As we all know, Proposition 58 has been tampered with, in the form of Proposition 19; finally giving the CA Legislature the opportunity they have been waiting for, for decades, to water down property tax relief in California. However, despite this, the state still has property tax relief options that are materially sound. They certainly should not be taking payment plans seriously, that are offered up by California Governor Gavin Newsom as a realistic way to “help” homeowners that owe the state on past due property taxes.
Sure, why not allow property owners to pay off what they owe more slowly. But the Governor and his team should also be looking at far more robust options, where homeowners can actually spend less, and save more. So middle class residents can access the type of tax cuts and property tax breaks that rich folks have enjoyed for decades.
For once, we’re talking about tax cuts for middle class residents, the type that upscale beneficiaries receive through high-end tax attorneys and expensive CPAs; with a trust loan, in concert with tax benefits from Proposition 58… which enables them to buyout siblings who own a share of the house their family has inherited. So they can own an inherited home by themselves, with a low Proposition 13 property tax base.
For many middle class heirs, it’s a perfect package. Although you still have to use Proposition 58 within year one after mom or dad passes… to utilize the CA Parent to Child Exemption – if you want to continue inheriting your parents’ property taxes. To avoid paying property taxes at present market value, in order to keep parents’ low property taxes, completely avoiding property tax reassessment.
In order to prevent a cleverly disguised Proposition 19 or Proposition 15 type of tax measure to come along and weaken, or even remove, property tax breaks for middle class residents – California needs to strengthen the state’s property tax laws, and cement measures that, despite Proposition 19, still can guarantee the right to a property tax transfer with a parent to child exemption, or parent to child exclusion; as long as you have a reliable trust lender you can depend on, for example like the Commercial Loan Corp. in Newport Beach, who can be reached at 877-464-1066. They apparently have the resources to not only provide the money to equalize co-beneficiary funding, establishing a sibling-to-sibling property buyout, with a low property tax base to avoid property tax reassessment.
All of the details that make up the foundation of this process are verified on blogs like this one, Property Tax Transfer, or the micro-site that furnishes a deep dive into Proposition 13 and Proposition 58 details and narratives: Trust and Estate Loans. And for those that prefer the hard cold facts and only the facts, there is the respected state government Website, the California State Board of Equalization, that provides arguably the most objective property tax relief overview available anywhere, concerning which transfers of real property are excluded from reassessment by Propositions 58 and 193?
Despite the inconveniences imposed by Proposition 19, California still has an intact, robust Proposition 13, and fairly intact Proposition 58 as long as one doesn’t exceed that first 12 month deadline period after the death of a surviving parent, or decedent… and one is sure to move into an inherited home as a primary resident, not renting it out, since this is sole bone critics of Proposition 13, Proposition 58, and the CA Parent to Child Exemption have been gnawing at incessantly for decades – using the Bridges family as their one and only example, over the past 40 years, believe it or not.
The problem with Proposition 19 forcing you, after inheriting property from your parents, to move into your parent’s home as a primary residence, or lose your ability to avoid property tax reassessment… on top of being forced to sell your own home, is the fact that your parent’s house may be too small to suit your family. Or the school district may not be suitable, or may be too far away. Or the commute to your job, after moving, may add an hour or more each way, causing another problem. No one in the Legislature asked those questions; or even considered these issues as potential problems.
Moreover, the question has arisen among critics of Proposition 19 – is this simply a step to get us to the point where they lower the boom on us – and completely remove the parent to child exclusion, effectively wiping out this critical tax break altogether? The question has come up… however, no one really knows the answer.
These days, post Proposition 19… California homeowners trust the State Legislature less than ever. Once it sank in how they had been misled by Prop 19, and had actually been duped into voting for it. Luckily, there was enough push-back on this to prevent the CA Legislature from going too far. There is enough property tax relief in the system to be useful to the middle class… to help families that really need this kind of tax break.
Even if Proposition 19, in terms of property tax relief and it’s front-runner tax break, the CA Parent to Child Exclusion or Exemption, is like walking around with a sprained ankle… Californians, unlike middle class homeowners in 48 other states, will still have property tax relief to turn to. Even if it does create an inconvenience for homeowners and inheritors of real property, and does need to be repealed in the near future. It won’t be so easy for the California Legislature communications team, and the Realtors Association press release copywriters, to spin the issues with a deceptive branding campaign and confusing marketing language mis-characterizing the CA Parent to Child Exemption… On the next go ’round it will be a very different story.
What We Need
For one, California needs property tax relief with iron-clad protection, to remain safe from any Proposition 19 or Proposition 15 type of tax obstruction or property tax hike that may come along in the near future to water down or even remove crucial property tax breaks. Not property tax deferment, as the Governor of California has proposed… Or a payment plan to give folks owing property taxes a little more time to payoff what they owe, as proposed in San Diego by two County supervisors. To be frank, these suggestions are stingy, and are half-way measures at best.
Proposition 19 has made the Parent to Child Exclusion challenging enough. So why not propose enhanced property tax relief options now, in the midst of a seemingly endless pandemic. Where most Californians are struggling… even impacting the upper middle classes now – upscale homeowners, high-end business property owners, commercial property owning landlords with office or residential tenants, or beneficiaries inheriting property from parents…
Payment plans or deferred tax payments are not what homeowners need. They need help in terms of being able to spend less… as making more is very difficult right now. So at least let’s help them to spend less! Significant property tax breaks will help accomplish that. Gov. Newsom must be able to see this. He is not so dense as to miss that point. We are sure he and his team can come up with some enhancements to what we already have. Roll back Prop 19 for one. Repeal it immediately, as unemployment continues to follow the Covid health disaster like an evil twin!
Then add components to Prop 58, instead of watering it down. That will help middle class homeowners and commercial property owners to spend less on property taxes. Tax breaks exactly like the billionaires have – at the disposal of the middle class. Why should only they and not the middle class and upper middle class have authentic tax cuts? And plan, then launch, a generous STATE Stimulus Package that will create jobs and heal the sick, as well as preventing any new infections with preventative vaccines that are reliable. This is a good start.