BILL ANALYSIS Ó
AB 1422
Page 1
Date of Hearing: May 9, 2011
ASSEMBLY COMMITTEE ON REVENUE AND TAXATION
Henry T. Perea, Chair
AB 1422 (Committee on Revenue and Taxation) - As Introduced:
March 22, 2011
Majority vote.
SUBJECT : Property taxation.
SUMMARY : Makes several non-controversial changes to
California's property tax law. Specifically, this bill :
1)Extends from 30 days to 6 months the period within which a
homeowner, who is transferring a base year value from his/her
principal residence to a newly purchased replacement home,
must notify the county assessor of the completion of new
construction on the replacement home.
2)Replaces obsolete statutory references to the "Civil
Aeronautics Board of the United States" (which no longer
exists) with the phrase the "Federal Aviation Administration"
and deletes the obsolete statutory references to the
"California Public Utilities Commission" in the definitions of
"certificated aircraft," "air taxi," and "aircraft."
3)Clarifies the period within which a person filing an affidavit
of interest must apply to the tax collector to have a parcel
separately valued on the current roll for the purpose of
paying property taxes.
EXISTING LAW :
1)Provides that all property is taxable unless explicitly
exempted by the California Constitution or federal law. The
Constitution limits the maximum amount of any ad valorem tax
on real property at 1% of full cash value, and the annual
increases to that value are limited to the rate of inflation,
not to exceed 2%.
2)Requires a reassessment of real property to current fair
market value upon a change of ownership, but creates
exceptions to numerous transfers. The value of the property
AB 1422
Page 2
established initially for property tax purposes is
generally referred to as "base year value", which is subject
to annual increases for inflation, not to exceed 2%.
3)Allows property owners over 55 years of age or disabled
persons once-in-a-lifetime opportunity to transfer the base
year value of their principle residence, within two years from
the sale of the original residence, to a
replacement home of equal or lesser value within the same
county (Proposition 60, 1988), or to a replacement home in
counties that have adopted ordinances allowing the
transfer (Proposition 90, 1990), provided certain conditions
are met and the county assessor is properly notified.
Currently, Alameda, Los Angeles, Orange, San Diego, San Mateo,
Santa Clara, and Ventura Counties allow these out-of-county
transfers. Base year transfers allow taxpayers to continue to
pay property taxes at the amount and rate of growth of their
previous home and prevent reassessments of their newly
purchased homes to full market value.
4)Allows a homeowner, who has been granted a base year value
transfer from his/her original residence to a replacement
dwelling, to perform new construction on the replacement
property subsequent to the transfer and exempts the new
construction from assessment. The new construction must be
completed within two years of the sale of the original
property and its value may not exceed the sales price of the
original property. Requires homeowners to notify the assessor
in writing of the completion of new construction within 30
days in order for the new construction to be eligible for the
property tax relief.
5)Provides that a county assessor may re-number or re-letter
parcels or prepare new map pages to show combinations or
divisions of parcels. ÝRevenue & Taxation Code (R&TC) Section
327].
6)Allows any person filing an affidavit of interest to apply to
the tax collector to have any parcel separately valued for the
purpose of paying property taxes (R&TC Section 2821) and
requires the assessor to determine the separate valuation of
that individual interest in the parcel (R&TC Section 2823).
7)Requires that applications requesting separate assessment for
the purpose of paying property taxes be made during the
AB 1422
Page 3
current fiscal year - from July 1 until June 30; however, it
authorizes a county board of supervisors to prohibit these
applications during the 10 working days preceding each tax
installment delinquency - December 10th and April 10th - and
during the 10 working days preceding June 30 of each year.
8)Prohibits separate valuations after the lien date (January 1)
immediately preceding the current fiscal year when the parcel
is covered by a subdivision map filed for recordation with the
county recorder. Allows a waiver of this prohibition,
however, with respect to requests for separate valuation of
new subdivision lots created after the lien date.
9)Provides that any subdivision of property for the purpose of
sale, lease, or finance is subject to the Subdivision Map Act.
Subdivisions into five or more parcels require local
government approval of both a tentative subdivision map, which
is discretionary, and a final subdivision map, which is
ministerial once all of the conditions of the tentative map
have been fulfilled. Subdivisions into four or fewer parcels
require local government approval of a parcel map, which is
discretionary. In either case, once a map is approved by the
local government, the clerk of the council or board of
supervisors must transmit the map to the county recorder for
recordation. The county recorder has 10 days to accept or
reject the map for recordation.
FISCAL EFFECT : None
COMMENTS :
1)The Purpose of the Bill . Sponsored by the California
Assessors' Association (CAA), AB 1422 is a technical,
non-controversial bill that improves local administration of
property tax laws for the benefit of taxpayers and assessors
alike. Consolidating the measures into a single bill negates
the need for individual bills to enact each change.
2)Extension of Time to Notify the Assessor . Under existing law,
homeowners who do not file a "base year value transfer" claim
to notify the assessor within 30 days of completing the new
construction are barred from receiving the full benefit of a
base year value transfer to which they are otherwise entitled.
This bill would amend R&TC Section 69.5(h)(4)(A) to increase
from 30 days to 6 months the time that the property owner has
AB 1422
Page 4
to notify the assessor when the additional construction is
completed. Thus, this bill gives homeowners more time to
include, under the initial base year value transfer, the value
of new construction improvement made to the replacement home.
The value of the improved replacement home still may not
exceed the market value of the original property sold, as
determined in the original claim for a base year value
transfer. As noted by the Board of Equalization staff, the
assessor already receives copies of all building permits
issued in the county, and thus, this amendment would allow the
assessor to extend automatically "the benefit of the base year
value transfer to the new construction, when applicable,
without any further action or paperwork from the property
owner."
3)Separate Assessment Requests . This bill would authorize a
board of supervisors to allow filing of applications for
requests for separate assessments only between July 1 and
March 31, which means that, in counties that approve this new
timeline, applications for separate parcel assessment would
not be accepted in the months of April, May, and June.
According to the sponsor, this amendment is follow up
legislation sponsored by the CAA in 2009 - ÝSB 822 (Committee
on Revenue and Taxation), Chapter 204] - which allows
assessors to create a separate valuation of five or more lots
created after the lien date. Splitting parcels in five or
more lots created after the lien date requires a preparation
of separate tax bills that must be mailed by November 1. In
order to allow enough time to process an application for
separate assessments - from initial processing to the issuance
of the tax bills - this bill proposes an application deadline
of April 1.
REGISTERED SUPPORT / OPPOSITION :
Support
California Assessors' Association (sponsor)
Opposition
None on file
Analysis Prepared by : Oksana Jaffe / REV. & TAX. / (916)
AB 1422
Page 5
319-2098