BILL ANALYSIS Ó
SENATE COMMITTEE ON APPROPRIATIONS
Senator Ricardo Lara, Chair
2015 - 2016 Regular Session
AB 1378 (Holden) - Property tax: base year value transfers.
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|Version: February 27, 2015 |Policy Vote: GOV. & F. 7 - 0 |
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|Urgency: Yes |Mandate: No |
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|Hearing Date: August 17, 2015 |Consultant: Robert Ingenito |
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This bill meets the criteria for referral to the Suspense File.
Bill
Summary: AB 1378 would allow spouses to each make separate base
year value transfer claims related to the onetime only benefit
provided to persons 55 years and over that move from one home to
another.
Fiscal
Impact: The Board of Equalization (BOE) estimates that the bill
would result in a $350,000 annual property tax revenue loss,
increasing annually thereafter. Approximately 50 percent of
property tax revenues statewide accrue to schools, which
generally offsets state General Fund obligations pursuant to
Proposition 98. Consequently, any reduction in the school share
of property tax revenues that are attributable to the bill's
impact on assessed values would result in a commensurate
increase in General Fund costs. BOE indicates that the bill's
administrative costs would be minor and absorbable.
AB 1378 (Holden) Page 1 of
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Background: The California Constitution (1) provides that all property is
taxable unless explicitly exempted by the Constitution or
federal law, (2) limits the maximum amount of any ad valorem tax
on real property at 1 percent of full cash value, and (3)
directs county assessors to only reappraise property when newly
constructed, or ownership changes. 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, or to homes in counties that adopt
ordinances allowing the transfer. 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.
The Constitution doesn't specify eligibility requirements;
consequently, state law details base year value transfer
requirements. Instead of allowing infinite number of 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. Current 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.
Proposed Law:
This bill would modify the definition of "claimant" with
respect to persons claiming base year value transfer tax relief,
excluding the claimant's spouse from being considered a claimant
for purposes of determining whether any future claim filed by
that spouse remains eligible. Consequently, for claims filed on
or after January 1, 2016, each disabled spouse aged 55 or older
would may qualify individually and file separately for one-time
AB 1378 (Holden) Page 2 of
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base year value transfer property tax relief.
Staff
Comments: BOE property tax data indicate that counties grant an
average of 5,000 base year value transfer claims each year. BOE
assumes the bill would lead to a five percent increase,
resulting in 250 additional qualified transfers annually.
California Association of Realtors data indicate that the median
home price in December 2014 was $454,000. The 2013-14 average
assessed value of a property receiving the homeowners' exemption
was $314,000. Therefore, BOE estimates the amount assessed value
difference per home after a base year transfer is about
$140,000, and the aggregate revenue loss (at the one percent
rate) is about $350,000 annually, and would likely increase to
the extent that home values exceed the annual two percent cap in
assessed valuation allowed under Proposition 13.
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