Strengthening Proposition 19 Property Tax Relief During a Pandemic

California Prop 19 Property Tax Transfer

California Prop 19 Property Tax Transfer

In the midst of a relentless Pandemic, causing untold economic carnage, unemployment and financial damage  to middle class Californians, it would be advisable for the state to provide middle income and working class residents with the ability to not only make more money, if that were to be possible,  but to be able to spend less.

One proposed solution to accomplish this – proposed by respected real estate analysts and property tax consultants – would be expanded property tax relief; despite certain limitations and obstructions from special-interest groups and changes to Proposition 58.   Proposition 19 property tax breaks should most likely be strengthened in favor of property owners, with a robust initiative led by the Governor – rather than an unhelpful deferred property tax payment plan, such as he has already suggested.

Forward thinking tax consultants such as property tax consultant, Proposition 13 specialist, Michael Wyatt Consulting have proposed property tax breaks that save homeowners, commercial property owners, and beneficiaries inheriting property more money from property tax breaks than are currently in place.   

Well known Trust and Estate Lender  Commercial Loan Corp, furnish trust beneficiaries with irrevocable trust loans, working in conjunction with Proposition 19 benefits, can establish a low Proposition 13 property tax base for homeowners, and save inheritors thousands of dollars every year in property taxes.

These property tax reduction measures – as long as homeowners make good use of them and keep inherited property, or allow other siblings or co-beneficiaries to buyout their shares  of inherited property through a trust loan working with Prop 58 tax breaks – will avoid property tax reassessment.  This process will, in fact, create a low property tax base for the singular owner or owners of this shared inherited property.  And there indeed is one solution to enable homeowners to spend less.  

This helps middle class property owners and working families to not only spend less, but also to retain more cash in  their bank and investment accounts. Most importantly, this type of trust loan financing also helps trustees and beneficiaries resolve disputes  over assessor stated property values – as well as resolving often heated conflicts over whether they should sell to an outside buyer, or profit more by allowing a co-beneficiary to buyout their property shares while avoiding property tax reassessment of this family property altogether. As realtors call it, “transfer of property between siblings” or “sibling to sibling property transfer” – lending money to an irrevocable trust, for trust loan financing  – can resolve various squabbles and infra-family problems between estate heirs and trust beneficiaries. 

Noted originator of trust loan financing, Commercial Loan Corp President Kerry Smith; and other outspoken supporters of property tax breaks for the middle classes, such as Property Tax Relief Consultant Michael Wyatt,  Jon Coupal, President of the Howard Jarvis Taxpayers’ Association; and Paramount Property Tax Appeal President Wes Nichols, have all stated, repeatedly, that Proposition 13 and Prop 58 should be better protected and expanded; That Proposition 19 should be expanded to better serve homeowners; and at the same time strengthened in the courts so Amendments that can potentially wipe out property tax breaks like Proposition 58 for example, in a single vote, will be impossible to advance without a great deal of trouble and expense.

California, since 1978, is the only state where you can avoid property tax reassessment at current rates; but the state does need to better protect, not water down, residents’ property tax relief options; to keep parents property taxes… and to transfer parents property taxes as well as inheriting property taxes at a low base rate for even a secondary inherited property.

Avoiding property tax reassessment is a crucial tax relief element, and therefore should be better  protected, for new homeowners and beneficiaries inheriting a home and/or buying out a sibling’s share of inherited property   the transfer of property between siblings, sibling to sibling property transfer, the right to transfer parents property taxes when inheriting property taxes – so beneficiaries can keep parents property taxes at its’ original low base rate… which applies to every  property tax transfer,  meaning every parent to child transfer and family parent to child exclusion.

Helpful information on Proposition 13 & Prop 58 as well as property tax appeals and property tax reduction solutions can be found at niche Websites like the CA State Board of Equalization and here at Property Tax News.  Or look carefully at various sections and articles at Loan to a Trust or at  detailed, more sophisticated trust loan info-websites.  Every property owner should know what’s involved with inheriting property taxes at a low rate, or a beneficiary buyout of sibling property shares, or “transfer of property between siblings” – with new, revised Proposition 19 basic property tax relief opportunities that are available to Californians, come rain or shine.

How Will Proposition 19 Impact Middle Class Families in California?

How Will Proposition 19 Impact Middle Class Families in California

How Will Proposition 19 Impact Families in California

Before Proposition 19 existed, parents in California could transfer their primary residence and $1,000,000 per parent of other property to their children without triggering a tax reassessment of  those properties. After Feb. 15, 2021 that exemption, the parent-child exclusion,  was watered down, limiting access to this time-honored exclusion from current property tax rates to moving into an inherited home only as a primary residence;  and limiting a beneficiary’s ability to go about avoiding property tax reassessment in CA to a strict 12-month move-in period. 

