Prop 19 CA Inheritance Property Implications

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Big Dog
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Re: Prop 19 CA Inheritance Property Implications

Post by Big Dog »

sailaway wrote: Fri Nov 20, 2020 4:27 pm
palanzo wrote: Fri Nov 20, 2020 4:19 pm
interwebopinion wrote: Fri Nov 20, 2020 4:16 pm
palanzo wrote: Fri Nov 20, 2020 4:11 pm
interwebopinion wrote: Fri Nov 20, 2020 4:05 pm Also, if you want your tax basis stuck in 1965 when you bought it, then you should be ok with your SS or pension payments stuck at the same year. That's only fair right? If you want your tax basis from decades ago, but your payments adjusted for today's world, then isn't that just naked hypocrisy?
I think you need to read about the history of and the reasons for Prop 13 and then you might see why it was passed.
I note that you didn't answer my question.

I am intimately familiar with the history, but I think the downstream effects on California have been devastating. We enjoy the low taxes we have to pay on our current house, compared to those buying now next door. But that doesn't stop me from pointing out what is inherently an unfair system, transferring wealth to older people at the expense of the young.
The answer is no because the two items are quite different. Older people who may be on a fixed income versus the younger people next door who have an income or often a dual income.

Most states address this by giving some kind of exemption to seniors, rather than freezing taxes for anyone who can keep a job in the same area for a few decades.
As an aside, the heirs reclaim that wealth transfer upon parents' death as the house basis is stepped-up. The heirs can sell it tax free.
palanzo
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Re: Prop 19 CA Inheritance Property Implications

Post by palanzo »

sailaway wrote: Fri Nov 20, 2020 4:27 pm
palanzo wrote: Fri Nov 20, 2020 4:19 pm
interwebopinion wrote: Fri Nov 20, 2020 4:16 pm
palanzo wrote: Fri Nov 20, 2020 4:11 pm
interwebopinion wrote: Fri Nov 20, 2020 4:05 pm Also, if you want your tax basis stuck in 1965 when you bought it, then you should be ok with your SS or pension payments stuck at the same year. That's only fair right? If you want your tax basis from decades ago, but your payments adjusted for today's world, then isn't that just naked hypocrisy?
I think you need to read about the history of and the reasons for Prop 13 and then you might see why it was passed.
I note that you didn't answer my question.

I am intimately familiar with the history, but I think the downstream effects on California have been devastating. We enjoy the low taxes we have to pay on our current house, compared to those buying now next door. But that doesn't stop me from pointing out what is inherently an unfair system, transferring wealth to older people at the expense of the young.
The answer is no because the two items are quite different. Older people who may be on a fixed income versus the younger people next door who have an income or often a dual income.

Most states address this by giving some kind of exemption to seniors, rather than freezing taxes for anyone who can keep a job in the same area for a few decades.
Taxes in CA are not frozen. They go up 2% per year which I think is "fair". An exemption would be a good idea but CA does not do that.
Big Dog
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Joined: Mon Sep 07, 2015 4:12 pm

Re: Prop 19 CA Inheritance Property Implications

Post by Big Dog »

palanzo wrote: Fri Nov 20, 2020 4:52 pm
sailaway wrote: Fri Nov 20, 2020 4:27 pm
palanzo wrote: Fri Nov 20, 2020 4:19 pm
interwebopinion wrote: Fri Nov 20, 2020 4:16 pm
palanzo wrote: Fri Nov 20, 2020 4:11 pm

I think you need to read about the history of and the reasons for Prop 13 and then you might see why it was passed.
I note that you didn't answer my question.

I am intimately familiar with the history, but I think the downstream effects on California have been devastating. We enjoy the low taxes we have to pay on our current house, compared to those buying now next door. But that doesn't stop me from pointing out what is inherently an unfair system, transferring wealth to older people at the expense of the young.
The answer is no because the two items are quite different. Older people who may be on a fixed income versus the younger people next door who have an income or often a dual income.

Most states address this by giving some kind of exemption to seniors, rather than freezing taxes for anyone who can keep a job in the same area for a few decades.
Taxes in CA are not frozen. They go up 2% per year which I think is "fair". An exemption would be a good idea but CA does not do that.
Some states don't tax retiree income, but CA is not one of those either.
MathIsMyWayr
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Location: CA

Re: Prop 19 CA Inheritance Property Implications

Post by MathIsMyWayr »

RetiredAL wrote: Fri Nov 20, 2020 4:30 pm
interwebopinion wrote: Fri Nov 20, 2020 4:16 pm
..... transferring wealth to older people at the expense of the young.
California is heavily into wealth transfer!
A familiar rant.
You have benefited from lower property taxes for a very long time. Now you don't like a little tweak. In other words, it is not to your advantage now.
RetiredAL
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Location: SF Bay Area

Re: Prop 19 CA Inheritance Property Implications

Post by RetiredAL »

MathIsMyWayr wrote: Fri Nov 20, 2020 8:01 pm
RetiredAL wrote: Fri Nov 20, 2020 4:30 pm
interwebopinion wrote: Fri Nov 20, 2020 4:16 pm
..... transferring wealth to older people at the expense of the young.
California is heavily into wealth transfer!
A familiar rant.
In other words, it is not to your advantage.
You assumed incorrectly. Today I personally benefit greatly CA's skewed taxation system 'of sock it to the rich'.

I now receive 90% of my working days take home pay, yet my state income tax bill last year dropped 90%. If I were to shave just $4K off my income, I could be at zero CA tax $. That 10% difference was our ROTH contributions.

What I pleasantly found in retirement was both my State and Fed tax bills went down a lot, more than I anticipated, for the same standard of living.

The opposite is true for my son and his wife. They are in that top 5% group the pays something like 90% state's income tax receipts.
MathIsMyWayr
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Location: CA

Re: Prop 19 CA Inheritance Property Implications

Post by MathIsMyWayr »

Heirs should also continue enjoying the low property taxes as landlords just like you have enjoyed for many years? Otherwise, they may have to pay higher taxes on the inherited house which will benefits other seniors, "transferring wealth to older people at the expense of the young".
RetiredAL wrote: Fri Nov 20, 2020 1:17 pm
Nomar wrote: Fri Nov 20, 2020 8:16 am I understand how different people look at this proposition differently. I think it is useful to remember that every CA homeowner has a voter approved benefit for long term home ownership in the form of Prop 13. In its original form Prop 13 did not pass the tax benefit to children of deceased parents. Nor should it. The United States is a republic not an aristocracy. Multigenerational tax breaks are not about allowing seniors to stay in their homes. They are about perpetuating unearned privilege. The rest of the citizenry pay higher taxes to compensate for property that is never reassessed on the tax rolls.
The base property tax rate is the same for all. What varies is the assessed valuation.

Is it Fair! What's fair? Are our commonly used progressive tax systems fair? What about the excluded massive amounts of money from inheritance taxes?

I doubt the average descendant who kept their parents home to rent would be considered "aristocracy".

I say Prop 13 brought stability to all homeowners. They pretty much know from the start how much their property tax will be going forward.
RetiredAL wrote: Fri Nov 20, 2020 9:29 pm
MathIsMyWayr wrote: Fri Nov 20, 2020 8:01 pm
RetiredAL wrote: Fri Nov 20, 2020 4:30 pm
interwebopinion wrote: Fri Nov 20, 2020 4:16 pm
..... transferring wealth to older people at the expense of the young.
California is heavily into wealth transfer!
A familiar rant.
In other words, it is not to your advantage.
You assumed incorrectly. Today I personally benefit greatly CA's skewed taxation system 'of sock it to the rich'.

I now receive 90% of my working days take home pay, yet my state income tax bill last year dropped 90%. If I were to shave just $4K off my income, I could be at zero CA tax $. That 10% difference was our ROTH contributions.

