BILL ANALYSIS
AB 402
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 402 (Ma)
As Amended August 20, 2007
Majority vote
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|ASSEMBLY: |45-31|(May 24, 2007) |SENATE: |25-13|(September 7, |
| | | | | |2007) |
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Original Committee Reference: REV. & TAX.
SUMMARY : Makes various changes regarding change of ownership of
real property.
The Senate amendments :
1)Clarify the circumstances wherein foster children may be
included in the definition of "children" for purposes of the
parent/child exclusion from change of ownership.
2)Add double-jointing language to include changes made to a
statute amended in this bill also amended in SB 1045
(Committee on Revenue and Taxation).
3)Create a new statute to enact the compliance requirements for
notices of change of ownership of interests in cooperative
housing corporations, etc., contained in this bill.
EXISTING LAW :
1)Requires reassessment of real property to fair market value
whenever there is a change of ownership. Excludes from the
definition of change of ownership transfers between parents
and children of: a) principle places of residence; and, b)
the first $1 million of real property other than principal
residences. Defines "children" to include a natural child
(other than a natural child adopted by another), a stepchild
(until the marriage upon which the relationship exists is
terminated by divorce or, if by death, until remarriage of the
surviving stepparent), a son-in-law or daughter-in-law, and an
adopted child (other than one adopted after age 18).
2)Requires a property owner to notify the county assessor
whenever there is a change of ownership. However, there is no
AB 402
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penalty for failing to file the change of ownership statement
unless the assessor requests the notice. Assessors typically
are alerted to changes of ownership when transfer documents
(deeds) are filed with the county recorder's office.
AS PASSED BY THE ASSEMBLY , this bill:
1)Amended the definition of "children" with respect to a change
of ownership exclusion to include foster children. Identified
the information needed to be filed with the county assessor to
establish the right to the exclusion.
2)Required owners to provide notice upon request by the county
assessor if a change of ownership interest occurred without
utilizing recorded deeds.
3)Required reimbursement to local agencies and school districts
for costs that the Commission on State Mandates determined
were mandated by the state.
4)Provided that no appropriation was made by this bill and the
state shall not reimburse any local agency for any property
tax assessment lost due to this bill.
FISCAL EFFECT : The Board of Equalization estimates an annual
property tax loss related to the transfers between foster
parents and foster children of $173,000, resulting in a General
Fund revenue loss of approximately $57,000.
COMMENTS : The author states, "AB 402 addresses two areas of
concern regarding change in ownership property tax laws under
Proposition 13 - It requires managers of cooperatives to report
the transfer of individual units in cooperative to county
assessors and expands Proposition 13's inter-familial tax
exemption to include foster children." According to the author,
this bill is about assessment fairness, including foster
children under the inter-familial exclusion from change of
ownership and requiring notices for change of ownership
interests in housing cooperatives is just like requiring notices
for other changes of ownership in real property.
Proponents state this bill, as amended, addresses concerns over
the administration of the exclusion for foster child/foster
parent transfers and the need for reporting requirements for
changes in ownership for stock cooperative developments.
AB 402
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Further, the incorporation of required documentation for foster
child/foster parent transfers will improve administration of the
exclusion and minimize abuse. Proponents believe a penalty
should be imposed for the failure to report transfers of
interest in the co-op association consistent with other
transfers to improve reporting compliance, which is a real
problem.
Revenue and Taxation Committee staff note that the ability for
one form of property ownership to escape reassessments on
transfer creates unfairness and uncertainty within property
taxation. It also undermines the general tenets of Proposition
13, which provide that a change of ownership causes a
reassessment to current fair market value.
Analysis Prepared by : Kimberly Bott / REV. & TAX. / (916)
319-2098
FN: 0002528