As long as this deadline is kept, heirs will be avoiding property tax reassessment in CA without issue.  An heir’s ability to transfer parents property taxes when inheriting property taxes, and the right to keep parents property taxes on any property tax transfer from a parent, as Proposition 19 parent to child transfer, or Prop 19 parent to child exclusion, is guaranteed.  As is the right for a beneficiary to get a trust loan from a trust lender to implement a  transfer of property between siblings… In other words, you can lock in a low Prop 13 property tax base plus buyout co- beneficiaries if they want to sell their inherited property.  Amen!  And in the midst of the Coronavirus crisis, with rampant unemployment and under-employment… a 6-figure trust loan could be a life-saver.

After Feb. 16, a transfer of a principal residence by a parent to a child (heir) is only exempt if the parent was using the property as their principal, or primary, residence; and the heir is also residing in the inherited home as a primary, principal residence following the parental property transfer.  If that is not a problem, we’ll most likely see an equivalent number of middle class and blue collar families avoiding property tax reassessment in CA as before Prop 19 became law. 

Even if only half as many people as before take advantage of the Prop 19 parent-child exclusion, 50% is still a pretty healthy number.  No other transfers of property between parents and children will be exempt from reassessment, with the exception of a family farm, which is currently defined but as “farmed land” whether the property includes a residence or not. 

Transfers that are excluded from property tax reassessment do have limitations, however.  The exclusion applies only as far as the assessed value at the time of transfer plus $1,000,000. Any property beyond that value would be reassessed at a current market tax value.

Housingwire.com recently wrote: “Prop 19 will deliver needed funding for cities, counties, and school districts when they need it most. It will generate hundreds of millions in annual revenue for fire protection, affordable housing, homeless programs, safe drinking water, and other local services and dedicated revenue for fire districts in rural and urban communities to fix inequities that threaten life-saving response times to wildfires and medical emergencies.”

So how will Proposition 19 impact the middle class, working family  housing market in California, admittedly an expensive state to live in.  Although certain components in California will benefit from a new property tax revenue stream, regular middle class and blue collar families residing in inherited homes may still find it difficult keeping up with the rising costs and expensive lifestyle of California. Yet Prop 58 can still help. Proposition 58 Property Tax Breaks are still in place, despite restrictions.  Providing you intend to occupy an inherited home as your primary residence you can still save as much as $10,000 annually in property tax savings.  

President of One80Reality, Nick Solis, tells us:  ““We are definitely  going to see property taxes rise on inherited homes. California is one of those places where blue collar workers usually pass down homes to kids and other family members. Those homes are now going to be taxed at a much higher rate. It will force their hands to sell, because the properties will be more expensive to retain.”

Mr. Solis said he’s not worried about selling homes, but a new demographic of home buyers is going to emerge. He tells us: “Not     all who receive inherited homes come from money. Many blue collar workers and families bought in previous decades when homes were affordable, and are passing them down to their kids. They will see a tax increase. We’re going to see a different demographic. We were already seeing a major push of middle class and blue collar people,  that could afford a home in places like the Bay area, now moving into the central valley or other more affordable places because they just feel too uncomfortable living in their current homes. And now taxes are going to be even higher on inherited homes.”

A well known California realtor, who preferred to remain anonymous,  recently claimed: “With higher property taxes, keeping inherited homes as rental properties may become unprofitable, estate-planning attorneys are going to be very busy, as this new law may cause many people to decide to sell properties that they intended to pass on to their heirs.” 

Millennials and other younger generations will be impacted as well, avoiding property tax reassessment in CA People in their early twenties might decide to leave California, with no plan to ever return.  This is quite different than recent years, where the state was attracting a lot of young starter-home buyers. The same young adults are now looking carefully for more affordable homes, after graduating from college – even if that means leaving the state completely, with a new job; and perhaps a new family.

Another seasoned California realtor told us, on condition of remaining anonymous:  “It’s a real game-changer.  Both in terms of California properties being sold that would have been passed on through a family trust, or by the beneficiaries who decide they either can’t afford to pay property taxes based on a current assessed value, or just don’t want to pay the higher property taxes. The state’s going to make a lot of money.”

Higher property taxes or not, California will always be an attractive place to live. There is sunshine 12 months per year, an ocean nearby, convenient cities and yet rural areas 30 minutes away… “People are always going to want to live in California, but I can see life getting more expensive here a lot faster than I expected,” Mr. Solis added.

What Will CA Prop 19 Accomplish for Families Looking For a Low Property Tax Base?

California Prop 19 Info

California Prop 19 Info

The pro-Proposition 19 members of the realtor community in all 58 counties throughout California are openly enthusiastic about Proposition 19, more or less  due to an anticipated increase in property sales, accelerated broker commissions and increased property tax revenue.

