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Passing Low Property Taxes To Your Kids

TedTed
edited August 2018 in Off-Topic
FYI: Actors Jeff and Beau Bridges, along with their sister, own a four-bedroom Malibu home with access to a semi-private beach and panoramic views of the Pacific Ocean.

They inherited it from their mother, who had owned the house since the late 1950s when their father, Lloyd Bridges, first made it big in Hollywood.

Earlier this year, they advertised the “stunning Malibu dream” for rent at $15,995 a month — a hefty price tag for a house that has a property tax bill of less than half that.

Like other descendants of a generation of California homeowners, the Bridges siblings enjoy a significant perk that keeps their property tax bill low. Part of that is thanks to Proposition 13, which has strictly limited property tax increases since 1978. But they also benefit from an additional tax break, enacted eight years later, that extended those advantages to inherited property — even inherited property that is used for rental income.
Regards,
Ted
http://www.latimes.com/politics/la-pol-ca-california-property-taxes-elites-201808-htmlstory.html

Comments

  • Here's the LATimes link:
    http://www.latimes.com/politics/la-pol-ca-california-property-taxes-elites-201808-htmlstory.html

    At least there was mention, albeit just a single sentence, about the real problem with Prop 13 and "inheriting" property, viz. commercial owners "live" forever:
    The assemblyman was bothered that under Proposition 13 companies could maintain low property tax bills on their buildings forever even as management — in effect, the company’s owners — changed over time.
    There's little doubt that allowing children to retain the old assessment value when they inherit property has the bigger effect on wealth disparity, and thus raises more public ire. But if you follow the money, it's commercial real estate where California is losing more tax revenue. $11B/year, according to this other LATimes article:

    http://www.latimes.com/politics/essential/la-pol-ca-essential-politics-updates-the-effort-to-raise-taxes-on-commercial-1523046304-htmlstory.html
  • TedTed
    edited August 2018
    @msf: Thanks, forgetting link has happened a lot lately, maybe that's telling me something !
    Regards,
    Ted:)
    P.S. One of the things on my bucket list was to own Malibu beachfront property. Never got around to executing the plan.
  • beebee
    edited August 2018
    @Ted...Maybe a week here ...you can host ...the Next (First) MFO reunion? Looks roomy enough for all of us:
    https://vrbo.com/4833636ha
  • Here's a bit more on this from Kathleen Pender, in the SF Chronicle.
  • @Old_Joes Thank for linking Kathleen's slant on the subject. Over the years I have linked dozens of her articles here at MFO and FundAlarm. As a financial writer I have found she does her homework..
    Regards,
    Ted:)
  • Yes sir, she is pretty good.

    OJ
  • She cites the ca.gov data for 2016-2017 showing that 62,251 homes were inherited without being reassessed. (That's in Table F, column (25) on p. 23, pdf p. 28.)

    This is very useful. It shows that 7,027 of those homes, or about 11% of the homes were in LA county. The original article has a graphic with text saying that this cost LA County over $280M last year. Extrapolating (multiplying by 9), this law cost California a bit more than $2.5B.

    That's nothing to sneeze at, but still peanuts compared to the break that companies owning property ($11B) get. That remains the elephant in the room. As Ms. Pender notes, this may be addressed in the 2020 election.
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