BILL ANALYSIS
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|SENATE RULES COMMITTEE | SB 565|
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UNFINISHED BUSINESS
Bill No: SB 565
Author: Migden (D), et al
Amended: 8/25/05
Vote: 21
SENATE VOTES NOT RELEVANT
ASSEMBLY FLOOR : 47-28, 8/31/05 - See last page for vote
SUBJECT : Property tax: reappraisal exclusion
SOURCE : Betty Yee, Acting Member, Board of Equalization
DIGEST : Assembly Amendments delete the Senate version of
the bill relating to the CalHome program. This bill now
excludes the transfer of real estate between registered
domestic partners from transfers resulting in the
reappraisal of real property.
ANALYSIS :
Existing law:
1. Requires reassessment of real property to fair market
value upon a change of ownership. Adopts the fair
market value as the new base year value for real
property.
2. Defines "change of ownership" as a transfer of a present
interest in real property, the value of which is
CONTINUED
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substantially equal to the value of the fee interest.
3. Provides numerous specific exclusions to changes in
ownership.
4. Excludes interspousal transfers and transfers between
parents and children from a change of ownership.
5. Provides that numerous transfers of ownership interests
in a legal entity are not considered transfers of the
real property of the legal entity. Requires that
subsequent transfers of ownership interests be tracked
so that when any person acquires more than 50 percent of
the interests in the entity, a change of ownership is
deemed to occur for all of the real property owned by
the entity.
This bill:
1. States legislative intent to guarantee equality for all
Californians, regardless of gender or sexual
orientation, and to protect Californians from
potentially severe economic and social consequences
following life crises.
2. Provides that a change of ownership for property tax
purposes excludes specific transfers between registered
domestic partners (RDPs). Includes transfers to trusts,
at death, in connection with property settlements upon
dissolution of RDPs, of co-ownership interests, and
distributions of a legal entity's property to a RDP, or
former RDP, in exchange for the interest of the RDP in
the legal entity in connection with a property
settlement or dissolution of a RDP.
3. Is effective commencing with the lien date for fiscal
year 2006-07.
4. Provides for no reimbursement to local governments for
any property tax revenue lost pursuant to this bill.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
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BOE staff estimates that the property tax revenue loss from
this bill will be approximately $865,000 for each fiscal
year.
SUPPORT : (Verified 8/31/05)
Betty Yee, Acting Member, Board of Equalization (source)
American Federation of State, County, and Municipal
Employees, AFL-CIO
Equality California
ARGUMENTS IN SUPPORT : The author's office asserts that
RDPs experience unequal treatment with regard to property
reassessments following inter-domestic partner transfers
and that this bill will eliminate the inequality by
excluding inter-domestic partner's transfers from creating
a change in ownership. Proponents state that this bill
eliminates one of the many legally entrenched forms of
economic discrimination that continue to confront gay,
lesbian and bisexual Californians. Proponents proffer the
following example: "Currently, if one of two domestic
partners owns a home and dies, the property cannot usually
be transferred to the surviving partner without a
devastating property tax liability," and state that this
bill rectifies this existing disparity.
BOE amended two regulations, Property Tax Rule 462.040,
"Change in Ownership - Joint Tenancies," and Property Tax
Rule 462.240, "The Following Transfers Do Not Constitute a
Change in Ownership," in November 2003. The Property Tax
Rule changes existing law to cover transfers of real
property between RDPs through intestate succession
following death of one RDP as well as the use of estate
planning tools by RDPs to become original transferor status
under joint tenancy. The Property Tax Rule changes are
effective for transfers made on or after November 13, 2003.
The transfers described in the Property Tax Rule changes
are included among the transfers specifically authorized
under this bill.
ASSEMBLY FLOOR :
AYES: Arambula, Baca, Bass, Berg, Bermudez, Calderon,
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Canciamilla, Chan, Chavez, Chu, Cohn, Coto, De La Torre,
Dymally, Evans, Frommer, Goldberg, Hancock, Jerome
Horton, Jones, Karnette, Klehs, Koretz, Laird, Leno,
Levine, Lieber, Liu, Matthews, Montanez, Mullin, Nation,
Nava, Negrete McLeod, Oropeza, Parra, Pavley,
Ridley-Thomas, Ruskin, Saldana, Salinas, Torrico, Umberg,
Vargas, Wolk, Yee, Nunez
NOES: Aghazarian, Benoit, Blakeslee, Bogh, Cogdill,
DeVore, Emmerson, Harman, Haynes, Houston, Huff, Keene,
La Malfa, La Suer, Leslie, Maze, McCarthy, Mountjoy,
Nakanishi, Niello, Plescia, Sharon Runner, Spitzer,
Strickland, Tran, Villines, Walters, Wyland
NO VOTE RECORDED: Daucher, Garcia, Shirley Horton,
Richman, Vacancy
JJA:mel 9/1/05 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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