By Jenifer Anisman, Esq., Partner, The Law Firm of Harold Greenberg
By a show of hands in the room (and by room, I mean the state of California), how many homeowners here over the age of 55 intend to sell your home and buy another of value? equal, benefiting from maintaining your current tax base? (A handful of people in the room raise their hands)… By a show of hands, how many homeowners here over the age of 55 intend to sell your home and buy another of equal value THREE times (and keep your current tax base)? (One or two half-masts).
And that’s because we all love to move, right? Especially in our 50s, 60s, 70s and 80s. The 90s would particularly like to move. Right? And now Proposition 19 allows them to move three times without reassessment!
Who is going to use it?
Yet that’s what we got with Proposition 19. Homeowners over 55 already had the right to move once to a house of equal value and maintain their low property tax assessment under proposition l3, but proposition 19 allows them to do it three times instead of once. AWESOME. Are they allowed to make a profit on the sale? NO.
By a show of hands, how many homeowners would like your children to inherit your property without facing prohibitive property tax increases? (Each owner parent in the room raises their hand. And by room I mean the state of California. Thousands? Probably millions)… By a show of hands, how many homeowners have children who can afford to pay $ 20,000 to $ 30,000 in property taxes on their home each year? (A handful? A quarter? A third?)
So how did we lose this precious property right in the last election? Proposition 19 has increased the number of times a homeowner over the age of 55 can swap their property for property of equal value and keep their tax rate low under Proposition 13 from once to three. Proposition 19 took away the right of our children to maintain the tax base on the property they inherit from their parents. They receive up to $ 1,000,000, but as long as they use the property as their primary residence.
By a show of hands, how many people aged 40, 50 and 60 want to move your family out of your home and into that of your parents? (A handful, a quarter, a third?)… With a show of hands, how many 40, 50 and 60 year olds would use the property inherited from their parents as additional income by offering it to the community for rent? (More hands?)… By a show of hands, how many believe they can provide affordable rental housing to the community when they have to pay $ 30,000 in property taxes? (Eyes look around). That’s what I thought.
Finally, by a show of hands, how many Californian homeowners have seen their property value rise to over $ 1,000,000? (Almost everyone in the room). What Proposition 19 took away was a precious source of security for our children and the ancestral American home. The right for our children and / or grandchildren to inherit our property without facing prohibitive tax increases, and has given us little, if any, in return. There was no disclosure on the ballot that Proposition 19 would repeal Proposition 58!
Is your blood boiling? You’re not alone. But it’s getting worse.
More and more roaming
For a state that claims it cares so much about homelessness that it has taken away the right of landlords to collect rent or evict tenants (no break on mortgages or property taxes), Proposition 19 belies their concern. feigns and guarantees more homelessness. Take the example of Venice, California. Yes, there are yuppies, but he also has a long history of blue collar black, white, red, yellow, brown (to name a few) Venetian families who have owned their homes since the 70s, 80 and 90. Some even before. As everyone knows, those homes that were bought for less than $ 500,000 (many older families bought their homes for less than $ 70,000!) Are now worth between $ 2 and $ 3 million. As anyone who doesn’t live in a cave (or who didn’t leave home during COVID) knows, property values in Venice have skyrocketed to millions of dollars. The $ 1,000,000 cap in Proposition 19 is not going to help the children of longtime Venetians. Too many people will lose their properties through tax liens. They are condemned to join the ranks of the tent dwellers so ubiquitous in this part of the city.
Take, for example, Ernesto and his wife, Linda. Ernesto is a retired plumber who bought his home in Vernon in 1976 for $ 64,000. He and his wife are retired and live comfortably off Social Security in their paid home. Ernest and Linda have a son, Felix. Félix has learning disabilities and continues to live as an adult with his parents. The only thing between Felix and homelessness is his parents’ house. Why should we care about Felix? Because homelessness affects everyone. Under Proposition 19, Felix is sentenced to the streets when his parents die, as are most people with disabilities living with their parents.
For many California families, the only thing between their kids and homelessness is the multigenerational family home that can be found in every Los Angeles community. Supporters will argue that children can still benefit from the sale of their valuable new home, but it homogenizes and gentrifies the community. Forcing the home to sell is just not the answer for blue collar workers, service industry workers, people with intellectual disabilities and the like. This argument ignores how long the money received, after taxes, capital gains, etc., will support the child, place money above family values, and create homogeneous gentrified communities.
In addition, many people are very concerned about the possibility of their working class children inheriting their homes after the death of their parents. Even without moving in, in an expensive state like California, these homes provide security for the working-class community who can offer them as affordable rental housing until they retire and move in. But not if the property taxes are $ 20,000. Then they have to sell the property to the rich. Hey, I’m not against the rich, but I’m against homogeneity and homelessness. A balanced community is a healthy community.
There is no need to tout the benefits of propositions 13 and 58. The bottom line is that it was taken away without giving much in return and due to the skyrocketing property values in California, the proposition 19 will cause many people who continued to live in their parents’ house to become homeless. Especially in Venice and San Francisco where the problem of roaming is already so pervasive. Can these cities handle more? I do not think so.
California is a forerunner state that has often set the standard for the rest of the nation. Proposals 13 and 58 were no exception. Proposition 19 is a step backwards by putting taxes above the core value of affordable housing and the multigenerational family home. Due to the particularly high increase in property values at this time, there will be an unprecedented loss of family homes and an increase in homelessness. No one can say “My grandfather built this house” anymore unless they make more than $ 200,000 a year. It erodes the community and the fabric of society on a fundamental level.
Take, for example, John and Janet. John is a building contractor who built his own home in Culver City. His wife and children helped build the house. They grew up in the house and it has many special details hand cut by John. The sentimental value of the house and all that it represents has its roots in the very concept of what it means to be human and the concept of “home”. Of course, when John and Janet are successful, the property taxes will drop from $ 6,000 per year to around $ 25,000. The family home will be lost, unless one of the children wants to move in and earns more than the six-figure average.
With income above the six-figure average, let’s get back to homelessness. It is no secret that in today’s market, only high income individuals / couples can buy a house in California, and in the event of divorce, one party cannot maintain it. Therefore, only the rich will own. What will happen to workers in the service sector? Have the middle-income, minimum-wage workers that parents have owned for a long time paid off? They have the possibility of a certain comfort and security. But not with Proposition 19. Unless the house is worth $ 1,000,000 or less, chances are they can’t afford to keep it. Many of these people will end up on the street or on Section 8 coupons.
Proposition 19 is bad planning and should be repealed. We have given up a valuable property right for something that hardly anyone will use. Landlords must restore the protections of propositions 13 and 58 and protect them diligently. Whether this is done by repeal or by a new proposal, I’ll leave it to you.
Proponents who unwittingly supported Proposition 19 did so on the basis that it should generate more money for the state. But is this fundamentally what citizens need beyond housing, security and income? California is the land of Silicon Valley, Hollywood, tourism and theme parks, as well as the San Joaquin Valley, which powers a third of the world (to name a few huge tax-generating machines) … . not to mention the union’s highest per capita income.
Do we really need to take this advantage away from the middle class? And with all the huge tax-generating machines, are we getting more benefits from the government in proportion to what we’ve given up? Are these benefits that we want or need? I don’t know those answers, but I do know that Proposition 19 was a dirty trick.
Jenifer Anisman, Esq. is a lawyer with the law firm Harold Greenberg in Los Angeles. You can reach Jenifer at [email protected] or by phone at (323) 732-9536.