California Parent to Child Property Tax Exclusion
Importance of Retaining Proposition 58 & Property Tax Relief
Regardless of what critics of Proposition 58 and Prop 13 have to say in Op-Eds and Editorials in California newspapers… No matter how many times opponents of California property tax relief attempt to completely unravel and decimate invaluable property tax breaks protected by Prop 13 and Prop 58, during a Coronavirus pandemic no less – popular support for property tax relief in California holds… For commercial property owners and homeowners alike.
Despite a win here and there by opponents to property tax relief in California… supporters of watering down critical tax breaks such as the “Parent to Child Exclusion” win a battle here or there chiefly as a result of tricky, deceptive marketing; with slippery snake oil tax measures like Proposition 19 in 2020.
We just narrowly missed a statewide disaster, with the proposed property tax measure Proposition 15 almost passing, which would have resulted in egregious property tax hikes, raising taxes on apt building and office building landlords, commercial shopping center owners and store properties being rented out to hundreds of thousands of commercial tenants all across the state.
This would have forced commercial and business property owners in all 58 counties in California to raise prices on all goods and services – simply to survive. Moreover, this would have been the beginning of the final unraveling of the 1978 Proposition 13 tax relief package. The door to worse things to come, so to speak, would have been opened. Fortunately, the door was closed. At least for now.
The fact is, if Proposition 15 had passed in Nov. of 2020 everything you buy or rent in the state of California, even online, would have gone sky high. So, clearly, this was a near miss of a total statewide economic melt-down. As it happens, the other deceptive property tax promoted in 2020, sponsored by the CA Legislature and the California Association of Realtors among others, Proposition 19, did in fact pass. The lesser of two evils, so to speak.
Although not perfect, there is still enough room within the property tax system in California so beneficiaries inheriting property from parents, and homeowners, can still make good use of Prop 13, of Proposition 58 and the “Parent to Child Exclusion”… Beneficiaries can still take advantage of trust loans and the ability to buyout co-beneficiaries if they wish to sell off their inherited ownership in inherited property… plus lock down a low Proposition 13 property tax base. So Proposition 13 remains, for the moment, troubled… but intact.
The right to avoid property tax reassessment is crucial for California’s economic well being. It means beneficiaries can still make use of Prop 58 and irrevocable trust loans to buyout co-beneficiaries wanting to sell off inherited property. It means residents can inherit and keep parents property taxes, and can transfer parents property taxes. Inheriting property taxes from parents at a low base rate is critical for middle class homeowners. Otherwise, selling off inherited property becomes unavoidable and inevitable.
Middle class heirs, new home owners, frequently are not able to pay current market-value property tax rates – in a hyper expensive state… in the midst of an out-of-control pandemic, where nearly 7 million people in this state are out of work or under-employed, or are still working from home at a 50% salary level. Not to mention the astronomical costs associated with illness and the loss of life, for family members. Items that healthcare insurance refuses to pay for.
The folks supporting the realtor community, CA Association of Realtors, politicians running the State Legislature, and organizations such as the California NAACP State Conference, California Senior Advocates League, California Statewide Law Enforcement Association, Californians for Disability Rights, and the Congress of California Seniors simply must begin to look at middle class families and working family life more realistically. You’d think they would be, however they apparently did not read the fine print, and were hoodwinked into voting for Prop 19 in Nov of 2020.
By simple good luck homeowners and beneficiaries can still make use of Prop 58 and a trust loan process to buyout inherited property from siblings while locking down a low Proposition 13 protected property tax base. Had those organizations read the fine print, they would have noticed that certain tax relief protections they took for granted were under direct attack – such as the ability for eligible homeowners to transfer their tax assessments within counties and to homes of equal or lesser market value; To retain the right for folks age 55 and older, or people with disabilities, to keep the same number of times they are able to transfer their tax assessments; To be able to transfer tax assessments on inherited homes, including inherited properties not used as primary residences, to be transferred from parent-to-child or grandparent-to-grandchild – without any issues or problems.
California still retains Proposition 13 property tax breaks, and beneficiaries can still make use of Prop 58 and trust loan funding. However, had Proposition 15 been successful, and had the Proposition 19 people gotten everything they had wanted – loading all these new proposed property taxes on top of regular working people would have had an extremely negative affect on the majority of the population of California.
Based on their recent efforts, how do the folks running the state of California, in the Legislature, think that adding the property taxes they had wanted to add would affect all these working families? Do they even consider how further unraveling property tax relief would affect the California economy as a whole?
Does it ever occur to the politicos in the Legislature that going further in the direction of eliminating property tax breaks, as they would like to do, would literally be a social and financial disaster for the state as a whole?
The Governor and his friends need to give this some serious thought.