Other political, partisan professionals believe in the new tax measure as well, such as Jim Brulte, California Republican Party former chair, who stated, “Proposition 19 protects tax savings and other benefits for vulnerable Californians including seniors, disabled homeowners, and wildfire victims.  State and local Democrats should close unfair loopholes, and provide needed housing!”  Alexandra Rooker, former chair of the California Democratic Party said, “Proposition 19 protects seniors and working families…”

Yet, some others do not see it that way. Why?

Jon Coupal, President of the Howard Jarvis Taxpayers Association wrote in a recent editorial: “Proposition 19 is an attempt by Sacramento politicians to raise property taxes by removing two voter-approved taxpayer protections from the State Constitution. This Prop 19 measure would, all too frequently, require reassessment to market value of property transferred from parents to children, and grandparents to grandchildren.”

Sara Kimberlin and Kayla Kitson at CalBudgetCenter.org, the non partisan California Budget & Policy Center that focuses on public policy news and analysis and the effect of these policies on middle class and working California families – are among the unconvinced.  Ms. Kimberlin and Ms. Kitson tell us emphatically, in direct contrast to the statements from Mr. Brulte and Ms. Rooker: “Proposition 19 does little to help California’s housing affordability crisis! It has created a complicated property tax scheme, and reinforces racial inequities in California.”

As one of the most complicated, confusing measures on the November 2020 state ballot, Proposition 19 did genuinely seem to promise large improvements for seniors, homeowners with “severe disabilities” (which is almost impossible to define), the firefighter’s union, and other related parties. A sure sentimental winner when it comes to pulling the heart-strings of Californians.

Yet the closer you looked (which few bothered to do prior to the vote in November 2020) the more significant the changes to California’s residential property tax system you saw… Some helpful to regular middle class homeowners, folks with disabilities, and seniors… Some not so helpful. In the past, you would want to keep parents property taxes through parent to child transfer. As well as locking in a low property tax base while buying out siblings’ inherited property through Proposition 58 and a trust loan. Now it’s through Proposition 19… and there are limitations. and there are l

If you are inheriting CA property taxes from a parent, hoping to keep your parent’s home, that they left to you, as well as keeping their low Proposition 13 tax base – and your attorney is recommending a 3rd party loan to make all this happen, while buying out co-beneficiaries that are looking to sell off their inherited property shares – it would make a lot of sense to call an established trust lender to get advice and possibly a large irrevocable trust loan.  You want to look into California lenders who will lend directly to an irrevocable trust or probate estate. You also want to make sure you understand all about inheriting CA property taxes from a parent, as well as how to transfer parents property taxes when Inheriting property taxes from a parent.  You want to make sure, regardless, what it takes to keep parents property taxes on any property tax transfer, with a parent to child transfer… and parent to child exclusion from having to pay egregious, current property tax rates! 

In actual fact, it looks like Proposition 19 will most likely expand a property tax loophole for older wealthier homeowners, while covering the cost by narrowing the parent to child exclusion, or exemption, for beneficiaries of inherited properties – but, and here’s  the problem, also requiring state and local governments to create new systems capable of tracking how much new property tax revenue is coming in as a result, with a far more sophisticated, robust administrative infrastructure; significantly increasing overhead costs of existing administrative local governments.

They expect Prop 19 will bring in additional hundreds of millions (economists insist it’s nowhere near the billion-plus the California Legislature is anticipating).  And yet this new admin system will call for a great deal more in administrative costs to manage, hire, create software and train staff for this new tax system than anyone is realistically projecting at this point… as well as re-allocating the supposed additional hundreds of millions due to Proposition 19, as a final step. 

VoterGuide.sos.ca.gov tells us Proposition 19 is likely to result in increased state and local revenues – but not for every county. They tell us while most of the new Proposition 19 property tax revenue willhat-does-ca-proposition-19-accomplish be restricted to a new fund limited to supporting fire response, Prop 19 also limits taxes on seniors, “severely disabled” homeowners, and wild fire of forest fire victims.  Tax analysts and assessors refer to these people as “eligible homeowners.”

An eligible homeowner can move within the same county and keep paying the same amount of property taxes if their new home is not more expensive than their existing home. Also, certain counties allow these rules to apply when an eligible homeowner moves to their county from another county.  So, despite the positive benefits, implementing Prop 198 will not be as simple and as easy as it’s supporters  claim it will be.

Is a Parent to Child Transfer Still Relevant for CA Beneficiaries & Homeowners?

Parent to Child Property Tax Transfer

Parent to Child Property Tax Transfer

In a Pandemic depressed economy, with a tsunami of unemployed and under-employed workers floating around in every state… it’s obvious that middle class working  families need to save more… and spend less – on items not classified as necessary for survival.  Property taxes being one of those sort of artificial expenses imposed on citizens by the government.

One solution for this dilemma is property tax relief, which we talk about at length on this blog.  Why not institute genuine property tax relief, not tax deferment as the state government has suggested, moving payment dates around.  Clearly ineffective in a crisis like the one we’re in right now.  California needs expanded property tax relief that’s even more wide reaching than  what we have now.  