What I pleasantly found in retirement was both my State and Fed tax bills went down a lot, more than I anticipated, for the same standard of living.

The opposite is true for my son and his wife. They are in that top 5% group the pays something like 90% state's income tax receipts.
jucor
Posts: 273
Joined: Tue Jun 02, 2015 8:35 am

Re: Prop 19 CA Inheritance Property Implications

Post by jucor »

palanzo wrote: Tue Nov 17, 2020 8:39 pm
sergeant wrote: Tue Nov 17, 2020 6:40 pm
pc95 wrote: Tue Nov 17, 2020 6:30 pm
sergeant wrote: Tue Nov 17, 2020 6:12 pm I feel bad for Jeff Lebowski but I'm sure The Dude will abide.

Most people don't keep their parents home as a rental and I expect most will continue to enjoy the step up basis when they inherit it and then sell it. Prop 19 wasn't just a tax grab. It also allows many of us to transfer our current property tax rate to another home anywhere in the state. We are in the process of looking to relocate and I estimate a property tax savings of about 6k a year due to Prop 19.
Its about having the option or not. Our parents have owned the house for 41 years - bought circumstantially and coincidentally just after prop 13 was passed. Talking to my siblings, the house holds additional sentimental value (memories). Keeping the rental option open has its merits since the endre are 3 of us. I recall talking with a coworker in Hawaii who had to take out a new mortgage to pay his brother for half. --- compelled him to continue working for close to another decade.
You still have the option to keep the home and use it as a rental. It will just require you to charge higher rent or make less profit.
Or no profit.
Seriously? Where in CA can you cannot make a profit on a rental house you inherited because the property taxes and maintenance exceed cost of fair market rent? If I were to inherit such a home I'd sell it for sure.
Carefreeap
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Location: SF Bay Area

Re: Prop 19 CA Inheritance Property Implications

Post by Carefreeap »

jucor wrote: Sat Nov 21, 2020 7:48 am
palanzo wrote: Tue Nov 17, 2020 8:39 pm
sergeant wrote: Tue Nov 17, 2020 6:40 pm
pc95 wrote: Tue Nov 17, 2020 6:30 pm
sergeant wrote: Tue Nov 17, 2020 6:12 pm I feel bad for Jeff Lebowski but I'm sure The Dude will abide.

Most people don't keep their parents home as a rental and I expect most will continue to enjoy the step up basis when they inherit it and then sell it. Prop 19 wasn't just a tax grab. It also allows many of us to transfer our current property tax rate to another home anywhere in the state. We are in the process of looking to relocate and I estimate a property tax savings of about 6k a year due to Prop 19.
Its about having the option or not. Our parents have owned the house for 41 years - bought circumstantially and coincidentally just after prop 13 was passed. Talking to my siblings, the house holds additional sentimental value (memories). Keeping the rental option open has its merits since the endre are 3 of us. I recall talking with a coworker in Hawaii who had to take out a new mortgage to pay his brother for half. --- compelled him to continue working for close to another decade.
You still have the option to keep the home and use it as a rental. It will just require you to charge higher rent or make less profit.
Or no profit.
Seriously? Where in CA can you cannot make a profit on a rental house you inherited because the property taxes and maintenance exceed cost of fair market rent? If I were to inherit such a home I'd sell it for sure.
There are some isolated towns in the desert and mountains where that can happen. A couple of years ago there was a bad accident on I-10 outside 29 Palms. I drove the back way through Joshua National Park and on the other side was a town which had abandoned trailer after abandoned trailer over a 20 mile stretch. I didn't research it but my guess is that these parcels were probably abandoned and escheated back to the County for failure to pay taxes.

Even where I live, on the coastal side of the SF Peninsula there are some lots that are effectively undevelopable. The County puts them up for sale but no one wants them because you can't get a sewer permit and because it's in the Coastal Zone the Coastal Commission won't allow septic tanks.
Every day I can hike is a good day.
goos_news
Posts: 55
Joined: Mon Jun 10, 2019 7:14 pm

Re: Prop 19 CA Inheritance Property Implications

Post by goos_news »

Carefreeap wrote: Sat Nov 21, 2020 1:31 pm
jucor wrote: Sat Nov 21, 2020 7:48 am
palanzo wrote: Tue Nov 17, 2020 8:39 pm
sergeant wrote: Tue Nov 17, 2020 6:40 pm
pc95 wrote: Tue Nov 17, 2020 6:30 pm

Its about having the option or not. Our parents have owned the house for 41 years - bought circumstantially and coincidentally just after prop 13 was passed. Talking to my siblings, the house holds additional sentimental value (memories). Keeping the rental option open has its merits since the endre are 3 of us. I recall talking with a coworker in Hawaii who had to take out a new mortgage to pay his brother for half. --- compelled him to continue working for close to another decade.
You still have the option to keep the home and use it as a rental. It will just require you to charge higher rent or make less profit.
Or no profit.
Seriously? Where in CA can you cannot make a profit on a rental house you inherited because the property taxes and maintenance exceed cost of fair market rent? If I were to inherit such a home I'd sell it for sure.
There are some isolated towns in the desert and mountains where that can happen. A couple of years ago there was a bad accident on I-10 outside 29 Palms. I drove the back way through Joshua National Park and on the other side was a town which had abandoned trailer after abandoned trailer over a 20 mile stretch. I didn't research it but my guess is that these parcels were probably abandoned and escheated back to the County for failure to pay taxes.

Even where I live, on the coastal side of the SF Peninsula there are some lots that are effectively undevelopable. The County puts them up for sale but no one wants them because you can't get a sewer permit and because it's in the Coastal Zone the Coastal Commission won't allow septic tanks.
Those are really rare corner cases and don't apply to the original claim, which was swinging from profit to loss of a rental based on the increase in property tax. It is how much loss you are increasing (and likely only very little incremental) as neither is being rented nor capable of being rented. There is a situation in which someone has inherited a rental property in a lower cost rental market (like one of the rural counties) that has appreciated, but due to excessive cash-out refinancing they also inherit an outsized debt. Thus their rental return might swing from positive to negative, but for that to happen the rental property investment was a pretty bad one to begin one (well below standard returns -- you are better off moving your remaining equity elsewhere).
interwebopinion
Posts: 87
Joined: Thu Aug 13, 2020 6:21 pm

Re: Prop 19 CA Inheritance Property Implications

Post by interwebopinion »

RetiredAL wrote: Fri Nov 20, 2020 9:29 pm
The opposite is true for my son and his wife. They are in that top 5% group the pays something like 90% state's income tax receipts.
You are confirming the basic problem with prop 13. You get to enjoy that standard of living partly because you don't have to pay the same property taxes that your son would have to pay if were to buy your house today. Prop 13 on the one hand, and the self-centered opposition to new development on the other, have made it very difficult for the younger generation. It's a double whammy - higher prices on housing AND higher property taxes. Because you're not paying your fair share, the state, which needs money for the roads and services you enjoy, has to get it from taxes on income. I guess you win again, since you have the luxury of not needing as much income to sustain your standard of living as your son.
Big Dog
Posts: 2089
Joined: Mon Sep 07, 2015 4:12 pm

Re: Prop 19 CA Inheritance Property Implications

Post by Big Dog »

interwebopinion wrote: Sat Nov 21, 2020 4:07 pm
RetiredAL wrote: Fri Nov 20, 2020 9:29 pm
The opposite is true for my son and his wife. They are in that top 5% group the pays something like 90% state's income tax receipts.
You are confirming the basic problem with prop 13. You get to enjoy that standard of living partly because you don't have to pay the same property taxes that your son would have to pay if were to buy your house today. Prop 13 on the one hand, and the self-centered opposition to new development on the other, have made it very difficult for the younger generation. It's a double whammy - higher prices on housing AND higher property taxes. Because you're not paying your fair share, the state, which needs money for the roads and services you enjoy, has to get it from taxes on income. I guess you win again, since you have the luxury of not needing as much income to sustain your standard of living as your son.
tbf: a lot of the "younger generation" is also against new development....
RetiredAL
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Location: SF Bay Area

