BILL ANALYSIS Ó
AB 483
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Date of Hearing: April 15, 2013
ASSEMBLY COMMITTEE ON REVENUE AND TAXATION
Raul Bocanegra, Chair
AB 483 (Ting) - As Introduced: February 19, 2013
Majority vote.
SUBJECT : Property taxation: valuing property: comparable
sales
SUMMARY : Makes a technical clarifying change to property tax
law. Specifically, this bill replaces the term "lien date" with
"valuation date" for purposes of the comparable sales valuation
method.
EXISTING LAW :
1)Defines "lien date" as either the date on which taxes on the
supplemental roll become a lien on the property resulting from
a change in ownership or, under the regular roll, the date on
which all tax liens attach annually on January 1. [Revenue and
Taxation Code (R&TC) Sections 75.54 and 2192].
2)Provides that "near in time to the valuation date" does not
include any sale more than 90 days after a lien date. (R&TC
Section 402.5).
FISCAL EFFECT : None.
COMMENTS :
1)The author has provided the following statement in support of
this bill:
AB 483 amends Revenue and Taxation Code [Section] 402.5,
replacing the term "lien date" with "valuation date." This
creates conformity between state law and BOE rules and
eliminates potential confusion for taxpayers and taxpayer
agents.
2)Proponents state:
Currently, the Revenue and Taxation Code is written in a
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way that conflicts with California Board of Equalization's
(BOE) rules. Assembly Bill 483 resolves a technical
discrepancy and changes comparable property assessment law
in the Revenue and Taxation Code by replacing the term
"lien date" with "valuation date." This technical change
will bring state law into conformity with existing BOE
rules.
BOE rules state that when making comparable sales, the
value of property must be assessed at the "valuation date"
instead of the "lien date." These two terms are not
interchangeable and have caused confusion among county
assessors. Assembly Bill 483 creates conformity between
state law and BOE rules, streamlining property assessment
throughout California.
3)Background . Assessors, when valuing property, may use a
Comparative Sale Approach. Under this approach, the
appraiser:
a) Selects comparable properties based on their
similarities to the property being appraised;
b) Compares the selected properties to the subject
property; and,
c) Adjusts the sales prices of the comparable properties to
reflect significant differences between the subject and
comparable properties. The comparable sales approach is
based on the principal of substitution, which states that
an informed participant would not pay more for the property
than the cost of acquiring a substitute property of equal
utility.
A comparable property must be sufficiently comparable in terms
of location, physical characteristics, and use. Additionally,
sales of comparable property must have occurred "near in time
to the valuation date" of the subject property. Specifically,
R&TC Section 402.5 provides that "'near in time to the
valuation date' does not include any sale more than 90 days
after the lien date."
4)Construction of current law . A lien date is the day on which
taxes are levied against property. R&TC Section 2192 defines
the regular roll "lien date" as all the tax liens that attach
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annually on January 1. This attachment occurs during the
county assessor's annual assessment of all taxable property in
the county. However, under the supplemental roll "lien date"
of R&TC Section 75.54, a lien may also attach to real property
on the day the property changes ownership or upon completion
of new construction. This change in ownership has also been
referred to as the "event date" and "valuation date." Despite
having two separate definitions, "lien date" is more commonly
associated with the annual assessment date of January 1st.
R&TC Section 402.5 provides that the phrase "near in time to
the valuation date" does not include any sale more than 90
days after the lien date. This has caused confusion because
the lien date can either be the annual assessment date of
January 1st, or the date on which the property changes
ownership. To makes things clear, the BOE has determined that
"lien date," for purposes of R&TC Section 402.5, is synonymous
with "valuation date," i.e., change of ownership date [BOE
Rule 342(d)]. Without this clarification, taxpayers may
attempt to eliminate the use of certain comparable properties
during an assessment appeals hearing by restricting properties
to those made no more than 90 days after January 1st. The
BOE's interpretation also accomplishes the legislative intent
of using "near in time" comparable sales under R&TC Section
402.5. For example, under the annual assessment definition of
"lien date," if a home is sold on August 1, 2012, the
selection of comparable sales would be limited to those made
before April 1st of that year. This would prevent the use of
a comparable sale made on August 2, 2012, even though it
occurred a day after the sale of the subject property.
According to the California County Assessors' Association, the
method of property tax assessment in the State of California
changed substantially after the passage of Proposition 13.
Prior to its passage, the "lien date" of January 1st was the
date used for estimating the valuation of property.
Proposition 13 adopted an acquisition system of taxation,
utilizing the date of change in ownership or completion of
construction as the date of valuation. In 1980, two years
after the passage of Proposition 13, the R&TC Section 402.5
was amended to replace the term "lien date" with "valuation
date" in two places but missed a third. AB 483 will rectify
the problem by making an additional amendment to that section.
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5)Is there a change in law? Current law provides that "near in
time to the valuation date" does not include any sale more
than 90 days after the lien date. Since the BOE has
determined that "lien date" and "valuation date," for purposes
of R&TC Section 402.5, are synonymous, this bill would only
provide technical clarification to existing law.
REGISTERED SUPPORT / OPPOSITION :
Support
California Assessor's Association (Sponsor)
American Federation of State, County and Municipal Employees
Opposition
None on file
Analysis Prepared by : Carlos Anguiano / REV. & TAX. / (916)
319-2098