Blog #proposition 15


06Oct

Proposition 15 proposes to remove the Prop 13 protection on commercial properties allowing for annual reassessment and potential drastic property tax increases.

The California Business Properties Association (CBPA) has developed a set of take action now resources on the Vote No on Prop 15 website.  Included are social media resources, sample newsletters, letters to the editor guide, share your story, volunteer to text voters no on prop 15, and no on Prop 15 flyers in multiple languages.  A few of the key points: Prop 15 increases the cost of living, threatens to make homeownership more expensive and increases rents on small businesses.  The site also includes some in the flaws in the property tax hike initiative, ways to donate and a chance to read the initiative for yourself.  See that and more at:  Vote No On Prop 15.

Read More  
09Sep

With the possible passage of Proposition 15, would a Sale-Leaseback be good way to avoid paying a large property tax increase? With 1031 exchanges also possibly going away are Opportunity Zones the answer?

A new survey released points potential trouble for Proposition 15.  An opinion survey by Probolosky Research shows 48.8% plan to vote against it, 41% for it and 10.3% are undecided.

Although this is goods news, there is still a lot of time between now and election day and a lot can change.  Couple with that, Biden’s overtures that he might eliminate the tax deferred 1031 exchange, Commercial Real Estate Property owners still have a lot at stake this election.

One option to Commercial Property, Industrial and Warehouse owners who occupy their building is a sale-leaseback.  A sale-leaseback not only allows the owner to enjoy an infusion of cash, but rental payments under the lease are usually fully tax deductible.

Aside from a 1031 exchange, another option to Commercial and Industrial Real Estate owners is deferring a capital gain to an opportunity zone fund.  To learn more, see this post: Opportunity Zones: A Commercial Real Estate Capital Gains Tax Savings Instrument

To discuss further or anything else, Contact Me here.

Read More  
07Aug

We will be voting on Prop 15 in November, if passed your commercial real estate property tax may go up and no longer have Proposition 13 protection.

As I mentioned back in April, we will be voting in California on the Split Roll Tax in November, now called Proposition 15.  If you’re not sure what “Split Roll” refers to, see my post: Split Roll Tax And What It Means For California Commercial Real Estate.

A more recent update from AIR points out only a simple majority is required for the measure to pass.  Recent polls indicate its likely to be a tight race, 53% of likely voters were in favor per the Public Policy Institute.  Reassessments could begin 2022-2023 but a recent Press Telegram article indicated the assessor might not have the funds and resources necessary to implement it among other issues.

There is an exemption for properties less than $3 million, however owners who have multiple commercial buildings in excess of $3 million are not exempt.  Properties would be reassessed at least once in every 3 years and the 1% base tax remains in place.

For more information, see the post on A.I.R Forms Practitioner: https://airpractitioner.com/2020/08/05/californias-controversial-split-roll-initiative-prop-15-the-basics/

Read More