Re: Prop 19 CA Inheritance Property Implications

Post by RetiredAL »

Big Dog wrote: Sat Nov 21, 2020 4:21 pm
interwebopinion wrote: Sat Nov 21, 2020 4:07 pm
RetiredAL wrote: Fri Nov 20, 2020 9:29 pm
The opposite is true for my son and his wife. They are in that top 5% group the pays something like 90% state's income tax receipts.
You are confirming the basic problem with prop 13. You get to enjoy that standard of living partly because you don't have to pay the same property taxes that your son would have to pay if were to buy your house today. Prop 13 on the one hand, and the self-centered opposition to new development on the other, have made it very difficult for the younger generation. It's a double whammy - higher prices on housing AND higher property taxes. Because you're not paying your fair share, the state, which needs money for the roads and services you enjoy, has to get it from taxes on income. I guess you win again, since you have the luxury of not needing as much income to sustain your standard of living as your son.
tbf: a lot of the "younger generation" is also against new development....
Bingo! Various gov't entities have restricted vast land areas to development for many decades now. When you reduce the land to build on, you start a bidding war for existing housing. The housing costs in the San Jose is 3 to 4x what it is in Fresno.

Add to that, decent apartments that were considered reasonable cost, part in fact to Prop 13 savings, are getting bought out, ripped up, and replaced with expensive new construction at much higher density.

Do you really think the FANG's are paying high wages because they are generous? They pay high because if they didn't, they would not be able to find talent that can afford to live here.
Carefreeap
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Location: SF Bay Area

Re: Prop 19 CA Inheritance Property Implications

Post by Carefreeap »

goos_news wrote: Sat Nov 21, 2020 3:09 pm
Carefreeap wrote: Sat Nov 21, 2020 1:31 pm
jucor wrote: Sat Nov 21, 2020 7:48 am
palanzo wrote: Tue Nov 17, 2020 8:39 pm
sergeant wrote: Tue Nov 17, 2020 6:40 pm

You still have the option to keep the home and use it as a rental. It will just require you to charge higher rent or make less profit.
Or no profit.
Seriously? Where in CA can you cannot make a profit on a rental house you inherited because the property taxes and maintenance exceed cost of fair market rent? If I were to inherit such a home I'd sell it for sure.
There are some isolated towns in the desert and mountains where that can happen. A couple of years ago there was a bad accident on I-10 outside 29 Palms. I drove the back way through Joshua National Park and on the other side was a town which had abandoned trailer after abandoned trailer over a 20 mile stretch. I didn't research it but my guess is that these parcels were probably abandoned and escheated back to the County for failure to pay taxes.

Even where I live, on the coastal side of the SF Peninsula there are some lots that are effectively undevelopable. The County puts them up for sale but no one wants them because you can't get a sewer permit and because it's in the Coastal Zone the Coastal Commission won't allow septic tanks.
Those are really rare corner cases and don't apply to the original claim, which was swinging from profit to loss of a rental based on the increase in property tax. It is how much loss you are increasing (and likely only very little incremental) as neither is being rented nor capable of being rented. There is a situation in which someone has inherited a rental property in a lower cost rental market (like one of the rural counties) that has appreciated, but due to excessive cash-out refinancing they also inherit an outsized debt. Thus their rental return might swing from positive to negative, but for that to happen the rental property investment was a pretty bad one to begin one (well below standard returns -- you are better off moving your remaining equity elsewhere).
It could have happened to me when I inherited my mom's condo in swanky La Jolla Shores in 2008. It was upsidedown by about $300k. Within a year the value plunged from $900k in mid 2007 to a Broker Price Opinion by the bank of $487k. There's a long story behind it but I was able to settle the $300k 2nd for $9,300, make the payments on the $451k 1st. PITI & HOA were barely covered by renting it out. I had faith prices would rise and they did. But it took a while to recover. It's probably worth about $900k today. Had the property taxes risen I would have walked away from the mess and let the bank foreclose.
Every day I can hike is a good day.
quantAndHold
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Re: Prop 19 CA Inheritance Property Implications

Post by quantAndHold »

Carefreeap wrote: Sat Nov 21, 2020 5:33 pm
goos_news wrote: Sat Nov 21, 2020 3:09 pm
Carefreeap wrote: Sat Nov 21, 2020 1:31 pm
jucor wrote: Sat Nov 21, 2020 7:48 am
palanzo wrote: Tue Nov 17, 2020 8:39 pm

Or no profit.
Seriously? Where in CA can you cannot make a profit on a rental house you inherited because the property taxes and maintenance exceed cost of fair market rent? If I were to inherit such a home I'd sell it for sure.
There are some isolated towns in the desert and mountains where that can happen. A couple of years ago there was a bad accident on I-10 outside 29 Palms. I drove the back way through Joshua National Park and on the other side was a town which had abandoned trailer after abandoned trailer over a 20 mile stretch. I didn't research it but my guess is that these parcels were probably abandoned and escheated back to the County for failure to pay taxes.

Even where I live, on the coastal side of the SF Peninsula there are some lots that are effectively undevelopable. The County puts them up for sale but no one wants them because you can't get a sewer permit and because it's in the Coastal Zone the Coastal Commission won't allow septic tanks.
Those are really rare corner cases and don't apply to the original claim, which was swinging from profit to loss of a rental based on the increase in property tax. It is how much loss you are increasing (and likely only very little incremental) as neither is being rented nor capable of being rented. There is a situation in which someone has inherited a rental property in a lower cost rental market (like one of the rural counties) that has appreciated, but due to excessive cash-out refinancing they also inherit an outsized debt. Thus their rental return might swing from positive to negative, but for that to happen the rental property investment was a pretty bad one to begin one (well below standard returns -- you are better off moving your remaining equity elsewhere).
It could have happened to me when I inherited my mom's condo in swanky La Jolla Shores in 2008. It was upsidedown by about $300k. Within a year the value plunged from $900k in mid 2007 to a Broker Price Opinion by the bank of $487k. There's a long story behind it but I was able to settle the $300k 2nd for $9,300, make the payments on the $451k 1st. PITI & HOA were barely covered by renting it out. I had faith prices would rise and they did. But it took a while to recover. It's probably worth about $900k today. Had the property taxes risen I would have walked away from the mess and let the bank foreclose.
And in the Prop 19 world, if the market value of the property dropped by that much, the property tax would reflect the lower market value.
Yes, I’m really that pedantic.
Carefreeap
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Location: SF Bay Area

Re: Prop 19 CA Inheritance Property Implications

Post by Carefreeap »

quantAndHold wrote: Sat Nov 21, 2020 5:47 pm
Carefreeap wrote: Sat Nov 21, 2020 5:33 pm
goos_news wrote: Sat Nov 21, 2020 3:09 pm
Carefreeap wrote: Sat Nov 21, 2020 1:31 pm
jucor wrote: Sat Nov 21, 2020 7:48 am

Seriously? Where in CA can you cannot make a profit on a rental house you inherited because the property taxes and maintenance exceed cost of fair market rent? If I were to inherit such a home I'd sell it for sure.
There are some isolated towns in the desert and mountains where that can happen. A couple of years ago there was a bad accident on I-10 outside 29 Palms. I drove the back way through Joshua National Park and on the other side was a town which had abandoned trailer after abandoned trailer over a 20 mile stretch. I didn't research it but my guess is that these parcels were probably abandoned and escheated back to the County for failure to pay taxes.

