BILL NUMBER: SB 559 INTRODUCED
BILL TEXT
INTRODUCED BY Senator Kehoe
FEBRUARY 22, 2007
An act to amend Sections 62 and 5096 of the Revenue and Taxation
Code, relating to taxation, to take effect immediately, tax levy.
LEGISLATIVE COUNSEL'S DIGEST
SB 559, as introduced, Kehoe. Property taxation: change in
ownership: exclusion.
(1) 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. Beginning on January 1, 2006, existing law
excludes from the definition of "change in ownership" transfers of
real property between registered domestic partners.
This bill would also exclude from the definition of "change in
ownership" any transfer of property between registered domestic
partners that occurred on or after January 1, 2000, and any transfer
between nonregistered domestic partners, as defined, that occurred on
or after January 1, 2000, and before January 1, 2007. This bill
would require the assessor to reassess property that was transferred
between these parties during these time periods as if a change in
ownership had not occurred, but only if the transferee submits a
request for reassessment on or before June 30, 2009, as specified.
Any change in the adjusted base year value of that property would be
deemed effective on the first day of the first month following the
month in which the request for assessment is submitted. By requiring
county assessors to reassess this property, this bill would impose a
state-mandated local program.
(2) Existing law requires property taxes to be refunded if, among
other circumstances, the taxes were paid more than once, the taxes
were illegally assessed or levied, or paid on an assessment that was
in excess of the value of the property, as specified.
This bill would also require a refund of property taxes paid on
property that is required to be reassessed under the bill.
(3) The California Constitution requires the state to reimburse
local agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
This bill would provide that, if the Commission on State Mandates
determines that the bill contains costs mandated by the state,
reimbursement for those costs shall be made pursuant to these
statutory provisions.
(4) 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.
(5) 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
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 1999, the Legislature enacted Chapter 588 of
the Statutes of 1999, effective January 1, 2000, which established a
state registry of domestic partnerships. 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. In
2003, the Legislature enacted Chapter 421 of the Statutes of 2003,
effective January 1, 2005, which extended to registered domestic
partners nearly all of the rights and responsibilities of spouses
under state law that had not been provided by prior domestic partner
legislation. And, in 2005, the Legislature enacted Chapter 417 of the
Statutes of 2005, which amended Section 62 of the Revenue and
Taxation Code concerning valuation and taxation of real property, to
exclude property transfers between registered domestic partners from
the definition of "change in ownership" for purposes of property tax
reassessment. The Legislature has intended a liberal reading of these
laws and this act builds upon this existing framework.
(d) Although it intended to protect family members during life
crises and to reduce discrimination on the bases of sex and sexual
orientation in a manner consistent with the California Constitution,
Chapter 417 of the Statutes of 2005 did not expressly exempt
transfers from one registered domestic partner to the other domestic
partner that resulted from the death of a partner prior to January 1,
2006; the act also did not expressly exempt transfers to a surviving
nonregistered domestic partner that occurred before it was possible
for domestic partners to secure protection against property tax
reassessment by registering their partnership with the state.
(e) Protection against reassessment of family owned real property
and resulting increases in property taxes can be a critical bulwark
against financial hardship and the loss of the family home or
business when a family member dies or a family relationship ends in
divorce or dissolution of a domestic partnership. The same is true
for domestic partners whose relationships predated California's
protective legislation. Many domestic partners whose property was
reassessed due to the death of one partner or the dissolution of the
domestic partnership have been forced by the resulting increase in
property taxes to sell the family home. Those domestic partners who
have retained ownership and have been paying increased property taxes
are being treated unequally in a manner inconsistent with the goal
of the domestic partnership laws.
(f) 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 domestic partners with respect to
property ownership would further California's compelling 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 warranted by the California
Constitution.
(g) Therefore, the Legislature finds and declares that this act
serves a public purpose of the state.
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 registered domestic partner , 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) and
floating homes subject to taxation pursuant to Section 229, 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.
() 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) (1) Commencing with the lien
date for the 2006-07 fiscal year on January 1, 2000
, any transfer between registered domestic partners, as defined
in Section 297 of the Family Code, including, but not limited to:
(1)
(A) 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)
(B) Transfers that take effect upon the death of a
registered domestic partner.
(3)
(C) 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)
(D) The creation, transfer, or termination, solely
between registered domestic partners, of any coowner's interest.
(5)
(E) 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.
(2) Any transfer between registered domestic partners that
occurred on or after January 1, 2000, that was classified as a change
in ownership that resulted in appraisal at full cash value as of the
date of the change in ownership under Section 75.10 shall entitle
the transferee registered domestic partner to a reassessment by the
assessor under this paragraph as if that transfer had not occurred.
The transferee shall submit a request for reassessment under this
paragraph to the assessor on or before January 1, 2009. Any change in
the adjusted base year value of the property acquired resulting from
the application of this paragraph shall be deemed to be effective on
the first day of the month following the month in which the request
for assessment was submitted. This paragraph shall be liberally
construed to provide the benefits of this subdivision and Article
XIII A of the California Constitution to registered domestic
partners.
(q) (1) Any transfer between nonregistered domestic partners that
occurred on or after January 1, 2000, and before January 1, 2007,
including, but not limited to:
(A) Transfers to a trustee for the beneficial use of a
nonregistered domestic partner, or the surviving nonregistered
domestic partner of a deceased transferor, or by a trustee of such a
trust to the nonregistered domestic partner of the trustor.
