Californians are anxiously waiting to see if voters pass or sink CA Proposition 15, affecting business and commercial property owners by specifically removing their ability to legally avoid property tax reassessment; as well as Proposition 19, which is designed to unravel the “parent to child exemption” or “parent to child exclusion” (from current, reassessed property tax rates).
In fact Californians are wondering right now, if Proposition 19 passes, how much Proposition 58 will be affected; and how they will be able to get a trust loan to buyout siblings who wish to sell mutually inherited property. Or exactly how they will be able to work with Proposition 58 to lock in a low property tax base rate, if Prop 19 passes. Companies like Michael Wyatt Consulting or Lucas Real Estate, or Commercial Loan Corp, are fielding questions like this as we speak.
If Prop 19 passes, California can say goodby to any property tax transfer activity from one family member to another… there will be no way to transfer parents property taxes at a nice low base rate, in fact inheriting property taxes from parents to avoid property tax reassessment or the right to keep parents property taxes with a parent to child exemption will, sadly, be a thing of the past.
If voted into law, as the LAO (Legislative Analyst’s Office) tells us, these property tax measures will, in effect, repeal popular inter-generational transfer protections guaranteed by Proposition 58’s parent-to-child exclusion and Proposition 193 (grandparent to grandchild exemption) property transfer tax breaks – upending tax relief protections that Californians have depended on for decades.
Proposition 15 removes property tax breaks for landlords and other business property owners – which, if voted into law, would not only directly affect business and commercial property owners, impacting stores, gas stations, supermarkets, etc., frequented every day by consumers – but will impact everyone in California. Not only for countless people renting units in apartment buildings all across the state, but also for tenants renting commercial properties and offices in commercial buildings will be paying much higher property tax, and therefore will be forced to raise their prices. Hence, the cost of goods and services will go up in all 58 counties in the state. If Prop 15 passes, prepare to pay significantly higher prices, basically for everything – for rent, gas, food, air & ground travel, clothes, electronics, movies and computer entertainment, cel. phones… you name it!
This leaves us at roughly 50,000 to 60,000 families in California that will be victimized economically by unreasonably high property taxes… in the midst of a Covid-19 pandemic no less. Obviously, many middle class families will be unable to keep inherited property due to property tax hikes… and, among other difficulties, will be generally unable to afford decent health coverage that includes preexisting conditions… unless they’re over 65 and have access to Medicare – unless the ACA (“Obamacare”) has been watered down, as Republicans have repeatedly promised to do… and this is on the record. So people in California are nervous; as are folks nation-wide.
On top of this crisis for California home owners – if Proposition 15 passes, tenants that don’t own but pay rent will suffer from increased rents – as Prop 15 will unravel commercial and business property owners’ ability to avoid property tax reassessment at current rates. Business property owners and landlords will no longer be able to retain a low property tax base-rate, such as home owners supposedly will continue to do – although most of us are not entirely convinced about that. Once the door has been opened, so to speak, do we really believe that the powers that be in California, the Legislature, and their realtor colleagues, are simply going to stop there?
As far as Proposition 19 is concerned, most middle class beneficiaries and families inheriting real property from their parents would be forced to sell that property within the first year, as Prop 19 dictates, plus most beneficiaries or heirs will be unable to cover increased transfer costs and, in particular, yearly hiked up property taxes. Hence, they are doubly motivated to sell inherited property many would much prefer to keep.
Opponents of CA Proposition 13 repeatedly offer up the tired tale about the Bridges family using Prop 13 to transfer a pricey luxury beachfront property, paying little tax, and renting out for big bucks. It’s interesting that this story is literally the only narrative we hear about that condemns Proposition 13 and Proposition 58 by real-life example. So they raised $58 Million, in part, on this much repeated tale, and other anecdotal non fact-based evidence, to destroy property tax relief in California.
>> Click Here for Part Two…