BILL ANALYSIS Ó
SENATE COMMITTEE ON GOVERNANCE AND FINANCE
Senator Robert M. Hertzberg, Chair
2015 - 2016 Regular
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|Bill No: |AB 1378 |Hearing |7/8/15 |
| | |Date: | |
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|Author: |Holden |Tax Levy: |Yes |
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|Version: |2/27/15 |Fiscal: |Yes |
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|Consultant| Grinnell |
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Property tax: base year value transfers
Provides that a claimant's spouse shall not be deemed as a
claimant for purposes of base year value transfers.
Background and Existing Law
Article XIII of the California Constitution provides that all
property is taxable unless explicitly exempted by the
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 directs assessors to only reappraise
property when newly constructed, or ownership changes
(Proposition 13, 1978). Voters subsequently approved change in
ownership exclusions to allow homeowners over the age of 55 and
disabled persons (regardless of age) to transfer their home's
base year values to a replacement home of equal or lesser value
within the same county (Proposition 60, 1988, and Proposition
110, 1990), or to homes in counties that adopt ordinances
allowing the transfer (Proposition 90, 1990). Ten counties
allow these out-of-county transfers (Alameda, El Dorado, Los
Angeles, Orange, Riverside, San Bernardino, San Diego, San
Mateo, Santa Clara, and Ventura). Base year transfers allow
taxpayers to continue to pay property taxes at the amount and
rate of growth of their previous home, and not on the cash value
of their newly purchased home.
AB 1378 (Holden) 2/27/15 Page 2
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Because the Constitution doesn't specify eligibility
requirements, state law details base year value transfer
requirements. Instead of allowing infinite transfers, taxpayers
can generally transfer base year values once, as a "claimant" is
eligible only when an assessor has not previously granted a base
year transfer, with "claimant" defined as any eligible person
claiming the base year transfer. Currently, the law only allows
individuals to claim a second base year value transfer after
becoming 55 years of age, then another should they subsequently
become disabled, or vice versa. If the claimant has a spouse
who is also an owner of record of the home, then the spouse is
considered a claimant, and therefore precluded from claiming a
base year transfer in the future. The author wants to remove
this "marriage penalty" by allowing spouses that co-own property
with eligible base year value transfer claimants to subsequently
request a transfer.
Proposed Law
Assembly Bill 1378 provides that a claimant's spouse shall not
be deemed as a claimant for purposes of base year value
transfers, thereby allowing a spouse to subsequently claim
another base year value transfer. However, the provision only
allows a claimant's spouse to apply for the subsequent base year
value transfer prospectively.
State Revenue Impact
The State Board of Equalization (BOE) estimates a $350,000
annual property tax revenue loss.
Comments
1. Purpose of the bill . According to the author, "Assembly Bill
1378 recognizes the evolving nature of marriage relations and
living patterns of Californians and expands eligibility for a
Proposition 60/90 transfer to include one transfer per person in
a recognized long-term relationship. Assembly Bill 1378 ensures
California law recognizes all types of marriages, cohabitations
and housing situations."
AB 1378 (Holden) 2/27/15 Page 3
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2. Push and pull . Currently, whenever a taxpayer transfers a
base year value to a replacement property, his or her spouse is
permanently precluded for subsequently claiming a base year
value transfer if their name is on the title, as they are
considered a "claimant." AB 1378 deletes spouses from that
term's definition. However, under current law, taxpayers can
also avoid this "marriage penalty" by simply keeping the
spouse's name off of the title of either the original home, or
failing that, keep the original claimant's name off the
replacement home when they buy it. Additionally, currently law
allows the spouses of individuals who own property separately,
and are not themselves over 55 or disabled, but reside on a
property with a person who is but not on title, to claim the
base year value transfer on their behalf. By deleting
cohabitating spouses from the definition of "claimant," AB 1378
would allow for second transfers, but at the cost of always
requiring the eligible person to claim the transfer, and be a
recorded owner of both properties.
3. BOE and assessors . In 1850, the Legislature first directed
county assessors to tax property; however, assessors in
different counties often applied different tax rates and methods
of assessment. The California Constitution of 1879 created BOE
to equalize rates and assessment practices among counties. As
part of this effort, BOE collects data from counties to ensure
that one taxpayer is not filing multiple claims for benefits
when the taxpayer is not eligible. In this case, state law
requires BOE to maintain a database of base year value transfer
claimants, so the name of both the claimant and the spouse is
entered into the database. If a claimant's spouse subsequently
applies, the BOE database would match then name, and the
transfer could not be granted. AB 1378's change would ensure
that the spouse's name didn't go in the database, so that he or
she can maintain eligibility for a future transfer. However,
because the measure is prospective, names currently in the
database would remain ineligible.
Assembly Actions
Assembly Floor 80-0
Assembly Appropriations 17-0
Assembly Revenue and Taxation 9-0
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Support and
Opposition (7/2/15)
Support : California Assessors Association, California
Association of Realtors, California Taxpayers Association,
Howard Jarvis Taxpayers Association.
Opposition : Unknown-- END --