We should be building on what we already have – not watering it down!  Despite property tax breaks that no other state has, California could use expanded tax breaks from Proposition 19, to help homeowners establish an even lower property  tax base, saving residents even more during  a crisis like the pandemic we’re in right now.  With an even greater ability to resolve inherited property conflicts between beneficiaries as well. 

In other words, a beneficiary buyout of co-beneficiary property shares, while avoiding property tax reassessment, can be re-drawn so there is no 12-month deadline for beneficiaries to follow… Plus the ability to avoid property tax reassessment on certain investment properties that have revenue potential. 

Residents need more opportunities in a depressed economy like we’re in now to drive revenue, not less.  Solutions like inheriting property taxes in California 2021 need to be expanded statewide, and legally strengthened. Solutions and firms like that will help beneficiaries & homeowners buyout a sibling’s share of an inherited home as an investment property to rent out, not just to live in as a primary residence.

Every property owner should understand the details underlying Prop 19, and know what’s involved with a beneficiary buyout of sibling property shares, or “transfer of property between siblings”, and “lending money to an irrevocable trust“ – from an irrevocable trust lender.  Every California homeowner and beneficiary inheriting property should know how a sibling to sibling property transfer works; keeping yearly taxes on property at parents low rates; and inheriting property taxes in California 2021.

Only California allows this, so it’s worth taking a closer look, and taking full advantage of.  Take a look at the site managed by CA State Board of Equalization, at and research property tax breaks  and Proposition 19 property tax relief revisions at Loan to a Trust  and read up on updates to Proposition 19 at this blog, Property Tax News.    There are also property tax consultants to learn from  such as  property tax specialist Michael Wyatt Consulting who are experts at property tax breaks that save homeowners, commercial property owners, and beneficiaries inheriting property thousands of dollars if not tens of thousands of dollars every year.   

The well known president of Commercial Loan Corp, Kerry Smith is another expert to learn from, or to receive a trust loan from, if the need is there.  Trust and Estate Loans is another source of excellent material, if you want to learn more about establishing a low base property tax rate through a trust loan, and Californians ability to execute a transfer of parents’ property and transfer of parents property taxes when inheriting parents property and inheriting property taxes during a property tax transfer with your parents’ low property tax base. If you’re going to own property in California, it’s worth it to know about your ability to avoid property tax reassessment, and to keep parents property taxes.  Well worth it!  

The California Proposition 19 Newspaper Debate

California Proposition 19

California Proposition 19


The official California  “Voter Guide” (Official Voter Information Guide) tells us CA Proposition 19 actually protects Proposition 13 property tax savings; and “closes unfair tax loopholes used by wealthy out-of-state investors” — a subtle reference to East Coast investors, of which in reality there are relatively few families like this actually coming to California to inherit property from parents, under Proposition 13, and rent out to wealthy tourists. 

This exaggerated claim has already been dis-proven, yet folks that support Prop 19  and continuously question property tax relief and Proposition 13, continue to repeat this false claim in the media — even though most CA property owners back Prop 13 and Proposition 58.

Newspapers have weighed in recently on Proposition 19: in terms of support…  

• San Mateo Daily Journal: “This would enable people in high cost areas to move more easily, opening up room for new residents to the area.”

• The San Diego Union-Tribune: “While critics see this as a gift to the wealthy elderly, the great majority of older homeowners are middle-income, not rich. Allowing them (as well as disabled homeowners and wildfire or disaster victims) to downsize without suffering a huge property tax hit is a humane policy that helps people retire with much less financial stress. It would also promote fluidity in home sales, increasing the availability of larger homes for families with children and easing the phenomenon of Proposition 13 depressing the real estate free market by trapping empty-nesters in homes bigger than they need.”

And in opposition…

• Tahoe Daily Tribune: “It’s no secret that ballot initiatives can be confusing, but Proposition 19 takes obfuscation to a whole new level.  Voters can’t be blamed if they can’t remember whether Prop. 19 is the initiative that is a massive property tax hike or the measure that actually has something good for homeowners or the initiative that has something to do with firefighting. The fact is, all three are at least somewhat true — especially the part about the big tax increase.”

• Mercury News & East Bay Times Editorial Boards: “Prop. 19 merely plugs one hole in the state’s porous property tax laws while creating another. It’s time for holistic reform that simplifies the system and makes it more equitable. This isn’t it. The longer a person had owned their current home, and already benefited from inordinately low tax bills due to Prop. 13, the greater the tax break on the new property. And those who downsize would often be competing with first-time buyers for more-affordable smaller homes. The real reform would be to abolish the tax-transfer program, not expand it.”

• The Bakersfield Californian Editorial Board: “Proposition 19 is another do-over on the ballot. Two years ago, the real estate industry spent $13 million on a similar initiative campaign to expand the program statewide and enhance the benefit for eligible homeowners. Sixty percent of voters rejected the initiative.”

