BILL ANALYSIS
SENATE REVENUE & TAXATION COMMITTEE
Senator Lois Wolk, Chair
SJR 20 - Alquist
Amended: May 5, 2010
Hearing: May 12, 2010 Fiscal: No
SUMMARY: Urges Congress and the President to Exempt from
Capital Gains All Proceeds from the Sale of a
Principal Residence for a Senior Citizen Aged 65
or Above.
EXISTING FEDERAL AND STATE LAW allows taxpayers to
exclude up to $250,000 single/$500,000 joint in income
resulting from the sale of their principal residence.
Additionally, taxpayers may adjust the basis of inherited
property upward to fair market value at the time of the
decedent's death. Therefore, any appreciation in the
property's value that occurred prior to the decedent's
death is exempted from capital gains taxation.
THIS RESOLUTION makes a request from the Legislature
to Congress and the President of the United States to enact
legislation to increase the exclusion on the sale of a
principal residence by a senior citizen 65 years of age or
older who pays for long-term care costs from $250,000 to
$500,000 for single filers and from $500,000 to $750,000
for joint filers. The resolution also makes findings to
support the request, and resolves that the Secretary of the
Senate transmit copies of the resolution to specified
elected officials.
SJR 20 - Alquist
Page 2
FISCAL EFFECT:
According to committee staff, the resolution does not
directly affect state revenue.
COMMENTS:
A. Purpose of Bill
According to the Author, "Federal and state income tax
laws impose capital gains taxes upon the sale of capital
assets, including a qualifying principal residence. When a
taxpayer sells a qualifying principal residence, he or she
is allowed to exclude from income up to $250,000 ($500,000
for joint returns). Any gain over and above this amount is
taxed as a capital gain, regardless of the taxpayer's age.
A senior citizen who is 65 years of age or older is equally
subject to capital gains taxes on the sale of his or her
principal residence even if he or she will be moving into a
unit within an assisted living facility, continuing care
retirement community, or similar, where there may be heavy
upfront fees. Oftentimes, when a senior citizen, who is
65 years of age or older, sells his or her principal
residence, it is because their home is too big to take care
of and/or too expensive to maintain on the senior citizen's
fixed income. Therefore, a senior citizen is usually
selling his or her principal residence in order to
downsize, reduce expenses, and financially prepare for the
costly long-term care needs they will likely have in the
future. SJR 20 would provide that the California
Legislature respectfully requests Congress and the
President to enact legislation to eliminate the capital
gains tax on the sale of a principal residence by a senior
citizen who is 65 years of age or older. Such an
elimination of the capital gains tax would enable senior
citizens to be better equipped to plan for their long-term
care housing needs as they grow older."
SJR 20 - Alquist
Page 2
Support and Opposition
Support:California Senior Legislature
Oppose:California Tax Reform Association
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Consultant: Colin Grinnell