BILL NUMBER: SB 565	AMENDED
	BILL TEXT

	AMENDED IN ASSEMBLY  JUNE 20, 2005
	AMENDED IN ASSEMBLY  JUNE 9, 2005
	AMENDED IN SENATE  APRIL 26, 2005

INTRODUCED BY   Senator Migden
   (Principal coauthor: Assembly Member Nunez)

                        FEBRUARY 18, 2005

   An act to amend Section 62 of the Revenue and Taxation Code,
relating to taxation, to take effect immediately, tax levy.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 565, as amended, Migden.  Property tax reappraisal exclusion:
domestic partners.
   The California Constitution generally limits ad valorem taxes on
real property to 1% of the full cash value of that property. For
purposes of this limitation, "full cash value" is defined as the
assessor's valuation of real property as shown on the 1975-76 tax
bill under "full cash value" or, thereafter, the appraised value of
that real property when purchased, newly constructed, or a change in
ownership has occurred. Existing law excludes from the definition of
"change in ownership" specified transfers of real property between
family members and transfers made for the purpose of perfecting title
to property.
   This bill would, commencing with the lien date for the 2006-07
fiscal year, exclude from the definition of "change in ownership" any
transfer of property between registered domestic partners. 
This bill would also require that 2 specified regulations relating to
changes in ownership of real property be applied retroactively to
July 1, 2003, and make findings regarding the public purpose served
by this provision. 
  Section 2229 of the Revenue and Taxation Code requires the
Legislature to reimburse local agencies annually for certain property
tax revenues lost as a result of any exemption or classification of
property for purposes of ad valorem property taxation.
   This bill would provide that, notwithstanding Section 2229 of the
Revenue and Taxation Code, no appropriation is made and the state
shall not reimburse local agencies for property tax revenues lost by
them pursuant to the bill.
  This bill would take effect immediately as a tax levy.
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.
   The Legislature finds and declares all of the following:
   (a) It is the intent of the Legislature in enacting this act to
guarantee equality for all Californians, regardless of gender or
sexual orientation, and to further the state's interests in
protecting Californians from the potentially severe economic and
social consequences of abandonment, separation, the death of a
partner, and other life crises.
   (b) To this end, the Legislature has enacted various statutes in
an attempt to move California closer to fulfilling the promises of
inalienable rights, liberty, and equality contained in Sections 1 and
7 of Article I of the California Constitution.
   (c) For example, in 2002, the Legislature enacted Chapter 447 of
the Statutes of 2002, effective July 1, 2003, which granted
registered domestic partners the same intestate succession rights
with respect to separate property as spouses. A liberal reading of
Chapter 447 was intended by the Legislature and this act builds upon
that framework.
   (d) Many lesbian, gay, and bisexual Californians continue to face
economic discrimination, despite forming lasting, committed, and
caring relationships with persons of the same sex according to the
laws of this state. These couples build lives together, as do
spouses, by purchasing property and creating and operating family
businesses.  Expanding the rights of registered domestic partners
with respect to property ownership would further California's
interests in promoting family relationships and protecting family
members during life crises, and would reduce discrimination on the
bases of sex and sexual orientation in a manner consistent with the
California Constitution.
  SEC. 2.  Section 62 of the Revenue and Taxation Code is amended to
read:
   62.
   Change in ownership shall not include:
   (a) (1) Any transfer between coowners that results in a change in
the method of holding title to the real property transferred without
changing the proportional interests of the coowners in that real
property, such as a partition of a tenancy in common.
   (2) Any transfer between an individual or individuals and a legal
entity or between legal entities, such as a cotenancy to a
partnership, a partnership to a corporation, or a trust to a
cotenancy, that results solely in a change in the method of holding
title to the real property and in which proportional ownership
interests of the transferors and transferees, whether represented by
stock, partnership interest, or otherwise, in each and every piece of
real property transferred, remain the same after the transfer. The
provisions of this paragraph shall not apply to transfers also
excluded from change in ownership under the provisions of subdivision
(b) of Section 64.
   (b) Any transfer for the purpose of perfecting title to the
property.
   (c) (1) The creation, assignment, termination, or reconveyance of
a security interest; or (2) the substitution of a trustee under a
security instrument.
   (d) Any transfer by the trustor, or by the trustor's spouse, or by
both, into a trust for so long as (1) the transferor is the present
beneficiary of the trust, or (2) the trust is revocable; or any
transfer by a trustee of such a trust described in either clause (1)
or (2) back to the trustor; or, any creation or termination of a
trust in which the trustor retains the reversion and in which the
interest of others does not exceed 12 years duration.
   (e) Any transfer by an instrument whose terms reserve to the
transferor an estate for years or an estate for life. However, the
termination of such an estate for years or estate for life shall
constitute a change in ownership, except as provided in subdivision
(d) and in Section 63.
   (f) The creation or transfer of a joint tenancy interest if the
transferor, after the creation or transfer, is one of the joint
tenants as provided in subdivision (b) of Section 65.
   (g) Any transfer of a lessor's interest in taxable real property
subject to a lease with a remaining term (including renewal options)
of 35 years or more. For the purpose of this subdivision, for 1979-80
and each year thereafter, it shall be conclusively presumed that all
homes eligible for the homeowners' exemption, other than
manufactured homes located on rented or leased land and subject to
taxation pursuant to Part 13 (commencing with Section 5800), that are
on leased land have a renewal option of at least 35 years on the
lease of that land, whether or not in fact that renewal option exists
in any contract or agreement.
   (h) Any purchase, redemption, or other transfer of the shares or
units of participation of a group trust, pooled fund, common trust
fund, or other collective investment fund established by a financial
institution.
   (i) Any transfer of stock or membership certificate in a housing
cooperative that was financed under one mortgage, provided that
mortgage was insured under Section 213, 221(d)(3), 221(d)(4), or 236
of the National Housing Act, as amended, or that housing cooperative
was financed or assisted pursuant to Section 514, 515, or 516 of the
Housing Act of 1949 or Section 202 of the Housing Act of 1959, or the
housing cooperative was financed by a direct loan from the
California Housing Finance Agency, and provided that the regulatory
and occupancy agreements were approved by the governmental lender or
insurer, and provided that the transfer is to the housing cooperative
or to a person or family qualifying for purchase by reason of
limited income. Any subsequent transfer from the housing cooperative
to a person or family not eligible for state or federal assistance in
reduction of monthly carrying charges or interest reduction
assistance by reason of the income level of that person or family
shall constitute a change of ownership.
   (j) Any transfer during the period March 1, 1975, to March 1,
1981, between coowners in any property that was held by them as
coowners for all or part of that period, and which was eligible for a
homeowner's exemption during the period of the coownership,
notwithstanding any other provision of this chapter. Any transferee
whose interest was revalued in contravention of the provisions of
this subdivision shall obtain a reversal of that revaluation with
respect to the 1980-81 assessment year and thereafter, upon
application to the county assessor of the county in which the
property is located filed on or before March 26, 1982. No refunds
shall be made under this subdivision for any assessment year prior to
the 1980-81 fiscal year.
   (k) Any transfer of property or an interest therein between a
corporation sole, a religious corporation, a public benefit
corporation, and a holding corporation as defined in Section 23701h
holding title for the benefit of any of these corporations, or any
combination thereof (including any transfer from one entity to the
same type of entity), provided that both the transferee and
transferor are regulated by laws, rules, regulations, or canons of
the same religious denomination.
   (l) Any transfer, that would otherwise be a transfer subject to
reappraisal under this chapter, between or among the same parties for
the purpose of correcting or reforming a deed to express the true
intentions of the parties, provided that the original relationship
between the grantor and grantee is not changed.
   (m) Any intrafamily transfer of an eligible dwelling unit from a
parent or parents or legal guardian or guardians to a minor child or
children or between or among minor siblings as a result of a court
order or judicial decree due to the death of the parent or parents.
As used in this subdivision, "eligible dwelling unit" means the
dwelling unit that was the principal place of residence of the minor
child or children prior to the transfer and remains the principal
place of residence of the minor child or children after the transfer.