• Los Angeles Times Editorial Board: “But Proposition 19 would just expand the inequities in California’s property tax system. It would grossly benefit those who were lucky enough to buy a home years ago and hold onto it as values skyrocketed. It would give them a huge tax break and greater buying power in an already expensive real estate market. It would skew tax breaks further away from people who don’t own a home or who may be struggling to buy one.”

• San Francisco Chronicle Editorial Board: “[Proposition 19] is still a flawed package, designed to rev up home sales that benefit real estate agents who could reap more in commissions. It favors one narrow segment of the tax-paying public but does nothing for the rest of the state’s home buyers. The measure shows the convoluted extremes that California’s tangled property tax system produces.”

Whichever way you see it, it’s fairly clear that Proposition 19 is a billion-dollar tax increase on families. It limits one of the best tools parents have to help their children — the right, enshrined in California’s Constitution since 1986, to pass their home and other property on without any increase in property taxes, as a Proposition 19 parent to child transfer.

On the other hand, Proposition 19 still allows residents to avoid property tax reassessment, as long as families move into inherited property inside 12 months, and only as a primary residence. 

California beneficiaries inheriting property from parents can still work with trust lenders to get a loan to a trust you can also get a trust loan to buyout co-beneficiaries, while locking in a low property tax base… You can still easily buyout co-beneficiaries with a transfer of property between siblings.  Beneficiaries can always take advantage of a property tax transfer — in other words, transfer parents’  property taxes to themselves under Prop 19, what used to be Prop 58… and keep parents property taxes after inheriting property, and inheriting property taxes,  for as long as they live in their inherited home… as a standard Proposition 19 parent to child transfer or parent to child exclusion from current property tax rates. 

Moreover, Prop 19 will in fact generate additional property tax revenue, that will supposedly be put to good use in the state of California. So, it cuts both ways.

The Affect of Prop 19 on the Housing Market & Working Families in California

California Proposition 19 Property Tax Assistance

California Proposition 19 Property Tax Assistance

Jeanne Radsick, president of The Realtors Group, said recently:  “it’s vital  for homeowners who may be empty-nesters or who are looking to move for health reasons to have more options.  And if they can maintain  stable tax basis, they can live a similar life.  There’s not enough senior housing to accommodate older folks otherwise.”

Still, beneficiaries of Proposition 19 are those who already benefited the most under the state’s existing property tax laws.  Homeowners 55 and older in California are more likely to be older and not poor.  Although, an analysis of Proposition 19 by the California Budget and Policy Center, has some interesting things to say. They are a non-profit that is an advocate for working families and lower-income Californians…. 

At any rate,  their analysis tells us that homeowners in California tend to be more white and wealthier and older.  They seem to be forgetting that homeowners  also happen to be middle class and blue collar; but the study ignores the fact that middle class and working families are the principle users of Proposition 13, Proposition 58 and now of course Prop 19 exclusion for reassessment of property taxes.  Although, the real estate industry does i fact stand to benefit from the increase in home sales that is expected as a result of the Prop 19 measure.  But there’s nothing we can do about it, so we may as well focus on what we can do to lower property taxes.

However. Property tax relief is not chiefly for wealthy Californians nor was it meant for them.  In fact if you crunch the numbers without bias, the high volume of beneficiaries using trust loans to buyout siblings, establishing a low property tax base; while using the parent to child exclusion to avoid property tax reassessment… are mostly middle class.  Not millionaires. We don’t quite follow why they keep making that argument.  Millionaires surely aren’t the only folks interested in Proposition 13 and Prop 58, property tax transfer, or rather the ability to  transfer parents property taxes, to keep parents property taxes while inheriting property taxes during a parent to child transfer, or parent to child exclusion. 

We certainly see more working families and upper middle class families buying out a siblings’ share of a mutually inherited home, than we do corporate CEOs. Another key Proposition 58 benefit… allowing for the exclusion for reassessment of property taxes on transfers between parents and children. Not just for rich people!

Ms. Radsick said that protecting Realtors’ interests was not a driving force behind the push for Proposition 19.  “It is not about making money for the Realtors, for crying out loud,” she said. “It’s about tax fairness for people who need help.”  We need to sit back and really ponder that statement.

Liam Dillon at the Los Angeles Times had some interesting views on the   evolving property tax breaks available to Californians.  He writes:  “The biggest winners under Proposition 19 would be homeowners 55 and older who would pay lower property taxes when moving to a new, more expensive residence.  Currently, homeowners who are 55 or older have a one-time opportunity to retain their existing tax benefits if they move to a home of equal or lesser value within the same county. They can do the same when moving between Los Angeles and nine other counties.

Mr. Dillon goes on to say:  “Proposition 19 would further ease the tax burden by allowing the same group of senior homeowners to blend the taxable value of their old house with the purchase price of a new, more expensive home, reducing the property tax payment they’d otherwise face.   Disabled homeowners would receive the benefit as well. The rules under Proposition 19 would extend to every county in the state, and homeowners could take advantage of the break as many as three times when they decide to move.”

