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Entries in property tax (3)

Monday
Nov032014

Los Angeles County Ballot: "P" is for Parks, Prevention and Protection – or Profligacy?

Litigation Los AngelesEnvironmental Litigation  

Stephen T. Holzer
818.907.3299

 

The only initiative that affects all of Los Angeles County (there are 33 local/city ballot measures and six California propositions), Measure P covers a diverse range of interests.

The full title of Measure P is: Safe Neighborhood Parks, Gang Prevention, Youth/Senior Recreation, Beaches/Wildlife Protection Measure. The initiative seeks to ensure continued funding for these listed concerns via a $23 tax per parcel of land in Los Angeles County.

Proposition P aims to replace the expiring Proposition A, which was approved in 1992. Prop A generated $52M per year. The new measure will generate slightly more ($54M annually) for 30 years beginning July 1, 2015. The funds will be allocated as follows: 

  • 30 percent to maintain and develop open spaces, i.e. trails, mountains, rivers, wetlands and streams;

  • 20 percent to neighborhood parks and park projects, fields, gyms, playgrounds and restrooms;

  • 15 percent to beaches and clean water projects in beaches and parks;

  • 15 percent to maintain or improve existing and future parks;

  • 10 percent to increase parks, open spaces and recreational areas in disadvantaged communities;

  • 5 percent to nonprofit or public agencies that work with youth and seniors, those that plant trees or prevent graffiti, or those that work to increase public access to rivers and streams; and

  • The remaining 5 percent is allocated to administration. 

There seems to be few sources of opposition to Proposition P, but this side includes The Los Angeles Times and The Sierra Club. The editorial board at The Times decries the procedure employed to put P on the ballot, citing a secretive process excluding public hearings or a "needs assessment:"

It's irresponsible to begin divvying up more than $50 million each year without a clear sense of what the county and cities need most and how the money can most effectively be spent.

Additionally, The Times says explanations are needed, particularly regarding: 

  • Whether or not this tax will supplant some work covered by the storm water fee, given that some  Prop P funds are allocated to clean water projects;

  • Whether or not Prop P decreases the need for another parcel tax approved last year for districts around Hollywood Hills and the Santa Monica Mountains (which was also written to replace funds from the expiring Proposition A);

  • The change from a square foot tax formula to a flat per parcel tax. 

Support for Measure P is much greater. Organizations like AARP California, the City of Los Angeles, The Conservation Fund and many others are all in favor of voting yes because: 

  • City, state and federal budgets for parks and recreation has been cut – Prop P provides continuity of funding from an assessment already in place.

  • All funds remain local. The money generated stays in LA County and can only be allocated to the uses outlined in the measure. 

Whether or not Measure P will pass is anyone's guess, as it doesn't seem to be a priority question in polling.

Stephen T. Holzer is an Environmental and Business Litigation Attorney. Contact him directly via email: sholzer@lewitthackman.com, or by phone  at 818.907.3299 for more information. 

 

Disclaimer:
This Blog/Web Site is made available by the lawyer or law firm publisher for educational purposes only, to provide general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand there is no attorney client relationship between you and the Blog/Web Site publisher. The Blog/Web Site should not be used as a substitute for obtaining legal advice from a licensed professional attorney in your state.

Friday
Oct032014

Cutting the BS(A): California's Prop 2 Re the Budget Stabilization Account

Litigation Los AngelesEnvironmental Litigation  

Stephen T. Holzer
818.907.3299

 

In our second blog examining the propositions we'll be seeing on the election ballot November 4th, we'll take a look at California's Proposition 2, or the Rainy Day Budget Stabilization Fund Act (formerly known as Proposition 44).

If you haven't guessed already, this prop is about the state's money, and the serious lack thereof.

Back in 2004, Californians voted to establish a Budget Stabilization Account (BSA), in which the government was expected to allot three percent of revenues from the general fund. The BSA was supposed to be a savings account for those years in which California experienced budget shortfalls. In retrospect, given the consistent downward spiral into debt, the BSA proved to be a tad optimistic.

California's Proposition 2 may be an acknowledgement of reality.  Among other things, the primary goals of this measure are to: 

  1. California Rainy Day FundCut the 2004 BSA deposit requirement in half. The state will be required to put 1.5 percent of revenues into the fund;

  2. Increase the funding with capital gains taxes if tax revenues exceed eight percent of general fund revenues;

  3. Require annual deposits to the BSA to begin no later than October 1, 2015; and to continue annually until the total BSA equals 10 percent of general fund revenues;

  4. Starting next fiscal year and ending fiscal year 2029-30, 1.5 percent of state revenues  must be used to pay for other obligations such as budgetary loans and unfunded state-level pension plans. (Essentially, of the three percent initially allotted to the BSA in 2004, half continues to be deposited into the BSA while the other 1.5 percent is allotted to other state debts.)

