PART THREE: Surviving CA Proposition 19 & Proposition 15 ~ Intended and Unintended Consequences, Losing Parent to Child Exemption

California Proposition 19 2020

California Proposition 19 2020


Well respected newspapers and noted organizations have weighed in on this issue, such as the California Assessors Association: Representing the state’s 58 county assessors, they are urging a “NO” vote on Proposition 15. The CAA insists it does not believe the hundreds of new, specially trained staff will be ready or able to fulfill expectations of all duties within the 3-year run-up to full statewide execution of Proposition 15.

The California Assessors Association also has very little confidence in the state government’s ability to manage huge changes to the tax system that Proposition 15 would bring; and very little faith in the state’s ability to organize and pay for the costs of implementation.  The CAA has also expressed great doubt in the state’s ability to yield anything near the billions of dollars anticipated by the California State Legislature, and their friends at C.A.R. who helped spearhead the tax measure to unravel Proposition 58, a highly destructive tax measure they’re calling Proposition 19.

Other parties in California have weighed in on these complicated issues, and we’d like to share some of those views with you here:

The Desert Sun Editorial Board: “…we see this [Proposition 15] as a dangerous move right now as COVID-19 continues to wreck state and local government finances and remains a deep threat to any economic revival. Already, many businesses have shuttered their commercial spaces due to health orders. Many of those have already announced the financial damage they’ve suffered means they’re closed for good. Raising taxes now is the last thing struggling businesses and our millions of currently unemployed or underemployed workers need, and likely will send many that still hope for a financial future to seek greener pastures in other states.

What seems clear is that the main backers of this measure — Realtors and the firefighters union — stand to gain greatly in the forms of expected increased home sales and related sales commissions and the measure’s dedication of some of the state’s ultimate new tax proceeds specifically to firefighting efforts.”

Tahoe Daily Tribune: “The non-partisan Legislative Analyst’s Office (LAO) estimates that the repeal of the inter-generational transfer protections will result in tens of thousands of California families getting hit with higher property taxes every year. The LAO acknowledges that Prop. 19 imposes an additional tax burden in the hundreds of millions of dollars.

The other part of Prop. 19 is intended to make voters forget about the huge tax increase by expanding the ability for older homeowners to move to a replacement home and transfer their base-year property tax assessment from their previous home to the new property. While this “portability” expansion has some merit, voters just rejected a virtually identical provision in 2018, when it was Proposition 5.”

Reason.org: “Overall, Proposition 19 is a complex vehicle for squeezing a relatively small amount of incremental revenue from property taxpayers. California property taxes raise an enormous amount of revenue in an inequitable manner as the state pursues ways of increasing property tax revenue from those properties not protected by voter initiatives.”

Marinij.com: (Bay Area News Group editorial board) “California’s property tax system is a mess. Proposition 15, the “split roll” measure on the Nov. 3 ballot, attempts to fix it. Unfortunately, it only makes matters worse. There are serious inequities in California’s property tax system that should be addressed. But Prop. 15 misses the mark. Vote no.”

Laist.com: “Prop 15 would burden commercial property renters, consumers and business owners alike, opponents say. Even though developers who own millions in property would stand to directly lose the most from this proposition, they could very well pass on the tax burden by raising rents for tenants. And although agricultural land is exempt from new tax hikes, farm fixtures — such as barns, dairies, fruit trees and more — are not exempt, which agricultural advocates say leaves farmers vulnerable.”

Metnews.com: “The Legislative Analyst’s Office (LAO) estimated that the repeal (from Proposition 19) of the intergenerational transfer protections guaranteed by Proposition 58 and Prop 193 would, if passed, cause somewhere between 40,000 to 60,000 families in California to be crippled economically by egregiously higher yearly property taxes. Obviously, most middle class families would be forced, sadly, to immediately sell an inherited home left to them by a surviving parent.”

NAACP: “Proposition 15 will push our prices up, and our businesses out! This property tax increase will end up on us…”

abc7.com: “The massive tax increase will prompt companies to flee California at a time when businesses are already struggling…”

These media outlets are expressing sensible, well thought out sentiments regarding the advent of proposed measures Proposition 15 and Proposition 19. Both seek to unravel  invaluable property tax relief benefits unique to California, contained in Proposition 13 and Proposition 58; not mirrored anywhere else in America. The question is — how will California survive the loss of the parent to child exemption protecting parent to child property transfer taxes; losing protections for heirs inheriting property taxes in general… plus a tax hike on business and commercial property owners… effectively raising the cost of all goods and services in the entire state of California, in all 58 counties.  