The downside, from our viewpoint, is the fact that given higher property taxes, using  inherited homes as rental properties may soon become unprofitable, without raising rents significantly… and that is not likely to be an effective long-terms solution. The fact of the matter is, these new property tax laws may encourage a lot of residents to sell properties they own, that they intended to leave to their heirs. Hence, realtors and brokers make more money, and that was one intention right from the beginning for Prop 19.

The concern surfacing among analysts revolves around the possibility of important companies leaving California for more business-friendly, lower-taxed states, taking their jobs with them.  As well as young white collar folks in their 20s and 30s, seeking more affordable property to settle into in nearby states; with a new job; focused on raising a family where they won’t get blasted every year with super high property taxes and income taxes, along with a high cost of living.

But, on the other hand… Higher property taxes or not, California will always be an attractive place to live.  There is still exclusion for reassessment of property taxes; there is still sunshine 12 months per year, an ocean nearby, convenient cities and beautiful rural areas 30 minutes away. And you can always find a good deal on most things, if you look for it.  People are always going to want to live in California.

Are Trusts Mainly for Wealthy Folks?

Are Trusts Only for the Wealthy

Are Trusts Only for the Wealthy?

Gifting property to adult children is a great thing to do, no matter the tax breaks – and thankfully, if you live in California and inherit property in that state, you do not need to be mega wealthy with $1,200 per hour tax lawyers to be able to avoid property tax reassessment, or to learn how to use a trust to save on taxes or to buy out siblings’ shares in your inherited real estate… with a trust loan.

Putting it bluntly, it doesn’t hurt to live in a state like California, where you get to save tens of thousands in tax breaks every year, compared to other states…. or compared to California the way it was pre-1978 before Proposition 13, and later in 1986 with Proposition 58, when you started to be able to keep parents property taxes when you’ve inherited property and are able to transfer parents property taxes, inheriting property taxes on a property tax transfer with a simple parent to child transfer or as lawyers call it, parent to child exclusion. Or perhaps lucky to be anywhere, if you can keep that house you inherited in your name, and you have a very good accountant! Another point – why trusts aren’t just for wealthy folks to save on income tax. 

There are trust lenders providing trust loans in California to cure family estate problems, with some beneficiaries insisting on selling inherited property – and no one can agree what the property value is, whether the local tax assessor is right or wrong;  or whether to sell or not to sell.  This is most likely one reason, besides saving on property taxes, that many property tax consultants and tax attorneys firmly believe that lawmakers in every state should pass property tax relief bills that make sense.

It would be advisable for homeowners and beneficiaries inheriting property to go to websites focused on CA Proposition 19, Prop 13, Prop 58, and Proposition 60… such as Michael Wyatt Consulting   and Trust and Estate Loans info-sites  or irrevocable trust lenders, or perhaps niche California focused property tax relief blogs like this one, Property Tax News.  Which is simply to straighten up and learn more about why property tax relief is crucial to California, and would be an economic life-saver to other states, if they were to surprise everyone and gain some genuine leadership, along the lines of what New York has.  So the middle class (not just the millionaires) can live in comfort and security.

As every state in America is now in the throes of a relentless pandemic, with a disastrous affect on businesses and unemployment within local and state economies…  lawmakers in every state would be wise to look at passing a property tax relief bill that would give consumers some financial relief, for example as CA Proposition 13 did in beginning in 1978 and Proposition 58 did in the beginning of that Amendment in 1986, giving Californians the ability to transfer parents property taxes.   

It seemed like a miracle for middle class homeowners in California… and beneficiaries to trusts inheriting a home from parents.  Enabling a property tax transfer solution from parents and grandparents when inheriting a home, and likewise inheriting property taxes – with a parent to child transfer or parent to child exclusion… the urgent need to keep parents property taxes was all of a sudden a reality, thanks to Howard Jarvis and colleagues, regardless of their deeper motivations – and of course the ability to transfer parents property taxes when inheriting property; avoiding property tax reassessment to keep property taxes low, and to have the ability to utilize trusts for a lower tax base – for all Americans; not just for corporate CEOs, VIPs and wealthy families in Beverly Hills, in Santa Barbara, the Marina in San Francisco, or similar locales. 

Does the 1978 Proposition 13 & 1986 Prop 58 still Work for Californians?

Does the 1978 Proposition 13 and 1986 Prop 58 still Work for Californians

Does the 1978 Proposition 13 and 1986 Prop 58 still Work for Californians

History Lesson on Property Tax Relief: Support & Opposition

2020 was an extremely motivated time for pent up anti property tax relief movement in California.  The deceptively entitled “2020 Proposition 13” went to voters on March 3, 2020. This tax hike would have increased California’s overall debt; compelling the state’s school districts to issue more debt, raising property tax bills all across the state. It did not pass, and to put it bluntly, was an utter waste of time and taxpayer’s money.