Even where I live, on the coastal side of the SF Peninsula there are some lots that are effectively undevelopable. The County puts them up for sale but no one wants them because you can't get a sewer permit and because it's in the Coastal Zone the Coastal Commission won't allow septic tanks.
Those are really rare corner cases and don't apply to the original claim, which was swinging from profit to loss of a rental based on the increase in property tax. It is how much loss you are increasing (and likely only very little incremental) as neither is being rented nor capable of being rented. There is a situation in which someone has inherited a rental property in a lower cost rental market (like one of the rural counties) that has appreciated, but due to excessive cash-out refinancing they also inherit an outsized debt. Thus their rental return might swing from positive to negative, but for that to happen the rental property investment was a pretty bad one to begin one (well below standard returns -- you are better off moving your remaining equity elsewhere).

It could have happened to me when I inherited my mom's condo in swanky La Jolla Shores in 2008. It was upsidedown by about $300k. Within a year the value plunged from $900k in mid 2007 to a Broker Price Opinion by the bank of $487k. There's a long story behind it but I was able to settle the $300k 2nd for $9,300, make the payments on the $451k 1st. PITI & HOA were barely covered by renting it out. I had faith prices would rise and they did. But it took a while to recover. It's probably worth about $900k today. Had the property taxes risen I would have walked away from the mess and let the bank foreclose.
And in the Prop 19 world, if the market value of the property dropped by that much, the property tax would reflect the lower market value.
My mom's basis was lower than the $487k BPO. She had taken advantage of Prop 60/90. Where she really messed up was letting my brother take over the family house and giving up the property tax basis on the house she and my father bought in 1963. When he got foreclosed on in 2009 he was paying less than $1000/yr in property taxes!
Every day I can hike is a good day.
Carefreeap
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Re: Prop 19 CA Inheritance Property Implications

Post by Carefreeap »

And FWIW I voted "no" on Prop 19 even though there's a chance we could benefit from it. We also don't have kids so it's not like I'm trying to help them out. I just don't like messing with Prop 13.

I had no idea that the house we bought back in 1995 for $332k would be worth $2M 25 years later. This is a house that without its view might be worth $450k in the Midwest. It used be a blue collar town. :shock:
Every day I can hike is a good day.
jucor
Posts: 273
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Re: Prop 19 CA Inheritance Property Implications

Post by jucor »

Carefreeap wrote: Sat Nov 21, 2020 1:31 pm
jucor wrote: Sat Nov 21, 2020 7:48 am
palanzo wrote: Tue Nov 17, 2020 8:39 pm
sergeant wrote: Tue Nov 17, 2020 6:40 pm
pc95 wrote: Tue Nov 17, 2020 6:30 pm

Its about having the option or not. Our parents have owned the house for 41 years - bought circumstantially and coincidentally just after prop 13 was passed. Talking to my siblings, the house holds additional sentimental value (memories). Keeping the rental option open has its merits since the endre are 3 of us. I recall talking with a coworker in Hawaii who had to take out a new mortgage to pay his brother for half. --- compelled him to continue working for close to another decade.
You still have the option to keep the home and use it as a rental. It will just require you to charge higher rent or make less profit.
Or no profit.
Seriously? Where in CA can you cannot make a profit on a rental house you inherited because the property taxes and maintenance exceed cost of fair market rent? If I were to inherit such a home I'd sell it for sure.
There are some isolated towns in the desert and mountains where that can happen. A couple of years ago there was a bad accident on I-10 outside 29 Palms. I drove the back way through Joshua National Park and on the other side was a town which had abandoned trailer after abandoned trailer over a 20 mile stretch. I didn't research it but my guess is that these parcels were probably abandoned and escheated back to the County for failure to pay taxes.

Even where I live, on the coastal side of the SF Peninsula there are some lots that are effectively undevelopable. The County puts them up for sale but no one wants them because you can't get a sewer permit and because it's in the Coastal Zone the Coastal Commission won't allow septic tanks.
Your examples are ones in which having a profitable rental is not really possible regardless of property taxes...

I am speaking of an inherited rental property that is not highly leveraged upon inheritance. In these cases property tax rises are not going to make the property unprofitable.

If one were to inherit a property with an outstanding debt that precluded profitability as a rental but was worth more than the debt it would make sense to sell.

If one were to inherit a property with an outstanding debt that precluded profitability as a rental and which was worth less than the debt it would make sense to disclaim the inheritance.
MathIsMyWayr
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Re: Prop 19 CA Inheritance Property Implications

Post by MathIsMyWayr »

quantAndHold wrote: Sat Nov 21, 2020 5:47 pm And in the Prop 19 world, if the market value of the property dropped by that much, the property tax would reflect the lower market value.
Would the property tax stay higher before the Prop 19? :? Sounds like everything wrong is the fault of the Prop. 19.
Nomar
Posts: 14
Joined: Sun Oct 21, 2018 9:54 am

Re: Prop 19 CA Inheritance Property Implications

Post by Nomar »

RetiredAL wrote: Fri Nov 20, 2020 1:17 pm
Nomar wrote: Fri Nov 20, 2020 8:16 am I understand how different people look at this proposition differently. I think it is useful to remember that every CA homeowner has a voter approved benefit for long term home ownership in the form of Prop 13. In its original form Prop 13 did not pass the tax benefit to children of deceased parents. Nor should it. The United States is a republic not an aristocracy. Multigenerational tax breaks are not about allowing seniors to stay in their homes. They are about perpetuating unearned privilege. The rest of the citizenry pay higher taxes to compensate for property that is never reassessed on the tax rolls.
The base property tax rate is the same for all. What varies is the assessed valuation.

Is it Fair! What's fair? Are our commonly used progressive tax systems fair? What about the excluded massive amounts of money from inheritance taxes?

I doubt the average descendant who kept their parents home to rent would be considered "aristocracy".

I say Prop 13 brought stability to all homeowners. They pretty much know from the start how much their property tax will be going forward.
My point about aristocracy was not the amount of net worth which is not the defining aspect of aristocracy. It is about unearned privilege and a different legal status that depends on your ancestry. All of us have different circumstances with regard to inheritance but the state should treat us all the same. It is a core tenet of republican theory that all citizens are equal before the law. If the idea underlying Prop 13 was to allow seniors to stay in their homes, it is an abuse to allow children to perpetuate the favored tax status.
Carefreeap
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Re: Prop 19 CA Inheritance Property Implications

Post by Carefreeap »

MathIsMyWayr wrote: Sun Nov 22, 2020 10:53 pm
quantAndHold wrote: Sat Nov 21, 2020 5:47 pm And in the Prop 19 world, if the market value of the property dropped by that much, the property tax would reflect the lower market value.
Would the property tax stay higher before the Prop 19? :? Sounds like everything wrong is the fault of the Prop. 19.
It depends on the County. When prices fell on a property I owned in San Diego County in 2009 I had to petition for a reassessment.

In contrast in 1992 San Mateo County did an automatic roll back of 20% for properties purchased in 1990 & 1991. I didn't think our property value was that low; we had bought a fixer and fixed it up but I sure wasn't going to argue.

In both cases the reassessment was considered temporary and could be raised back to market value at any time. I sold both properties before that happened. I assume that aspect of Prop 13 will not be affected by Prop 19.
Every day I can hike is a good day.
MathIsMyWayr
Posts: 2476
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Location: CA

Re: Prop 19 CA Inheritance Property Implications

Post by MathIsMyWayr »

Nomar wrote: Mon Nov 23, 2020 8:51 am
RetiredAL wrote: Fri Nov 20, 2020 1:17 pm
Nomar wrote: Fri Nov 20, 2020 8:16 am I understand how different people look at this proposition differently. I think it is useful to remember that every CA homeowner has a voter approved benefit for long term home ownership in the form of Prop 13. In its original form Prop 13 did not pass the tax benefit to children of deceased parents. Nor should it. The United States is a republic not an aristocracy. Multigenerational tax breaks are not about allowing seniors to stay in their homes. They are about perpetuating unearned privilege. The rest of the citizenry pay higher taxes to compensate for property that is never reassessed on the tax rolls.
The base property tax rate is the same for all. What varies is the assessed valuation.

