BILL NUMBER: SB 559 ENROLLED
BILL TEXT
PASSED THE SENATE SEPTEMBER 5, 2007
PASSED THE ASSEMBLY SEPTEMBER 4, 2007
AMENDED IN ASSEMBLY JULY 9, 2007
AMENDED IN ASSEMBLY JUNE 27, 2007
AMENDED IN SENATE APRIL 18, 2007
AMENDED IN SENATE MARCH 29, 2007
INTRODUCED BY Senator Kehoe
FEBRUARY 22, 2007
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 559, 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 between January 1, 2000, and January 1, 2006.
This bill would require the assessor to reverse any reassessment for
property that was transferred between these parties during this time
period, but only if the transferee submits an application for
reversal of that reassessment on or before June 30, 2009, as
specified. This bill would authorize a county to charge a fee for
these reassessment reversals, as provided. This bill would require
the State Board of Equalization to prepare a form for these requests,
as specified. Any reassessment reversal would apply commencing with
the lien date of the assessment year in which the claim is filed. By
requiring county assessors to reverse a reassessment for this
property, this bill would impose a state-mandated local program.
(2) 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 no reimbursement is required by this
act for a specified reason.
(3) 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.
(4) This bill would take effect immediately as a tax levy.
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 416 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
registered domestic partner that resulted from the death of a partner
prior to January 1, 2006.
(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 on January 1, 2000, any transfer between
registered domestic partners, as defined in Section 297 of the Family
Code, including, but not limited to:
(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.
(B) Transfers that take effect upon the death of a registered
domestic partner.
(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.
(D) The creation, transfer, or termination, solely between
registered domestic partners, of any coowner's interest.
(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 transferee whose property was reassessed in contravention
of the provisions of this subdivision for a transfer occurring
between January 1, 2000, and January 1, 2006, 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 June 30, 2009.
A county may charge a fee for its costs related to the application
and reassessment reversal in an amount that does not exceed the
actual costs incurred. 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.
(A) After consultation with the California Assessors' Association,
the State Board of Equalization shall prescribe the form for
claiming the reassessment reversal described in paragraph (2). The
claim form shall be entitled "Claim for Reassessment Reversal for
Registered Domestic Partners." The claim shall state on its face that
a "certificate of registered domestic partnership" is available upon
request from the California Secretary of State.
(B) The information on the claim shall include a description of
the property, the parties to the transfer of interest in the
property, the date of the transfer of interest in the property, and a
statement that the transferee registered domestic partner and the
transferor registered domestic partner were, on the date of transfer,
in a registered domestic partnership as defined in Section 297 of
the Family Code.
(C) The claimant shall declare that the information provided on
the form is true, correct, and complete to the best of his or her
knowledge and belief.
(D) The claimant shall provide with the completed claim the
"Certificate of Registered Domestic Partnership," or photocopy
thereof, naming the transferee and transferor as registered domestic
partners and reflecting the creation of the registered domestic
partnership on a date prior to, or concurrent with, the date of the
transfer for which a reassessment reversal is requested.
(E) Any reassessment reversal granted pursuant to a claim shall
apply commencing with the lien date of the assessment year, as
defined in Section 118, in which the claim is filed. No refunds shall
be made under this paragraph for any prior assessment year.
(F) Under any reassessment reversal granted pursuant to that
claim, the adjusted full cash value of the subject real property in
the assessment year described in subparagraph (E) shall be the
adjusted base year value of the subject real property in the
assessment year in which the excluded purchase or transfer took
place, factored to the assessment year described in subparagraph (E)
for both of the following:
(i) Inflation as annually determined in accordance with paragraph
(1) of subdivision (a) of Section 51.
(ii) Any subsequent new construction occurring with respect to the
subject real property.
SEC. 3. No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because a
local agency or school district has the authority to levy service
charges, fees, or assessments sufficient to pay for the program or
level of service mandated by this act, within the meaning of Section
17556 of the Government Code.
SEC. 4. 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. This act provides for a tax levy within the meaning of
Article IV of the Constitution and shall go into immediate effect.