Unlike Proposition 13 passed by voters in 1978, this 2020 version of Proposition 13 would have doubled the debt caps that currently limit how much bond debt local school districts can acquire. The 2020 Proposition 13 caps on local bond debt would have been increased from 1.25% of assessed property value to 2% for elementary and high school districts, and from 2.5% to 4% for school and community college districts.

The extra property tax revenue from 2020 Prop 13 would have gone into pockets not into roads.  The  2020 Proposition 13 tax hike would have cost taxpayers $740 million per year for 35 years. The cash mainly going to construction-worker unions and contractors that hire everyone, with priority spending going to people working on projects in districts that have signed labor agreements that those in  power prefer.  As we know, the so-called 2020 Proposition 13 failed.

Prop 15 and the Near End of Commercial Property Tax Relief     

Even more dangerous for California, the 2020 Proposition 15 tax hike that was proposed to voters across all 58 counties would have removed the right for commercial property owners to avoid property tax reassessment.  This would have raised property taxes on all commercial and business property owners, which would have raised commercial store rents, office and apt. rentals, rentals on all business tenants would have gone up.  This would in turn have increased prices on all goods and services throughout the state of California.   Considering the outcome on middle class residents and working families, it would not have been a pretty picture.

Supporters of the Proposition 15 campaign raised over $67.6 million mostly from foundations and public service unions. The top three contributors were the Chan Zuckerburg Initiative, California Teachers Association, and SEIU California. Supporters say Prop 15 is a broad coalition of 1600 organizations launched by civil rights organizations, housing groups, parents, teachers, nurses, firefighters and community-based organizations who advocate for equality and justice for communities of color

Opposition to Proposition 15 Campaign has raised over $73.1 million mostly from land developers, agricultural interests and golf and country clubs. The largest donor is the California Business Roundtable Issues PAC that has contributed more than $38 million to the No on 15 Campaign.  The Business Roundtable’s biggest donors are New York-based Blackstone Property Partners who gave $7 million and Michael Hayde, CEO of the Irvine real estate investment firm Western National Group, who gave $4.5 million.

Despite the massive effort towards promoting and passing this tax hike, voters were not sufficiently confused or conned into backing the bill en mass… and they rejected this tax increase on commercial properties, supposedly depriving the California school system of what allegedly could be a significant source of consistent revenue.  Although the true intended recipients of this extra commercial property tax revenue remained under questions… and backers of Proposition 15 – the first major effort to cut into beloved property tax relief afforded by Proposition 13 since it was voted into law in 1978 – finally conceded defeat, and California heaved a statewide sigh of unified relief. 

The question remains – would economic collapse of the statewide   consumer base and working family structure in California have been worth a few extra dollars for the educational system, which is doing relatively well as is?

Last Minute Promotion of Snake Oil Sales to California Voters

Motivated, determined and relentless opponents to property tax relief in California came up with a last minute tax hike measure, Proposition 19 – and the CA Association of Realtors shoved $35 Million at the CA Legislature to promote this unusually deceptive bill, after suffering significant tax hike losses.  They managed to confuse enough voters with disingenuous and deceptive public relations to get Proposition 19 passed – by a hair – and watered down the critical Proposition 58 “parent-to-child exclusion” tax break for middle class beneficiaries and new homeowners. 

This weakened California homeowners’ ability to avoid property tax reassessment without obstacles. So Proposition 19 managed to limit parent to child transfer rights to a one-year window, and only as a primary residence.  No longer could investment properties avoid property tax reassessment.

So the ability to transfer parents property taxes, when inheriting property taxes from a parent, is now on a tighter path. We can still keep parents property taxes but they made it more challenging, in the midst of a Pandemic no less.  Avoiding property tax reassessment and establishing a low property tax base; as well as buying out a sibling’s share of inherited property, meaning the transfer of property between siblings or sibling-to-sibling property transfer – still exists, yet with a few more obstacles to remain aware of. 

We can still transfer parents property taxes in California when  inheriting property and inheriting property taxes from a parent, and remain able to keep parents property taxes on any property tax transfer, such as the parent to child transfer or parent to child exclusion.  It’s just not quite as simple or easy as it was prior to advent of Proposition 19.

Thankfully, enough property tax breaks survived in California to enable property owners to still save significantly on property taxes. Californians can still get a trust loan from a trust lender, working alongside Proposition 58, to buyout a co-beneficiary when inheriting property taxes from a parent – and, most importantly, to establish a low Proposition 13 level property tax base, basically forever for an inherited home, for example from a niche firm like Commercial Loan Corp.  