   (n) Any transfer of an eligible dwelling unit, whether by will,
devise, or inheritance, from a parent or parents to a child or
children, or from a guardian or guardians to a ward or wards, if the
child, children, ward, or wards have been disabled, as provided in
subdivision (e) of Section 12304 of the Welfare and Institutions
Code, for at least five years preceding the transfer and if the
child, children, ward, or wards have adjusted gross income that, when
combined with the adjusted gross income of a spouse or spouses,
parent or parents, and child or children, does not exceed twenty
thousand dollars ($20,000) in the year in which the transfer occurs.
As used in this subdivision, "child" or "ward" includes a minor or an
adult. As used in this subdivision, "eligible dwelling unit" means
the dwelling unit that was the principal place of residence of the
child or children, or ward or wards for at least five years preceding
the transfer and remains the principal place of residence of the
child or children, or ward or wards after the transfer.  Any
transferee whose property was reassessed in contravention of the
provisions of this subdivision for the 1984-85 assessment year shall
obtain a reversal of that reassessment upon application to the county
assessor of the county in which the property is located. Application
by the transferee shall be made to the assessor no later than 30
days after the later of either the transferee's receipt of notice of
reassessment pursuant to Section 75.31 or the end of the 1984-85
fiscal year.
   (o) Any transfer of a possessory interest in tax-exempt real
property subject to a sublease with a remaining term, including
renewal options, that exceeds half the length of the remaining term
of the leasehold, including renewal options.
   (p) Commencing with the lien date for the 2006-07 fiscal year, any
transfer between registered domestic partners, including, but not
limited to:
   (1) Transfers to a trustee for the beneficial use of a registered
domestic partner, or the surviving registered domestic partner of a
deceased transferor, or by a trustee of such a trust to the
registered domestic partner of the trustor.
   (2) Transfers that take effect upon the death of a registered
domestic partner.
   (3) Transfers to a registered domestic partner or former
registered domestic partner in connection with a property settlement
agreement or decree of dissolution of a registered domestic
partnership or legal separation.
   (4) The creation, transfer, or termination, solely between
registered domestic partners, of any coowner's interest.
   (5) The distribution of a legal entity's property to a registered
domestic partner or former registered domestic partner in exchange
for the interest of the registered domestic partner in the legal
entity in connection with a property settlement agreement or a decree
of dissolution of a registered domestic partnership or legal
separation.   
  SEC. 3.
   (a) The amendments made to Sections 462.040 and 462.240 of Title
18 of the California Code of Regulations that became operative on
November 13, 2003, shall be applied retroactively to July 1, 2003.
   (b) Subdivision (a) furthers a vital public purpose of the state
by ensuring that these regulatory changes made by the State Board of
Equalization are applied uniformly across the state to ease the
administrative burden in applying those rules so that expectations of
taxpayers who relied upon those rules are protected.  
   SEC. 4.     SEC. 3. 
   Notwithstanding Section 2229 of the Revenue and Taxation Code, no
appropriation is made by this act and the state shall not reimburse
any local agency for any property tax revenues lost by it pursuant to
this act.
   SEC. 5.     SEC. 4. 
   This act provides for a tax levy within the meaning of Article IV
of the Constitution and shall go into immediate effect.