[quote=flyer]It’s true there are a lot of “loopholes” in CA laws that do benefit families who purchased property here over the past decades as our family has.
Imo, anyone, given the opportunity, would take advantage of these legal rights. That said, I wouldn’t be surprised if there are changes in the future.[/quote]
I understand everything flyer. Of course, CA eligible property owners should take advantage of every legal way to avoid reassessment upon transfer. And that’s okay and well within the law.
But you must admit a few things to yourself:
1) CA families who managed to amass multiple real estate holdings amongst themselves prior to 1978 without needing to sell a formerly-purchased property in order to buy another property were very likely already solvent enough to be able to afford the property taxes on each parcel, whatever they came out to be.
2) Whether or not you owned any real property prior to 1978, you had parents who owned property who could ostensibly leave it to you after November 1986 (and perhaps did) before or after their deaths with their own low assessment(s) intact pursuant to Prop 58. You possibly had grandparents who could have left you real property after March 1996 with their own low assessment(s) intact pursuant to Prop 193.
3) Had you received a stepped-up basis (for assessment purposes) on any real property you “inherited” (as my siblings and I did in three other states) and thus were required to pay tax on it based upon its current market value, you may have made completely different decisions regarding the disposition of your inherited properties. You may also have decided not to purchase more real property on your own if you chose to keep any properties you inherited with tax bills attached to them which were 6 – 10 times the tax you have actually paid on them over the years and what you are paying on them today.
In other words (strictly for illustration purposes), let’s assume the passage of Prop 13 but not the later passage of Props 58 and 193 (allowing prior owners’ assessments to extend into perpetuity). If you inherited a property back in 1997 that your grandparent(s) paid $34K for in 1949 (a LOT of $ back then), decided to hang onto it and today it is worth $1.7M, your current tax bill on it might be $11K or more, NOT the ~$1500 tax bill you are enjoying. If you inherited two or more properties which had tax bills in the tens of thousands (instead of $800-2K), you have to ask yourself if you would have bought additional properties on your own over the years, thus increasing your property tax burden even more.
You’ve spoken here of your kids being financially independent and now making good salaries. They can well afford to pay “market-rate” property tax, no? Yet, by law you will be able to deed them or leave them valuable real property which has yours, your parents or your grandparents former assessments attached to them before or after you pass on. (But knowing well the “millenial mindset,” I’m not saying here that your kids would keep them instead of sell them.)
My point is, the financial decisions you made in life may have been very different had Props 58 and 193 not existed. You may have not been financially able or even desirous over the years to amass the RE holdings you have or may not have been able to hang onto every parcel which was bequeathed to you (not saying here that you even wanted to or did, but you DID have the choice and flexibility to due to the existence Props 58 and 193).
All three initiatives are VERY regressive. They disproportionately benefit CA families who had considerable wealth amongst them long before Prop 13 was passed. The passage of Props 58 and 193 were simply icing on the cake for this group’s estate-planning purposes. The only “qualification” needed to take full advantage of these “loopholes” (as you call them) is to already own real property in CA prior to the passage of Prop 13 and the more parcels owned … and the better located … the higher the subsidy bestowed upon the family members (including their descendants).
CA natives and other lifelong Californians who didn’t already own property by then (or whose parents sold their CA property long before the passage of Prop 13 and moved out of state, as mine did) didn’t get to benefit from the measures nearly as much. Sure, this group may currently have assessments which are 1/2 to 2/3 of current market value (depending upon time of purchase, area located and if the size of the dwelling was ever increased). But this group will never be able to benefit from assessments as low as 1/6 to 1/10 of current market value, like those who bought real property before (and long before) 1978. The Supreme Court Opinion stated that it agreed with Respondent (LA County Assessor) that “neighborhoods would be preserved if owners had a predictable tax bill and thus could properly maintain their properties.” I don’t agree. What I see on the street is that very, very marginal “heirs” are attempting to keep their parent(s) or grandparent(s) former home as “shelter” for themselves but since many of them never received an education (some never graduated from HS), they rely on very low social security checks (or SSDI, VA Disability, etc) to support themselves. There is absolutely no way that these owners can eat, put gas in their vehicle (if they have one), pay their monthly utilities and their $500 annual tax bill (based upon their ancestor(s) assessment), much less maintain their property on their extremely low (in some cases, less than $800 month) income.
Had this group been faced with a a $3000+ annual property tax bill at the time of “inheriting” the property, they would have likely sold it and taken the cash because there is no way in h@ll they could afford to pay that amount every year. They would have been better off in a low-income and/or senior housing unit.
This type of CA “heir” exists in all types of neighborhoods and leaves the rest of their neighbors having to permanently deal with their sorry-a$$ inability to maintain their properties in any way shape or form because they quickly got in over their heads in trying mightily to keep their inherited property.