Most Californians struggling financially from Pandemic shutdowns and health outcomes should research niche blogs like this one, or   info sites like EdSource.org who looks  at both sides of Proposition 15 for example, or SiliconValleyandBeyond.com who examines property taxes and Proposition 19, among other related issues. As well as state government websites such as the  California State Board of Equalization.  The more we know about how to use trust loans and these unique tax breaks, plus other property tax reduction solutions we have access to, the better off we’ll all be going forward.

Transferring Your Mom’s Low Property Tax Base Via Prop 19

Transferring A Parents Low Property Tax Base with California Prop 19

Transferring A Parents Low Property Tax Base with California Proposition 19

It’s certainly nice and politically correct of the California Governor to let resident companies and families pay property taxes a few weeks late;   with millions of people unemployed or under-employed — with mouths to feed and bills to pay.  Politically correct, with nice optics… But not terribly effective, let’s face it.

How about just not collecting property taxes as long as the pandemic is literally killing our economy. How about something with a material, profound affect, not just nibbling weakly around the edges.  However, California still has more property tax relief options than any other state in the union, for middle class homeowners.  Wealthy residents  have countless tax cuts and property tax breaks.

At any rate, the country is moving rapidly towards a vaccine. Fine. But if the Governor of California and his team really want to move the needle for middle class residents, and genuinely help working families survive the disastrous pandemic economic effect — why don’t they update and bolster the benefits offered by Proposition 19, which is already in place?  No need to re-invent anything to move this to the next level! 

As the pandemic continues to diminish the California economy — the powerful realtor community and the State Legislature are promoting status quo — not really digging in and trying hard to  upgrade and improve the property tax breaks that are already in place.  They seem to have no appetite at all to make  the lives of millions of middle class homeowners more secure — with hope for better days in the future.  They seem instead to be far more interested in making the realtor community and the Legislature more secure, more comfortable, and a great deal wealthier regardless of the fact that these partisan groups are already swimming in money! 

However, despite the Legislature’s indifference to the financial problems of the middle class, Californians still have property tax relief options such as the right to keep parents property taxes, and transfer parents property taxes upon inheriting property and inheriting property taxes at a low base rate, as per Proposition 58 which is really now Proposition 19… Plus of course Prop 13 — but the walls may close in on us fast if we allow the powers that be to return with anything like the infamous commercial property tax Proposition 15; which would have increased prices across the state on virtually all goods and services… cutting deep into the middle class spending and tax paying machine that basically keeps the state economy alive. 

Many of these middle class residents stay up to date on  their property tax options, with websites such as the official California State Board of Equalization site.  As well as by researching inheritance solutions and property tax relief on property tax blogs like this one, Property Tax News;  plus going to websites addressing Prop 13 and maintaining a low property tax base… basic property tax breaks that allow resident to spend less and save more, like Trust and Estate Loans, and crucial updated information and news on Proposition 19 at the Howard Jarvis Taxpayers Association.  

Residents  these days also look seriously at options  and solutions to property devalued by the affects of the pandemic… going to websites like Michael Wyatt Consulting for help.  In fact, Mr. Wyatt speaks to this on his website in a very direct way.  He says:

The Covid-19 / Coronavirus pandemic has severely impacted the commercial and investment real estate markets in California. This has placed a significant burden on many property owners. The good news is, property tax relief is now available.  One of the property tax relief measures available is for when “restricted access” to properties causes a loss of market value of those properties. The other is reductions in value due to damage, destruction, depreciation, obsolescence, removal of property, or “other factors causing a decline in value“.  An effective method of supporting lost value due to restricted access or damage to a property, is to measure the loss of  revenue  from periods before and after the event causing the decline of the property’s performance.

New homeowners in California also research property tax breaks at  established finance firms that are focused on options that involve Proposition 58, and now Proposition 19, maintaining a low property tax base through a loan to an irrevocable trust, such as critical financing options for California residents furnished by Commercial Loan Corp — again, working hand-in-hand with Proposition 58 having morphed into Proposition 19 for all intensive purposes.   For  all commercial and residential property owners; enabling beneficiaries and homeowners to lock in a secure, low Proposition 13 property tax base, while buying out co-beneficiaries that have inherited the same property, yet are committed to selling their property shares — and who ultimately walk away with far more money in their pocket from irrevocable trust funding, rather than simply accepting cash from a third party buyer!

Property tax options that involve going through a trust loan are important to tax attorneys and sophisticated beneficiaries, as these specific property tax options are always more profitable; as well as maintaining a low property tax base with a property tax transfer, basically for the life of the property, with a standard parent to child transfer, or parent to child exclusion from paying reassessed property taxes; as long as requirements for Proposition 58 — now Proposition 19 — have been met.

We so have effective options to turn to in California… So we shouldn’t complain too much even though new property tax relief changes have created some challenges.  We also have a lot to be thankful for.

If you are curious how much you might be able to save by taking advantage of California Proposition 19 or Proposition 58, fill out the short form located here for a free estimate. 

Part Two: Proposition 19 Forces Changes to Prop 58 While Proposition 13 Remains Intact

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!