  5. Require the governor to declare a fiscal emergency before allowing the state to suspend or reduce annual BSA deposits

  6. Establish the Public School System Stabilization Account (PSSSA) – funding would come from capital gains tax revenues if they exceed eight percent of general fund revenues. The PSSSA is meant to fund K-14 education needs when the state runs out of educational funding from other revenue sources.

There seems to be wide support for Prop 2, and it transcends the usual party lines. Groups for include Governor Jerry Brown (who signed the bill August 11th), the California Chamber of Commerce and both the state's Democratic and Republican Parties.

Opposition to Proposition 2 seems to be spearheaded primarily by educational groups. Members of the opposition argue that it limits local school districts to saving their own funding down to a few weeks of district expenses. Additionally, the state regularly skims $5B or more annually from school-allocated property taxes, which California officials have yet to pay back. In fact, $10B in deferred payments from the state have forced school districts to cut programs and dip into their local financial reserves.

President of the California State Board of Education, Dr. Michael Kirst, rebuts with the argument that stabilizing the state economy is the best way to protect schools from further drains on the education budget.

The heart of the matter is this: It seems almost everyone wants a bigger Rainy Day Fund for California – the question is whether or not the cost for this will be borne by our schools.

 

Stephen T. Holzer is an Environmental and Business Litigation Attorney. Contact him via email: sholzer@lewitthackman.com, or by phone: 818.907.3224. 

 

Disclaimer:
This Blog/Web Site is made available by the lawyer or law firm publisher for educational purposes only, to provide general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand there is no attorney client relationship between you and the Blog/Web Site publisher. The Blog/Web Site should not be used as a substitute for obtaining legal advice from a licensed professional attorney in your state.

Thursday
Jul312014

Tax Implications: Selling Your Home

Gift Tax AttorneyEstate Tax Minimization

 

by Kira S. Masteller
818.907.3244

 

 

If you've lived at a property for at least two out of the five years before you sell your home, you can consider that property your primary residence or "main home", per the Internal Revenue Service.

The IRS will then figure in the selling price, amount realized, and the adjusted basis (net cost after depreciation deductions and capital expenditures) to determine your gains or losses on the sale.

Special circumstances may qualify you for a partial exclusion if you don't meet ownership/residence tests.

 

Tax Benefits for Selling Your Primary Residence

If you have gained, the profits from the home's sale are generally excluded from tax for up to $500K for married couples filing joint returns and $250K for individuals. There are tests to qualify for this exclusion: 

  1. Primary Residence Ownership: You had to have owned the home for at least two of the last five years.

  2. Use as a Primary Residence: You had to have lived at the property for a 24 month period in the five years prior to the date of sale.

  3. Prior Exclusions: You qualify so long as you did not use the $500K/$250K exclusion within the last 24 months. In other words, you can keep employing these exclusions for selling a series of primary residences every two years.

  4. Married Couples: At least one spouse must qualify for the exclusion, and both spouses must have used the property as a primary residence as outlined above. 

Special circumstances like divorce, change of health or certain unforeseen events may help you qualify for a partial exclusion, if you do not meet the 24 month ownership or residence tests.

You may also be able to extend the exclusions to a second home, if you convert it to a primary residence before selling, though the laws governing this practice have severely limited property owners from doing this since 2008. Still, you may be able to exclude 10 percent of the your gains when selling second or vacation homes.

 

Home Sales and Tax Obligations

The remainder of your profits (on sales after January 1, 2013) may be subject to the Net Investment Income Tax (NIIT), at a rate of 3.8 percent, dependent on factors like the seller's net investment income. The NIIT affects individuals as well as most trusts and estates.

First time home buyer credits may need to be repaid when you sell, depending on when you purchased the property.

Previously, you may have postponed tax obligations on home sales by using the proceeds to buy another primary residence – deferring what you owed the IRS under what was called rollover rules. The law changed in 1997, and rollover rules will no longer apply.

 

Other IRS Considerations

You must report any gains that exceed the exclusion amounts above, though we recommend you report all real property sales anyway. If you received Form 1099-S, report it.

Kira S. Masteller is a Trusts & Estate Planning Attorney at our firm. Contact her via email: kmasteller@lewitthackman.com, or by phone: 818.907.3244.

 

Disclaimer:
This Blog/Web Site is made available by the lawyer or law firm publisher for educational purposes only, to provide general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand there is no attorney client relationship between you and the Blog/Web Site publisher. The Blog/Web Site should not be used as a substitute for obtaining legal advice from a licensed professional attorney in your state.

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