature; and that any new “unpleasant surprises”, in other words, any proposed new taxes, even under stealth, imposed by any local city or town government, also must be approved by a confirmed vote of two-thirds (2/3).  More reasons that CA Proposition 13 popularity outweighs critics, regardless of how loud and aggressive they may be.

Naturally this type of necessary regulation, reigning in local tax-happy politicians, is obviously not going to be terribly popular with folks working in local township and city government. Just as avoiding property tax reassessment and home owners “keeping a family home in the family” is not going to please most realtors looking to place more homes on the California real estate market!

CA Proposition 13 popularity outweighs critics on all popular topics, hands down.  Whether it’s reigning in local representatives, at least where new taxes are concerned…  or being able to avoid property tax reassessment, to keep parents property taxes intact… Just so long as those particular realtors can drive their revenue numbers up, and those brokers can ramp up their commissions – that’s what’s important.  Not the will of the public.  And it looks like this conflict of interests goes all the way back to June 6, 1978; back to the beginning of this initiative.

Click Here: to take a look at how all this started, and developed through the years; and how the will of 2/3 of California voters got some control over how their homes would be taxed & not taxed!

Realtors and real estate brokers are especially not partial to Proposition 13, or Proposition 58 involving parent to child exclusion, parent to child property transfer, any type of ability to transfer parents property taxes or parent to child transfer involving a trust loan – given the slightly shrinking numbers of homes on the market to sell.

These real estate sales folks would of course prefer that all those homes remaining in the family were not so and were instead in their hands on the market for sale, and of course this involves families that have resided in the same home for decades; naturally taking advantage of Proposition 13 tax relief, and Proposition 58 property tax transfer benefits, loans to irrevocable trusts or, to put it simply, a trust loan from a trust lender familiar with loans to trusts… Naturally these realtors would prefer those homes were signed to their office, and were available to buy and sell; need we remind ourselves – at nicely inflated prices!

Naturally, local government entities with certain special interests (such as a tunnel-vision view of the CA school system), and especially motivated real estate sales professionals, are not going to be overjoyed with California home owners’ hanging on to particularly nice properties, with the ability to avoid property tax reassessment on a parent to child transfer (referred to as parent to child exclusion).   Moreover, Californians also enjoy some  very personal, family oriented benefits from Prop 13 and Proposition 58… Click here for more discussion on these personal dividends…

Of course, to be fair, we have to ask: Is Proposition 13 & 58 in demand with all age ranges and incomes, despite critics?  The polling data speaks for itself, and the answer is decidedly yes – CA Proposition 13 popularity outweighs critics with all demographic and income segments.

Without a doubt, 65% to 70% of the people residing in California enthusiastically want to keep parents’ property taxes, they want to continue to avoid property tax reassessment, and without question want to be able to transfer parents’ property taxes when facing the prospect of inheriting property taxes – anywhere in southern, northern or central California. This is a given. Or as they say in New York, “a no-brainer!”