Is it Fair! What's fair? Are our commonly used progressive tax systems fair? What about the excluded massive amounts of money from inheritance taxes?

I doubt the average descendant who kept their parents home to rent would be considered "aristocracy".

I say Prop 13 brought stability to all homeowners. They pretty much know from the start how much their property tax will be going forward.
My point about aristocracy was not the amount of net worth which is not the defining aspect of aristocracy. It is about unearned privilege and a different legal status that depends on your ancestry. All of us have different circumstances with regard to inheritance but the state should treat us all the same. It is a core tenet of republican theory that all citizens are equal before the law. If the idea underlying Prop 13 was to allow seniors to stay in their homes, it is an abuse to allow children to perpetuate the favored tax status.
+1
While I am all for helping the needy, I despise the shameles sharks circling around tax breaks and subsidies.
MathIsMyWayr
Posts: 2476
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Location: CA

Re: Prop 19 CA Inheritance Property Implications

Post by MathIsMyWayr »

Carefreeap wrote: Mon Nov 23, 2020 8:59 am
MathIsMyWayr wrote: Sun Nov 22, 2020 10:53 pm
quantAndHold wrote: Sat Nov 21, 2020 5:47 pm And in the Prop 19 world, if the market value of the property dropped by that much, the property tax would reflect the lower market value.
Would the property tax stay higher before the Prop 19? :? Sounds like everything wrong is the fault of the Prop. 19.
It depends on the County. When prices fell on a property I owned in San Diego County in 2009 I had to petition for a reassessment.

In contrast in 1992 San Mateo County did an automatic roll back of 20% for properties purchased in 1990 & 1991. I didn't think our property value was that low; we had bought a fixer and fixed it up but I sure wasn't going to argue.

In both cases the reassessment was considered temporary and could be raised back to market value at any time. I sold both properties before that happened. I assume that aspect of Prop 13 will not be affected by Prop 19.
My petition for a reassessment was also granted in the Santa Clara County around the time without much hassle.
Big Dog
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Re: Prop 19 CA Inheritance Property Implications

Post by Big Dog »

Nomar wrote: Mon Nov 23, 2020 8:51 am
RetiredAL wrote: Fri Nov 20, 2020 1:17 pm
Nomar wrote: Fri Nov 20, 2020 8:16 am I understand how different people look at this proposition differently. I think it is useful to remember that every CA homeowner has a voter approved benefit for long term home ownership in the form of Prop 13. In its original form Prop 13 did not pass the tax benefit to children of deceased parents. Nor should it. The United States is a republic not an aristocracy. Multigenerational tax breaks are not about allowing seniors to stay in their homes. They are about perpetuating unearned privilege. The rest of the citizenry pay higher taxes to compensate for property that is never reassessed on the tax rolls.
The base property tax rate is the same for all. What varies is the assessed valuation.

Is it Fair! What's fair? Are our commonly used progressive tax systems fair? What about the excluded massive amounts of money from inheritance taxes?

I doubt the average descendant who kept their parents home to rent would be considered "aristocracy".

I say Prop 13 brought stability to all homeowners. They pretty much know from the start how much their property tax will be going forward.
My point about aristocracy was not the amount of net worth which is not the defining aspect of aristocracy. It is about unearned privilege and a different legal status that depends on your ancestry. All of us have different circumstances with regard to inheritance but the state should treat us all the same. It is a core tenet of republican theory that all citizens are equal before the law. If the idea underlying Prop 13 was to allow seniors to stay in their homes, it is an abuse to allow children to perpetuate the favored tax status.
Actually, Prop 19 still allows children -- and grandchildren even -- to move into the parents' home and keep the low tax base. What Prop 19 changed was to eliminate the possibility of the kids turning their parents home into a rental (at market rates) and reaping the extra income as a result of the low Prop 13 tax base.

In other words, potential real estate investors are the ones who are hurt, not blue collar kids who continue to live into their parent's home.
Even where I live, on the coastal side of the SF Peninsula there are some lots that are effectively undevelopable. The County puts them up for sale but no one wants them because you can't get a sewer permit and because it's in the Coastal Zone the Coastal Commission won't allow septic tanks.
Not sure what this has to do with Prop 19, which is the property taxes for turning a home from owner-occupied into a rental. The fact that folks can't get water hook-ups is a different issue (related to California's slow/no growth attitudes and NIMBY-ism.
EnjoyIt
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Re: Prop 19 CA Inheritance Property Implications

Post by EnjoyIt »

palanzo wrote: Fri Nov 20, 2020 4:10 pm
Tingting1013 wrote: Fri Nov 20, 2020 4:03 pm
palanzo wrote: Fri Nov 20, 2020 3:59 pm
Tingting1013 wrote: Fri Nov 20, 2020 3:55 pm
palanzo wrote: Fri Nov 20, 2020 3:49 pm

Sure and the banks would stick large fees to the seniors as they already do with reverse mortgages. Is this a Boglehead solution?
The Boglehead solution is to live somewhere you can afford. If you can’t afford it, tough luck.

Also in a world without Prop 13, property tax rates would probably come down some. Broaden the base, lower the rate. So the hit to seniors would not be nearly as bad as current market rates would indicate.
Is that the advice you would give to your parents? To move away to live somewhere you can afford and away from the support networks and children? I think it is heartless and creates even more problems for the seniors so affected.
We have the opposite problem right now - children cannot afford to live near their parents, in the neighborhoods where they grew up.

So equalizing tax rates at least a little bit will probably have the effect of reuniting parents with children, just toward more LCOL areas.
Good luck. Hope the grocery store workers and BART drivers will be able to afford your vision of property taxes.
That’s exactly right. Prop 13 decreases supply of homes and synthetically increases home prices making it impossible for lower income people to afford to live in the area. The solution to seniors is to have a reasonable senior homestead exemption that reduces taxes. If taxes become unaffordable then yes, seniors should move just as so many people leave the New England area when they retire. Often times reuniting families as it did mine.

It makes sense though. People will always try and vote themselves more money or more benefits. Home prices are overvalued and maybe Prop 19 will help curb that a little.
A time to EVALUATE your jitters: | https://www.bogleheads.org/forum/viewtopic.php?f=10&t=79939&start=400#p5275418
RetiredAL
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Re: Prop 19 CA Inheritance Property Implications

Post by RetiredAL »

Big Dog wrote: Mon Nov 23, 2020 9:33 am
Nomar wrote: Mon Nov 23, 2020 8:51 am
RetiredAL wrote: Fri Nov 20, 2020 1:17 pm
Nomar wrote: Fri Nov 20, 2020 8:16 am I understand how different people look at this proposition differently. I think it is useful to remember that every CA homeowner has a voter approved benefit for long term home ownership in the form of Prop 13. In its original form Prop 13 did not pass the tax benefit to children of deceased parents. Nor should it. The United States is a republic not an aristocracy. Multigenerational tax breaks are not about allowing seniors to stay in their homes. They are about perpetuating unearned privilege. The rest of the citizenry pay higher taxes to compensate for property that is never reassessed on the tax rolls.
The base property tax rate is the same for all. What varies is the assessed valuation.

Is it Fair! What's fair? Are our commonly used progressive tax systems fair? What about the excluded massive amounts of money from inheritance taxes?

I doubt the average descendant who kept their parents home to rent would be considered "aristocracy".

