A certain Proposition 15 was promoted with millions of dollars behind it, yet it didn’t pass. However, the fact that the California Legislature was in favor of it is still troubling to many California homeowners.
Proposition 15 would have removed commercial properties like office buildings and industrial parks from Proposition 13 protections, mainly the ability to avoid property tax reassessment from current tax rates… Inheriting business properties from a parent would, under Prop 15, no longer have provided business property heirs with Proposition 13 tax breaks – so heirs can avoid property tax reassessment for inherited commercial properties.
Inheriting property taxes at a low Proposition 13 base would no longer apply to beneficiaries inheriting commercial property. Beneficiaries inheriting office buildings and other business facilities would no longer have been able to transfer parents property taxes.
It would have raised the rents on apt. buildings and office buildings, on all commercial tenants, affecting stores and malls, supermarkets, car dealers, pharmacies and you name it. Effectively raising the prices of all goods and services in California. An economic disaster in the making. Fortunately, it did not pass.
As a well known realtor in Santa Barbara pointed out recently in an interview, “Estate-planning attorneys are going to be very busy now, as Proposition 19 may cause many family members to decide to sell property they had intended to pass on to their heirs. Although other siblings will decide to keep and move into a home inherited from parents – as a primary residence – so heirs can avoid property tax reassessment It’s a game-changer….
In terms of properties being sold that would have been passed on through a family trust, or to beneficiaries who simply cannot afford to pay property taxes that are reassessed are current rates… or folks that just object to paying higher property taxes on principle. Realtors are going to make a lot of money like this. And that’s good for them and possibly good for California. The problem is, a lot of those folks selling their home in response to high income tax exacerbated by inflated living expenses, are also moving out of the state permanently – if they are also unable to save thousands of dollars every year for emergencies or their retirement account – by avoiding property tax reassessment. And that’s not good for California!”
Higher property taxes or not, California will always be an attractive place to live, to start a family, or just because the weather and the sights are pleasant. People are always going to want to live in California, but long-term residents see life getting more expensive in that state – more rapidly than anyone anticipated.
Moreover, the prospect of getting more and more squeezed by taxes is forcing both large and mid-sized companies, as well as a surprising number of people approaching retirement, soon to be on a fixed income, to move to other states that are far more income-tax, corporate-tax and property tax friendly – and the companies take their jobs with them!
A good number of residents in their 20s (just out of college) are choosing to leave the state, with no intention to return. In contrast to recent years, when California was an extremely popular state for young homeowners… and people in their 30s and even 40s, looking to start a family. Now, many young adults and families are seeking the most affordable place to live following college, or just as their careers are taking off – frequently with very young children to think about.
And this is where the CA Legislature’s short-sightedness really becomes obvious… Point being, what else leaves the state with all those young residents and tax conscious companies? The large amount of taxes they pay to California every year!