All Forum Posts by: Steven Rich

I recently published a blog post on a California real estate site using the above title. 

However, because I am the author, BiggerPockets won't allow me to include the URL link here. They call it "Self-Promotion" which is illegal here.

Send me a private message here so I can reply with the URL link.

Sorry to all of you for the trouble accessing this informative online article.

Steven Rich, MBA 

Today is the first day that Californians can apply for a permit to split their single-family residential lot into two in order to develop up to three more housing units.

Several options exist, including tearing down the primary residential home and building two duplexes. Or, keeping the primary home and building a smaller “Granny Flat” on the first lot and building a duplex on the second lot.

This blog post uploaded today explains: 

How Californians Can Build 2 Duplexes on One Lot in 2022

Experts claim that 410,000 California lots are “market feasible” for a split and development.

Greg,

Thanks for the new link. It's clearer than the Gibson & Dunn summary.

Greg, Yes, that is the link to the Gibson & Dunn law firm's summary of SB 9 and SB 10. 

I am surprised that Bigger Pockets let you post a URL of anything outside of a Bigger Pocket's article. I was chastised in the past by Bigger Pockets staff about posting URLs from outside sources and penalized. They deleted all my articles for using outside URLs as sources. One of their staff members sent me a message never to post any outside sources' URLs in the future. 

@Matt Devincenzo The giant law firm Gibson and Dunn (5 offices in California) recently published their legal opinion about SB 9 and made these conclusions:

The SB 9, California Housing Opportunity and More Efficiency (“HOME”) Act allows homeowners to subdivide their current residential lot or build a duplex.

Split lots: A housing project under SB 9 qualifies to split a lot under these requirements:

• Lot size minimum: Each parcel cannot be lesser than 40% of the original lot size; Each parcel must be no less than 1,200 square feet unless a local ordinance permits a smaller size;
• Residential use: The parcel can only be used as a residence;
• Prior subdivision: The homeowner didn’t subdivide an adjacent lot into a lot split under SB 9; and
• Applicants must sign an affidavit stating the intention to live in one of the units as the principal residence for at least three years after approval of the split.

Faster project process: Administrative approval of duplex residential development on a single-family lot without discretionary review or hearings.

Again, I can't include non-Bigger Pockets URL links here, but you will find it on their website. It looks pretty clear that many California homeowners can meet these requirements. 

According to the U.C. Berkeley Terner Center report (July 2021) showing every California County, in L.A. County 127,000 lots qualify for a split and development as market feasible, and 54,500 lots in San Diego County too. You can Google the Terner Center report which is very informative.

I didn't add up all the counties in California, as I wrote my article for a San Diego property mgmt. company. But, it looks like hundreds of thousands of lots are market feasible.   

A new California law takes effect on January 1, 2022. It allows every homeowner to split their single-family home lot into two and develop 3 more units. For instance, a homeowner keeps the home on one lot and purs a duplex on the new lot. Or, demolishes the home and put a duplex x on each lot for 4 units.

I just published a 2,000-word article about California's new laws SB 9 and SB 10 which begin on January 1, 2022. 

I wrote the article for the WeLease Blog (a San Diego Property Mgmt. Company).

I can't post the URL link here (not allowed) but can send it to anyone who wants to read it.  

Steven Rich, MBA

I just published a 2,000-word article about California's new laws SB 9 and SB 10 which begin on January 1, 2022. 

Thousands of California single-family home lots can split into two lots and develop up to 3 more housing units for a maximum of four units.

I wrote the article for the WeLease Blog (a San Diego Property Mgmt. Company).

I can't post the URL link here (not allowed) but can send it to anyone who wants to read it.  

Steven Rich, MBA

Scott, good point. The best tactic is to wait until you die and your heirs use the stepped up basis to side step the deferred taxes when they inherit the properties. I've heard of estates using that tactic to save $ millions in deferred taxes for the heirs. 

Michael, You are correct. I knew of one person who did 1031 Exchanges multiple times until he moved into a multiplex he bought and decided to live there and convert it into a single family home. After living there many years, he sold it and used the tax exemptions for the sale of a primary residence and all of the deferred accumulated taxes were forgiven. He saved a lot of money using that method. 

I personally sold real estate and bought other income producing properties using the 1031 Like-Kind Exchange process back in the 1980s. The system worked well for me and for the U.S. economy. That's because it requires re-investing the sales (exchange) proceeds into buying more real estate. 

It's not a loophole allowing a taxpayer to "keep the profits tax-free". Quite the opposite. 

It will be a big loss to the U.S. real estate industry to lose this tax-deferral tool to keep buying more real estate.