I say Prop 13 brought stability to all homeowners. They pretty much know from the start how much their property tax will be going forward.
My point about aristocracy was not the amount of net worth which is not the defining aspect of aristocracy. It is about unearned privilege and a different legal status that depends on your ancestry. All of us have different circumstances with regard to inheritance but the state should treat us all the same. It is a core tenet of republican theory that all citizens are equal before the law. If the idea underlying Prop 13 was to allow seniors to stay in their homes, it is an abuse to allow children to perpetuate the favored tax status.
Actually, Prop 19 still allows children -- and grandchildren even -- to move into the parents' home and keep the low tax base. What Prop 19 changed was to eliminate the possibility of the kids turning their parents home into a rental (at market rates) and reaping the extra income as a result of the low Prop 13 tax base.

In other words, potential real estate investors are the ones who are hurt, not blue collar kids who continue to live into their parent's home.
Even where I live, on the coastal side of the SF Peninsula there are some lots that are effectively undevelopable. The County puts them up for sale but no one wants them because you can't get a sewer permit and because it's in the Coastal Zone the Coastal Commission won't allow septic tanks.
Not sure what this has to do with Prop 19, which is the property taxes for turning a home from owner-occupied into a rental. The fact that folks can't get water hook-ups is a different issue (related to California's slow/no growth attitudes and NIMBY-ism.
In my case, it's maintaining the family vacation home, for the family, and has nothing to do with conducting/getting business (rental) income.
RetiredAL
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Re: Prop 19 CA Inheritance Property Implications

Post by RetiredAL »

MathIsMyWayr wrote: Mon Nov 23, 2020 9:05 am
Nomar wrote: Mon Nov 23, 2020 8:51 am
RetiredAL wrote: Fri Nov 20, 2020 1:17 pm
Nomar wrote: Fri Nov 20, 2020 8:16 am I understand how different people look at this proposition differently. I think it is useful to remember that every CA homeowner has a voter approved benefit for long term home ownership in the form of Prop 13. In its original form Prop 13 did not pass the tax benefit to children of deceased parents. Nor should it. The United States is a republic not an aristocracy. Multigenerational tax breaks are not about allowing seniors to stay in their homes. They are about perpetuating unearned privilege. The rest of the citizenry pay higher taxes to compensate for property that is never reassessed on the tax rolls.
The base property tax rate is the same for all. What varies is the assessed valuation.

Is it Fair! What's fair? Are our commonly used progressive tax systems fair? What about the excluded massive amounts of money from inheritance taxes?

I doubt the average descendant who kept their parents home to rent would be considered "aristocracy".

I say Prop 13 brought stability to all homeowners. They pretty much know from the start how much their property tax will be going forward.
My point about aristocracy was not the amount of net worth which is not the defining aspect of aristocracy. It is about unearned privilege and a different legal status that depends on your ancestry. All of us have different circumstances with regard to inheritance but the state should treat us all the same. It is a core tenet of republican theory that all citizens are equal before the law. If the idea underlying Prop 13 was to allow seniors to stay in their homes, it is an abuse to allow children to perpetuate the favored tax status.
+1
While I am all for helping the needy, I despise the shameles sharks circling around tax breaks and subsidies.
Mr Math: Are you saying you pass up all those beneficial deductions from your pay that most of the rest of us take as pre-tax, like healthcare, 401k and kin, IRAs, ect? If so, you are a very rare breed!

Edit to add: Or deducting 401K/IRA at 22% while working, the retiring and converting to ROTH at 12%.
Last edited by RetiredAL on Mon Nov 23, 2020 1:49 pm, edited 1 time in total.
MathIsMyWayr
Posts: 2476
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Location: CA

Re: Prop 19 CA Inheritance Property Implications

Post by MathIsMyWayr »

RetiredAL wrote: Mon Nov 23, 2020 1:14 pm
MathIsMyWayr wrote: Mon Nov 23, 2020 9:05 am
Nomar wrote: Mon Nov 23, 2020 8:51 am
RetiredAL wrote: Fri Nov 20, 2020 1:17 pm
Nomar wrote: Fri Nov 20, 2020 8:16 am I understand how different people look at this proposition differently. I think it is useful to remember that every CA homeowner has a voter approved benefit for long term home ownership in the form of Prop 13. In its original form Prop 13 did not pass the tax benefit to children of deceased parents. Nor should it. The United States is a republic not an aristocracy. Multigenerational tax breaks are not about allowing seniors to stay in their homes. They are about perpetuating unearned privilege. The rest of the citizenry pay higher taxes to compensate for property that is never reassessed on the tax rolls.
The base property tax rate is the same for all. What varies is the assessed valuation.

Is it Fair! What's fair? Are our commonly used progressive tax systems fair? What about the excluded massive amounts of money from inheritance taxes?

I doubt the average descendant who kept their parents home to rent would be considered "aristocracy".

I say Prop 13 brought stability to all homeowners. They pretty much know from the start how much their property tax will be going forward.
My point about aristocracy was not the amount of net worth which is not the defining aspect of aristocracy. It is about unearned privilege and a different legal status that depends on your ancestry. All of us have different circumstances with regard to inheritance but the state should treat us all the same. It is a core tenet of republican theory that all citizens are equal before the law. If the idea underlying Prop 13 was to allow seniors to stay in their homes, it is an abuse to allow children to perpetuate the favored tax status.
+1
While I am all for helping the needy, I despise the shameles sharks circling around tax breaks and subsidies.
Mr Math: Are you saying you pass up all those beneficial deductions from your pay that most of the rest of us take as pre-tax, like healthcare, 401k and kin, IRAs, ect? If so, you are a very rare breed!
I have no problem in taking advantage of the benefits intended and designed for everybody in a particular situation in which I happen to be. Bill Gates has every right to 401k, Social Security, Medicare... But I will be quite unhappy if he manipulates his income to take an unfair advantage of ACA subsidies, etc. Somebody has to pay for those benefits. If opposition gains strength, we may see changes and those needy may hurt by the action of the greedy. I have no objection to a prop 13 benefit for Jobs' residence unless there is any provision against. But I am against such a benefit extended to his vacation homes, vacation homes for anybody. Are you going to line up for a soup kitchen to save money. I don't see any difference in taking unfair advantages.
RetiredAL
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Location: SF Bay Area

Re: Prop 19 CA Inheritance Property Implications

Post by RetiredAL »

MathIsMyWayr wrote: Mon Nov 23, 2020 1:48 pm
RetiredAL wrote: Mon Nov 23, 2020 1:14 pm
MathIsMyWayr wrote: Mon Nov 23, 2020 9:05 am
Nomar wrote: Mon Nov 23, 2020 8:51 am
RetiredAL wrote: Fri Nov 20, 2020 1:17 pm

The base property tax rate is the same for all. What varies is the assessed valuation.

Is it Fair! What's fair? Are our commonly used progressive tax systems fair? What about the excluded massive amounts of money from inheritance taxes?

I doubt the average descendant who kept their parents home to rent would be considered "aristocracy".

I say Prop 13 brought stability to all homeowners. They pretty much know from the start how much their property tax will be going forward.
My point about aristocracy was not the amount of net worth which is not the defining aspect of aristocracy. It is about unearned privilege and a different legal status that depends on your ancestry. All of us have different circumstances with regard to inheritance but the state should treat us all the same. It is a core tenet of republican theory that all citizens are equal before the law. If the idea underlying Prop 13 was to allow seniors to stay in their homes, it is an abuse to allow children to perpetuate the favored tax status.
+1
While I am all for helping the needy, I despise the shameles sharks circling around tax breaks and subsidies.
Mr Math: Are you saying you pass up all those beneficial deductions from your pay that most of the rest of us take as pre-tax, like healthcare, 401k and kin, IRAs, ect? If so, you are a very rare breed!
I have no problem in taking advantage of the benefits intended and designed for everybody in a particular situation in which I happen to be. Bill Gates has every right to 401k, Social Security, Medicare... But I will be quite unhappy if he manipulates his income to take an unfair advantage of ACA subsidies, etc. Somebody has to pay for those benefits. If opposition gains strength, we may see changes and those needy may hurt by the action of the greedy. I have no objection to a prop 13 benefit for Jobs' residence unless there is any provision against. But I am against such a benefit extended to his vacation homes, vacation homes for anybody. Are you going to line up for a soup kitchen to save money. I don't see any difference in taking unfair advantages.
Do note I edited my post while you were replying to include: Or deducting 401K/IRA at 22% while working, the retiring and converting to ROTH at 12%.
MathIsMyWayr
Posts: 2476
Joined: Mon Mar 27, 2017 10:47 pm
Location: CA