The timing of these proposed tax measures, increasing taxes on California residents in the midst of a national pandemic, no longer allowing tax breaks for heirs inheriting property taxes…  does seem rather irresponsible and poorly considered, as Prop 15’s tax hike on commercial property owners and landlords would in effect raise the cost of everything in this state, due to higher rents imposed on stores and businesses everywhere in the state, not to mention apartments for folks who rents as opposed to owning property in California. 

So everyone loses.  Everyone, that is, except for the realtor community…. and the firefighter’s union, who is important, no doubt about it.  However, not so important that everyone else in the state of California should be behind the eight ball financially when everything — all goods and services from A to Z, so we mean when everything shoots up in price, 20%, 25%, 30% or more, depending. However, we’ll see what the vote brings in November. 

Perhaps Maybe California will get lucky, Prop 15 and 19 will be defeated, and heirs inheriting property taxes will still be able to avoid property tax reassessment.  And all this noise will be blown away like leaves in the wind.

PART TWO: Surviving CA Proposition 19 – Losing The Parent to Child Exemption

Surviving California Prop 19

California Prop 19


Let’s be clear.  Critics of property tax relief in California are typically well educated, bright, and articulate… and write awfully convincing Op-Ed’s in the San Francisco Chronicle and the Los Angeles Times. 

Yet, for whatever reason, these critics of property tax relief never produce  examples of how or why Proposition 13 is “so unfair” – with the exception of shifting sand anecdotal evidence, without genuine case study data or specific historical events to point to.  Other than the rather deceptive Lloyd and Jeff Bridges family tale of their one beach- front property used as a secondary property to rent out to wealthy tenants.

In fact it’s almost laughable that the Bridges family story is approved by supposedly responsible editors repeatedly, in numerous high-profile California newspapers. Always without backup evidence or case study data pointing to other examples of this type of usage of Proposition 13 and Proposition 58, by other wealthy or middle class Californians.  They can’t seem to come up with a credible follow up example, or any example, of this  sort of rental activity. 

Yet critics of property tax relief did manage to come up with Proposition 19, to take down the parent to child exclusion, associated with the parent to child transfer, that is the foundation of property tax relief for home owners in this state.  Those same home owners, and  beneficiaries inheriting property from parents are wondering how this Proposition 19 measure will affect Proposition 58, in terms of establishing a low property tax base, as well as getting a trust loan to buyout siblings inheriting the same property. 

There is a great deal of anxiety in California in terms of how Proposition 58 will stand if Proposition 19  is voted into law, with respect to locking down a long-term, even lifetime, low property tax base when receiving an intra-family trust loan associated with the transfer of property between siblings or  sibling to sibling property transfer.  If Proposition 19 does pass, most current beneficiaries want to know if getting a trust loan to buyout siblings will be the same, in terms of process; or will the process be different, more difficult, or perhaps even easier.  Buying out a siblings’ share of a house, getting a trust loan to buyout siblings post Proposition 19, is an important issue for most residents of  California.

Meanwhile, despite these nuts and bolts details, we’re still forced to listen to these relentless critics of Proposition 13 and Proposition 58, dispensing non fact-based anecdotal narratives to convince the public how “one-sided” and “massively abused” property tax relief is in California. How it’s only for rich, mainly elderly, home owners.  Or for the rich and famous… like the Bridges. 

Yet we still don’t hear any actual names attached to this supposed “long list of abusers of Proposition 13” to back up these claims behind the push to pass Proposition 19.     Obviously, this is a false representation of a proven property tax relief system that benefits more middle class home owners than anyone else in California.  Which makes perfect sense, if you think about it, as there are so many more middle class people in California, and elsewhere, than rich people! 

Although lately, to backup Proposition 15, to take away property tax breaks from business and commercial property owners, we are occasionally hearing about corporations, not people, always trotted out as, “…companies like Chevron and Disneyland…” (never mentioning any other company) “…that sit on valuable property, generating a huge profit every year – yet never paying taxes on their land in terms of present day reassessment”.  OK, we’re willing to listen.  But never with any actual figures or data to backup the claims. 

So even if a few corporations take advantage of Prop 13 tax relief measures that have  been in place in all 58 counties in  California since 1978, millions of middle class home owners will see their rents sky-rocket if Prop 15 passes… and commercial property owners, and apt. landlords just getting by, as well as family-run industrial businesses that own modest income bearing facilities – all use Proposition 13 fairly and properly, and benefit greatly from it.  Just as it should be.  So we’re going to punish these few perhaps greedy companies by crippling all business property owners in California? 

Without these tax breaks from Proposition 13 and Prop 58, without people like Howard Jarvis and Jon Coupal; Kerry Smith and Michael Wyatt who have fought for these tax breaks for California residential and business property owners…  very few middle class Californians, which is most of the state, would have been able to keep inherited property.  Landlords have been able to keep rents at moderately reasonable rates due to low commercial property taxes. So on and so forth. And this business about schools desperately needing funding – is yet again another half-truth.

