What Commercial Investors Need to Know About California Real Estate Law Loopholes

As a commercial property investor in California, you want to make sure that your investments are properly protected. The real estate market in the state of California is dramatically affected by loopholes like Proposition 13. Understanding these laws could ultimately help you both protect your investments now and help you invest smartly in the future. Here are some of the common loopholes that exist in California real estate law.

California Real Estate Law Loopholes for investors

The Tax Loophole California Real Estate Law

One of the biggest loopholes in buying commercial real estate in California is in Proposition 13.

This specific proposition was in place to protect people who buy or rent land for living or farming purposes.

Currently, large corporations are acquiring tax cuts through this proposition that is taking money from the public who needs it to properly function.

Quickly growing companies have learned to not allow for a business transfer to happen where one person to own a majority interest in that company at any one time. This is because if they keep from that happening, a reassessment by the state doesn’t have to happen on the company and their taxes won’t be adjusted accordingly.

Knowing how to get around this one law has caused a big problem for the real estate system in the state of California.

Big VS. Small Companies

Proposition 13’s commercial property loophole is a big problem for California real estate law, smaller investors, and business owners.

Larger companies have a huge advantage over smaller corporations and startups. In California specifically, big companies often pay insurance rates closer to what they were 40 years ago.

This is a big jump from what smaller startups pay which can be up to 20 times as much that amount.

Many people believe that this is the opposite of what it should be. They think that the smaller entities should be able to get these protections and cuts in their rates.

These protections are allowing some big Wall Street investors to take advantage of the system and this loophole. This translates into billions of dollars in tax breaks to these wealthy investors who have exploited this loophole.

Closing the Loophole

Closing the proposition 13 loophole would be to the benefit to everyone in the state of California.

The billions of recovered money could go towards servicing and benefiting the people of the area. An option is to put some of the money into the public school system.

Another way that money could help is by going into the public parks, health and medical services, libraries, and the streets.

Regular homeowners, renters, and smaller investors would still be able to benefit from the proposition.

Protect Your Investment

California Real Estate Law is a complicated matter that involves a few problematic loopholes.

Knowing the intricacies of commercial real estate law is important. This will help you protect your investment, especially when it comes to taxes.

The Law Office of Lisa Wills works hard to help you understand your rights and all the complex rules of commercial real estate requirements.

Take a look at other real estate legal tips on our blog.

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