Re: Prop 19 CA Inheritance Property Implications

Post by MathIsMyWayr »

RetiredAL wrote: Mon Nov 23, 2020 1:54 pm
MathIsMyWayr wrote: Mon Nov 23, 2020 1:48 pm
RetiredAL wrote: Mon Nov 23, 2020 1:14 pm
MathIsMyWayr wrote: Mon Nov 23, 2020 9:05 am
Nomar wrote: Mon Nov 23, 2020 8:51 am

My point about aristocracy was not the amount of net worth which is not the defining aspect of aristocracy. It is about unearned privilege and a different legal status that depends on your ancestry. All of us have different circumstances with regard to inheritance but the state should treat us all the same. It is a core tenet of republican theory that all citizens are equal before the law. If the idea underlying Prop 13 was to allow seniors to stay in their homes, it is an abuse to allow children to perpetuate the favored tax status.
+1
While I am all for helping the needy, I despise the shameles sharks circling around tax breaks and subsidies.
Mr Math: Are you saying you pass up all those beneficial deductions from your pay that most of the rest of us take as pre-tax, like healthcare, 401k and kin, IRAs, ect? If so, you are a very rare breed!
I have no problem in taking advantage of the benefits intended and designed for everybody in a particular situation in which I happen to be. Bill Gates has every right to 401k, Social Security, Medicare... But I will be quite unhappy if he manipulates his income to take an unfair advantage of ACA subsidies, etc. Somebody has to pay for those benefits. If opposition gains strength, we may see changes and those needy may hurt by the action of the greedy. I have no objection to a prop 13 benefit for Jobs' residence unless there is any provision against. But I am against such a benefit extended to his vacation homes, vacation homes for anybody. Are you going to line up for a soup kitchen to save money. I don't see any difference in taking unfair advantages.
Do note I edited my post while you were replying to included: Or deducting 401K/IRA at 22% while working, the retiring and converting to ROTH at 12%.
"Official" reasons for enrolling in 401k (isn't intended and designed for?):
1. Save for retirement with a blessing of the government, i.e., people. Taking care of poor old people will be on the general population.
2. Save taxes. Save taxes on contribution when you are in relatively high tax brackets and pay lower taxes on withdrawal during retirement.

I am not familiar with finance, but I believe Roth conversion was added later and available to everybody. I don't think minimizing taxes is unethical.
cacophony
Posts: 548
Joined: Tue Oct 16, 2007 9:12 pm

Re: Prop 19 CA Inheritance Property Implications

Post by cacophony »

Big Dog wrote: Mon Nov 23, 2020 9:33 am ...
Actually, Prop 19 still allows children -- and grandchildren even -- to move into the parents' home and keep the low tax base. What Prop 19 changed was to eliminate the possibility of the kids turning their parents home into a rental (at market rates) and reaping the extra income as a result of the low Prop 13 tax base.
That's accurate only if it's the parent's primary residence and the difference between the assessed value and FMV is less than $1MM. Under prop 19 property taxes can go up significantly in cases where children move into a primary residence that has more than a $1MM gain (not uncommon in many areas).
palanzo
Posts: 1608
Joined: Thu Oct 10, 2019 4:28 pm

Re: Prop 19 CA Inheritance Property Implications

Post by palanzo »

MathIsMyWayr wrote: Mon Nov 23, 2020 2:07 pm
RetiredAL wrote: Mon Nov 23, 2020 1:54 pm
MathIsMyWayr wrote: Mon Nov 23, 2020 1:48 pm
RetiredAL wrote: Mon Nov 23, 2020 1:14 pm
MathIsMyWayr wrote: Mon Nov 23, 2020 9:05 am
+1
While I am all for helping the needy, I despise the shameles sharks circling around tax breaks and subsidies.
Mr Math: Are you saying you pass up all those beneficial deductions from your pay that most of the rest of us take as pre-tax, like healthcare, 401k and kin, IRAs, ect? If so, you are a very rare breed!
I have no problem in taking advantage of the benefits intended and designed for everybody in a particular situation in which I happen to be. Bill Gates has every right to 401k, Social Security, Medicare... But I will be quite unhappy if he manipulates his income to take an unfair advantage of ACA subsidies, etc. Somebody has to pay for those benefits. If opposition gains strength, we may see changes and those needy may hurt by the action of the greedy. I have no objection to a prop 13 benefit for Jobs' residence unless there is any provision against. But I am against such a benefit extended to his vacation homes, vacation homes for anybody. Are you going to line up for a soup kitchen to save money. I don't see any difference in taking unfair advantages.
Do note I edited my post while you were replying to included: Or deducting 401K/IRA at 22% while working, the retiring and converting to ROTH at 12%.
"Official" reasons for enrolling in 401k (isn't intended and designed for?):
1. Save for retirement with a blessing of the government, i.e., people. Taking care of poor old people will be on the general population.
2. Save taxes. Save taxes on contribution when you are in relatively high tax brackets and pay lower taxes on withdrawal during retirement.

I am not familiar with finance, but I believe Roth conversion was added later and available to everybody. I don't think minimizing taxes is unethical.
Are you aware that a 401k is not available for everybody. Are you are taking your healthcare costs before tax? Many cannot including myself. You are taking advantage of a benefit. Just like others take advantage of the benefits Prop 13 and Prop 19 provide.
MathIsMyWayr
Posts: 2476
Joined: Mon Mar 27, 2017 10:47 pm
Location: CA

Re: Prop 19 CA Inheritance Property Implications

Post by MathIsMyWayr »

palanzo wrote: Mon Nov 23, 2020 4:25 pm Are you aware that a 401k is not available for everybody. Are you are taking your healthcare costs before tax? Many cannot including myself. You are taking advantage of a benefit. Just like others take advantage of the benefits Prop 13 and Prop 19 provide.
Well, 401k is open to everybody, but an employer does not have to provide one. Again, same story for pre-tax healthcare costs. Do you know that payment of health insurance premium of a dependent from your pocket is not an eligible expense for healthcare FSA reimbursement?
palanzo
Posts: 1608
Joined: Thu Oct 10, 2019 4:28 pm

Re: Prop 19 CA Inheritance Property Implications

Post by palanzo »

MathIsMyWayr wrote: Mon Nov 23, 2020 5:33 pm
palanzo wrote: Mon Nov 23, 2020 4:25 pm Are you aware that a 401k is not available for everybody. Are you are taking your healthcare costs before tax? Many cannot including myself. You are taking advantage of a benefit. Just like others take advantage of the benefits Prop 13 and Prop 19 provide.
Well, 401k is open to everybody, but an employer does not have to provide one. Again, same story for pre-tax healthcare costs. Do you know that payment of health insurance premium of a dependent from your pocket is not an eligible expense for healthcare FSA reimbursement?
That is semantics. I said a 401k is not available to everybody and that is true. Whether it's because an employer does not make it available or for some other reason is irrelevant.

“Roughly half of all households are offered work-based retirement plans at their current jobs,” researchers at the Stanford Center on Longevity point out in a 2018 report, “Seeing Our Way to Financial Security in the Age of Longevity.” So that means half of households do not have a 401k available.

The point remains. You are taking advantage of a benefit. Just like others take advantage of the benefits Prop 13 and Prop 19 provide.