Sure, some of the revenue from new, accelerated property taxes will go to schools… but nowhere near what is being promised, or rather vaguely indicated. The lion’s share we are told would go to pay for unfunded state-govt. pensions. And probably other state government purposes such as pay raises, generous benefits and vacations, and so on… plus special interest public works and building projects, no doubt.  And schools will pick up what’s left on the table after all that. 

Intended… and unintended… consequences.

>> Click Here to go to Part Three…

PART ONE: Surviving CA Proposition 19

California Proposition 19 2020 Election

California Proposition 19 2020 Election


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…

PART TWO: If Every State in America Had Property Tax Relief Similar to California…

California Transfer Parents Property Taxes To A Child

California Transfer Parents Property Taxes To A Child

All things considered, there is no good reason residential, commercial and industrial property owners in every state in the United States  shouldn’t have property tax relief, modeled after California tax relief.  And not wind up in a nightmare with the tax people as they did in California. with widows  and elderly veterans and retirees living off fixed incomes being evicted from their homes on a regular basis… prior to 1978.  

This is really where the major problem is with many middle class estates, along with estate taxes often enough. Without property tax benefits, as California has had since 1978, so many beneficiaries in so many different estate, inheriting property from parents, simply can’t afford the upkeep and property taxes on their inherited home, and frequently are forced to sell their parents’ property. Often against their will.

There is a lot of talk among real estate attorneys and property tax advisors in states other than California about adopting some sort of property tax shelter to help middle class Americans in a genuine fashion, long-term.  Instead of consistently bleeding the general public dry year after year, decade after decade… while multi-millionaires and billionaires pay less and less taxes by raising the national debt by a trillion or two.  Especially during so-called conservative administrations, which generally lean towards assisting the wealthy with tax cuts   while ignoring tax relief needs of the middle class and working classes. Moreover,  particularly in the midst of a global Pandemic, where we have millions our of work, no federal leadership, and 30 or so states in the Midwest and Deep South in deep trouble with Coronavirus health and economic issues piling up, with no end in sight.  What better time than now to pass national property tax relief, benefiting all states.

To out it bluntly, it’s time that the middle class have their day, and get to enjoy genuine property tax relief to free up some more cash so they can enjoy their lives a bit more, with a little less financial stress. However, the trick is to enlist the interest of the public itself, as well as certain name brand  politicians, which would, if they had some intelligence and common sense, endear them to their constituents forever.

If, by any chance you reside in California, and you happen to be a beneficiary inheriting property from your parents, consider yourself to be very lucky. Instead of buckling under to family conflicts revolving around property issues, you’d be able to buyout siblings’ property shares, while retaining a low Proposition 13 protected base property tax rate – plus always  take advantage, anywhere in the state, of your right to avoid property tax reassessment; to transfer parents property taxes, and keep parents property taxes when inheriting property taxes.

This is why so many property tax advisors and real estate lawyers in various locations believe every single state should have a property tax measure similar to CA Proposition 13, Proposition 58 & Prop 193.  The California model is a perfect prototype to mirror for effective, seamless property tax breaks;  including the right to transfer parents property taxes, inheriting property taxes and the ability to keep parents property taxes for all property tax transfer scenarios involving parent to child transfer or parent to child exclusion from present day property tax rates…  involving beneficiaries of family trusts – most importantly, avoiding property tax reassessment.  To mirror Proposition 58 type of benefits, states without property tax relief would need to also adopt the ability to help beneficiaries buy out sibling property – as realtors call it, “transfer of property between siblings” or “sibling to sibling property transfer”, or buying out siblings’ share of a house.  And beneficiaries everywhere, if they are aware of it, rarely disagree.

Beneficiaries, as well as residential, industrial and commercial property owners in every state in America need to research these forms of property tax relief at resource blogs like “Property Tax Transfer”;  as well as  Websites that focus on California Proposition 58, on the property tax transfer process, and on how trust loans from trust lenders work, to help beneficiaries buy out sibling property, from start to finish… outlining how the unique combination of a trust loan with Proposition 58 serves to equalize the  distribution  of  cash for trust beneficiaries… at Websites like “Trust & Estate Loans”… 

Or perhaps at a well known, premium trust lender’s Website that delves into the actual nuts & bolts of the Proposition 58 / trust lending process, for example at the popular, first-class Commercial Loan Corp. Website; which is, arguably, the most visited Website of it’s kind in this specific lending category.

This gives beneficiaries enough information to successfully avoid estate conflicts between siblings; with some beneficiaries insisting on selling inherited property, and some wanting to keep their inherited property, at a low long-term property tax base. 

>> Click Here to go to Part Three…