BILL ANALYSIS
AB 2357
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Date of Hearing: April 19, 2004
ASSEMBLY COMMITTEE ON REVENUE AND TAXATION
Rudy Bermudez, Chair
AB 2357 (Plescia) - As Introduced: February 19, 2004
Majority vote. Tax Levy. Fiscal Committee.
SUBJECT : Property tax: Homeowners exemption: Senior citizens
SUMMARY : Increases the homeowners' exemption for senior
citizens. Specifically, this bill :
1)Increases the homeowners' property tax exemption to $10,000 if
the assessee of a dwelling is aged 62 years or older.
2)States that the amount of an exemption allowed to a late claim
filed by an assessee that is aged 62 years or older is the
lesser or $8,000 or 80% of the full value of the dwelling.
3)States legislative intent that the annual Budget Act provides
for reimbursements to local governments as required by Section
25 of Article XIII of the California Constitution.
4)States legislative intent that a program be implemented to
provide a comparable benefit for qualified renters aged 62
years or older as required by Section 3 of Article XIII of the
California Constitution.
EXISTING LAW:
1)Exempts from property tax the first $7,000 of the assessed
value of a dwelling that is the principal place of residence
of the owner. Section 25 of Article XIII of the California
Constitution requires the state to reimburse each local
government for the revenue loss from the homeowners'
exemption. Under Section 3(k) of Article XIII of the
California Constitution, any legislative increase to the
amount of the homeowners' exemption is ineffective unless the
Legislature also a) increases the rate of state taxes in an
amount sufficient to fund subventions to local governments,
and b) increases benefits to qualified renters by a comparable
amount.
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2)Allows an individual, under the California Personal Income Tax
Law (PITL), to deduct real property taxes if that taxpayer
reports itemized deductions in a taxable year. The PITL also
allows a renters' credit to qualified taxpayers.
3)Provides several programs or other benefits for senior
citizens including the Homeowner's and Renters Assistance
(HRA) program offering a partial reimbursement of property
taxes, limited transfer of assessed value from one primary
residence to another for taxpayers over the age of 55, and
postponement of property tax payment for persons aged 62 years
or older.
FISCAL EFFECT : The Board of Equalization (BOE) estimates that
the average annual property tax savings would increase by $33,
up from the current property tax savings of approximately $77.
The BOE estimates that the total revenue loss to local
governments (which amount must be reimbursed by the state)
related to this bill would be $49.5 million for each fiscal year
(FY).
The Franchise Tax Board (FTB) has not yet released the revenue
loss relating to increased benefits due to renters under the
renters tax credit or revenue gain relating to the reduced
deductions for real property taxes.
COMMENTS :
1)The current amount of the homeowners' exemption has not been
changed since 1974. Since 1974, numerous measures have been
introduced in the Legislature to increase the exemption
amount. AB 82 (Dutton) was introduced in the 2003-2004
Legislative Session to increase the amount of the homeowners'
exemption to $32,000 and to increase the amount of the renters
credit to $185 or $370, depending upon filing status. AB 211
(Maze) was introduced in the 2003-04 Legislative Session to
increase the amount of the homeowners' exemption allowed to
seniors, disabled and blind persons to $17,000. Both AB 82
and AB 211 were held in the Assembly Committee on Revenue and
Taxation. In the 2001-2002 Legislative Session, two bills
were introduced that impacted the homeowners' exemption. AB
1844 (Mountjoy) increased the exemption amount to $17,000 for
persons over age 62, disabled, or blind. AB 1844 was held in
the Assembly Revenue and Taxation Committee. SB 48
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(McClintock) increased the exemption amount to $25,000, plus
added an inflation index. SB 48 was held in the Senate
Appropriations Committee.
2)Two programs offer property tax assistance to persons aged 62
or older, blind or disabled.
a) The State Controller administers the Property Tax
Postponement Program (PTPP). The PTPP allows eligible
homeowners to defer payment of property taxes due on their
personal residence until the homeowner moves from the
residence, sells the residence or passes away. The
Controller advances funds to fully pay the property tax
obligation of the eligible homeowner and then secures the
advance with a lien filed against the real property.
Simple interest is charged on the deferred tax payments
until repayment.
b) The FTB administers the Property Tax Assistance Program
(PTAP), which provides a rebate of a percentage of the
property taxes paid. The percentage rebate ranges between
4% and 96%, depending upon the income of the claimant, and
yields a rebate from almost $20 to a maximum of $473. The
maximum total household income for the 2002 claim year was
$37,119.
3)Another property tax benefit provided to persons over the age
of 55 years is the ability to transfer the base year
assessment value from one property to another property is the
new home purchased is of equal or lesser value and in the same
county.
1)The BOE staff suggest an amendment to clearly state that the
age of a person on the lien date (January 1) be used to
determine eligibility for the increased exemption. Committee
staff suggest an amendment to permit the increased exemption
is available if at least one of the assessees that both own
and use the property as a principal residence is 62 years or
older on the lien date.
2)This bill states legislative intent to confer a comparable
benefit to qualified renters aged 62 years or older. Since
the PITL currently contains a renters' credit program,
revising such a program would offer more guidance and
direction than the current intent language.
AB 2357
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REGISTERED SUPPORT / OPPOSITION :
Support
None on file
Opposition
None on file
Analysis Prepared by : Kimberly Bott / REV. & TAX. / (916)
319-2098