People should not be so quick to condemn the actions of others when they themselves are doing the same thing in a different area.
MathIsMyWayr
Posts: 2476
Joined: Mon Mar 27, 2017 10:47 pm
Location: CA

Re: Prop 19 CA Inheritance Property Implications

Post by MathIsMyWayr »

palanzo wrote: Mon Nov 23, 2020 6:16 pm
MathIsMyWayr wrote: Mon Nov 23, 2020 5:33 pm
palanzo wrote: Mon Nov 23, 2020 4:25 pm Are you aware that a 401k is not available for everybody. Are you are taking your healthcare costs before tax? Many cannot including myself. You are taking advantage of a benefit. Just like others take advantage of the benefits Prop 13 and Prop 19 provide.
Well, 401k is open to everybody, but an employer does not have to provide one. Again, same story for pre-tax healthcare costs. Do you know that payment of health insurance premium of a dependent from your pocket is not an eligible expense for healthcare FSA reimbursement?
That is semantics. I said a 401k is not available to everybody and that is true. Whether it's because an employer does not make it available or for some other reason is irrelevant.

“Roughly half of all households are offered work-based retirement plans at their current jobs,” researchers at the Stanford Center on Longevity point out in a 2018 report, “Seeing Our Way to Financial Security in the Age of Longevity.” So that means half of households do not have a 401k available.

The point remains. You are taking advantage of a benefit. Just like others take advantage of the benefits Prop 13 and Prop 19 provide.

People should not be so quick to condemn the actions of others when they themselves are doing the same thing in a different area.
Please read carefully. I am all for helping seniors staying in their places. However, I am against to extending these worthy benefits to their descendants for them to line their pockets. Same for other benefits and subsidies intended for the truly needy, but not for manipulators. I am all for helping the needy.
EnjoyIt
Posts: 4943
Joined: Sun Dec 29, 2013 8:06 pm

Re: Prop 19 CA Inheritance Property Implications

Post by EnjoyIt »

palanzo wrote: Mon Nov 23, 2020 6:16 pm
MathIsMyWayr wrote: Mon Nov 23, 2020 5:33 pm
palanzo wrote: Mon Nov 23, 2020 4:25 pm Are you aware that a 401k is not available for everybody. Are you are taking your healthcare costs before tax? Many cannot including myself. You are taking advantage of a benefit. Just like others take advantage of the benefits Prop 13 and Prop 19 provide.
Well, 401k is open to everybody, but an employer does not have to provide one. Again, same story for pre-tax healthcare costs. Do you know that payment of health insurance premium of a dependent from your pocket is not an eligible expense for healthcare FSA reimbursement?
That is semantics. I said a 401k is not available to everybody and that is true. Whether it's because an employer does not make it available or for some other reason is irrelevant.

“Roughly half of all households are offered work-based retirement plans at their current jobs,” researchers at the Stanford Center on Longevity point out in a 2018 report, “Seeing Our Way to Financial Security in the Age of Longevity.” So that means half of households do not have a 401k available.

The point remains. You are taking advantage of a benefit. Just like others take advantage of the benefits Prop 13 and Prop 19 provide.

People should not be so quick to condemn the actions of others when they themselves are doing the same thing in a different area.
I would gladly eliminate ALL tax decreasing measures in our law books and make taxes simple for everyone and not just those who know how to play the game better. That includes 401ks, Prop 13s, and whatever else is out there. Of course the tax rates would have to go down across the board as well to make up the difference.
A time to EVALUATE your jitters: | https://www.bogleheads.org/forum/viewtopic.php?f=10&t=79939&start=400#p5275418
palanzo
Posts: 1608
Joined: Thu Oct 10, 2019 4:28 pm

Re: Prop 19 CA Inheritance Property Implications

Post by palanzo »

EnjoyIt wrote: Tue Nov 24, 2020 1:13 am
palanzo wrote: Mon Nov 23, 2020 6:16 pm
MathIsMyWayr wrote: Mon Nov 23, 2020 5:33 pm
palanzo wrote: Mon Nov 23, 2020 4:25 pm Are you aware that a 401k is not available for everybody. Are you are taking your healthcare costs before tax? Many cannot including myself. You are taking advantage of a benefit. Just like others take advantage of the benefits Prop 13 and Prop 19 provide.
Well, 401k is open to everybody, but an employer does not have to provide one. Again, same story for pre-tax healthcare costs. Do you know that payment of health insurance premium of a dependent from your pocket is not an eligible expense for healthcare FSA reimbursement?
That is semantics. I said a 401k is not available to everybody and that is true. Whether it's because an employer does not make it available or for some other reason is irrelevant.

“Roughly half of all households are offered work-based retirement plans at their current jobs,” researchers at the Stanford Center on Longevity point out in a 2018 report, “Seeing Our Way to Financial Security in the Age of Longevity.” So that means half of households do not have a 401k available.

The point remains. You are taking advantage of a benefit. Just like others take advantage of the benefits Prop 13 and Prop 19 provide.

People should not be so quick to condemn the actions of others when they themselves are doing the same thing in a different area.
I would gladly eliminate ALL tax decreasing measures in our law books and make taxes simple for everyone and not just those who know how to play the game better. That includes 401ks, Prop 13s, and whatever else is out there. Of course the tax rates would have to go down across the board as well to make up the difference.
I would as well. I would want a guarantee that tax rates would go down and stay down.
EnjoyIt
Posts: 4943
Joined: Sun Dec 29, 2013 8:06 pm

Re: Prop 19 CA Inheritance Property Implications

Post by EnjoyIt »

palanzo wrote: Tue Nov 24, 2020 1:57 am
EnjoyIt wrote: Tue Nov 24, 2020 1:13 am
palanzo wrote: Mon Nov 23, 2020 6:16 pm
MathIsMyWayr wrote: Mon Nov 23, 2020 5:33 pm
palanzo wrote: Mon Nov 23, 2020 4:25 pm Are you aware that a 401k is not available for everybody. Are you are taking your healthcare costs before tax? Many cannot including myself. You are taking advantage of a benefit. Just like others take advantage of the benefits Prop 13 and Prop 19 provide.
Well, 401k is open to everybody, but an employer does not have to provide one. Again, same story for pre-tax healthcare costs. Do you know that payment of health insurance premium of a dependent from your pocket is not an eligible expense for healthcare FSA reimbursement?
That is semantics. I said a 401k is not available to everybody and that is true. Whether it's because an employer does not make it available or for some other reason is irrelevant.

“Roughly half of all households are offered work-based retirement plans at their current jobs,” researchers at the Stanford Center on Longevity point out in a 2018 report, “Seeing Our Way to Financial Security in the Age of Longevity.” So that means half of households do not have a 401k available.

The point remains. You are taking advantage of a benefit. Just like others take advantage of the benefits Prop 13 and Prop 19 provide.

People should not be so quick to condemn the actions of others when they themselves are doing the same thing in a different area.
I would gladly eliminate ALL tax decreasing measures in our law books and make taxes simple for everyone and not just those who know how to play the game better. That includes 401ks, Prop 13s, and whatever else is out there. Of course the tax rates would have to go down across the board as well to make up the difference.
I would as well. I would want a guarantee that tax rates would go down and stay down.
For that to happen we need to eliminate waste as well as special interest group subsidies. Unfortunately so many of us have these "pet projects" we want to sponsor and want to force others to pay into as well. And now we are back to the same complex tax structure with weird propositions and tax credits.

BTW, that is why I like the idea of a consumption tax on all non essential spending. This would exclude food and medicine. Everything else gets taxed by how much you spend. Poor people would spend less on non essential items and would therefor be taxed almost nothing while rich people would spend significnalty more and be taxed more. There would be no personal tax filings as all taxes would be paid at point of purchase. That wold essentially eliminate much of the IRS and tax preparers of the US cutting the cost significantly.
A time to EVALUATE your jitters: | https://www.bogleheads.org/forum/viewtopic.php?f=10&t=79939&start=400#p5275418
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