(B) Transfers that take effect upon the death of a nonregistered
domestic partner.
(C) Transfers to a nonregistered domestic partner or former
nonregistered domestic partner in connection with a property
settlement agreement or judicial distribution of assets upon
termination of a nonregistered domestic partnership.
(D) The creation, transfer, or termination, solely between
nonregistered domestic partners, of any coowner's interest.
(E) The distribution of a legal entity's property to a
nonregistered domestic partner or former nonregistered domestic
partner in exchange for the interest of the nonregistered domestic
partner in the legal entity in connection with a property settlement
agreement or judicial distribution of assets upon termination of a
nonregistered domestic partnership.
(2) For purposes of this section, nonregistered domestic partner
means a person who does both of the following:
(A) Signs an affidavit that states all of the following:
(i) That the person and his or her domestic partner shared a
common residence at the time of transfer.
(ii) That neither the person nor his or her domestic partner were
married to someone else or in another domestic partnership that had
not been terminated, dissolved, or adjudged a nullity at the time of
transfer.
(iii) That the person and his or her domestic partner are not
related by blood in a manner that would prevent them from being
married to each other in this state.
(iv) That the person and his or her domestic partner were at least
18 years old at the time of transfer.
(v) That either of the requirements are met:
(I) That the person and his or her domestic partner are members of
the same sex.
(II) That either the person or his or her domestic partner, or
both, satisfied the eligibility requirements for old age insurance
benefits pursuant to Title II of the Social Security Act (42 U.S.C.
Sec. 402a) or is an individual as described in Title XVI of the
Social Security Act (42 U.S.C. Sec. 1381) at the time of transfer.
(vi) That the person and his or her domestic partner were capable
of consenting to the domestic partnership at the time of transfer.
(vii) That the nonregistered domestic partnership ended either due
to the death of the affiant's former domestic partner or the
dissolution of the partnership.
(B) Demonstrates that any two of the following existed with his or
her former domestic partner during the partnership:
(i) A civil union, domestic partnership registration, or
reciprocal beneficiary registration with any foreign government,
state government, or local government.
(ii) Joint ownership of real property or an automobile.
(iii) Joint ownership of a bank account.
(iv) Joint signatories on a lease for a residence.
(v) A residential utility bill account held in both names, either
separately or jointly.
(vi) A designation as domestic partners for employee benefits
purposes or health insurance purposes.
(vii) An adoption by either domestic partner of a child of the
other domestic partner, a joint adoption by both domestic partners of
a child, or any other form of judgment establishing either domestic
partner's parentage or guardianship of a child of his or her domestic
partner, or establishing both domestic partner's parentage or
guardianship of a child.
(viii) The execution by either nonregistered domestic partner of a
will, trust, or other estate planning document designating his or
her domestic partner or any child or children of his or her domestic
partner as a beneficiary.
(3) In lieu of one of the criteria described in clauses (i) to
(viii), inclusive, of subparagraph (B) of paragraph (2):
(A) If the partnership terminated due to the death of a partner,
the surviving partner may instead provide a signed affidavit from a
person who knew the surviving partner and deceased partner at the
time of death of the deceased partner stating that the couple shared
a common residence and would have satisfied the requirements of
subparagraph (A) of paragraph (2) of subdivision (a).
(B) If the partnership terminated for reasons other than the death
of a partner, both partners may instead provide signed affidavits
stating that both partners satisfied the requirements of subparagraph
(A) of paragraph (2).
(4) Any transfer between nonregistered domestic partners that
occurred on or after January 1, 2000, and before January 1, 2009,
that was classified as a change in ownership that resulted in
appraisal at full cash value on the date of the change in ownership
under Section 75.10 shall entitle the transferee nonregistered
domestic partner to a reassessment by the assessor under this
paragraph as if that transfer had not occurred. The transferee shall
submit a request for reassessment under this paragraph to the
assessor on or before June 30, 2009. Any change in the adjusted base
year value of the property acquired resulting from the application of
this paragraph shall be deemed to be effective on the first day of
the month following the month in which the request for assessment was
submitted.
SEC. 3. Section 5096 of the Revenue and Taxation Code is amended
to read:
5096. Any taxes paid before or after delinquency shall be
refunded if they were:
(a) Paid more than once.
(b) Erroneously or illegally collected.
(c) Illegally assessed or levied.
(d) Paid on an assessment in excess of the ratio of assessed value
to the full value of the property as provided in Section 401 by
reason of the assessor's clerical error or excessive or improper
assessments attributable to erroneous property information supplied
by the assessee.
(e) Paid on an assessment of improvements when the improvements
did not exist on the lien date.
(f) Paid on an assessment in excess of the equalized value of the
property as determined pursuant to Section 1613 by the county board
of equalization.
(g) Paid on an assessment in excess of the value of the property
as determined by the assessor pursuant to Section 469.
(h) Paid on an assessment that is subject to reassessment pursuant
to paragraph (2) of subdivision (p) of Section 62 or paragraph (4)
of subdivision (q) of Section 62.
SEC. 4. If the Commission on State Mandates determines that this
act contains costs mandated by the state, reimbursement to local
agencies and school districts for those costs shall be made pursuant
to Part 7 (commencing with Section 17500) of Division 4 of Title 2 of
the Government Code.
SEC. 5. 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. 6. This act provides for a tax levy within the meaning of
Article IV of the Constitution and shall go into immediate effect.