BILL ANALYSIS
AB 103
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Date of Hearing: May 28, 2009
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Kevin De Leon, Chair
AB 103 (De Leon) - As Amended: April 22, 2009
Policy Committee: Revenue and
Taxation Vote: 6-3
Urgency: No State Mandated Local Program:
Yes Reimbursable: No
SUMMARY
This bill provides that a "change-of-ownership" reassessment of
property is not triggered when one co-owner of a principal
residence dies and his or her interest in the property is
transferred to the other owner. Specifically, the bill:
1)Requires that, in order to avoid a change-of-ownership
reassessment, the two individuals must together own 100% of
the real property in a joint tenancy or as tenants in common.
2)Requires that, in order to be eligible for the exclusion, the
transferee must sign, under penalty of perjury, an affidavit
affirming that he or she continuously resided with the
transferor at the residence for the one-year period
immediately preceding the transfer.
3)Applies to transfers occurring between January 1, 2010 and
January 1, 2020, and provides that the state will not
reimburse any local agency for any losses in property tax
revenues due to this bill.
FISCAL EFFECT
1)Board of Equalization (BOE) staff estimates that this bill
will result in annual property tax reductions ranging from
$175,000 to $525,000 in 2010-11, with the amounts increasing
is subsequent years.
2)Under Proposition 98, reductions in property taxes to K-12 and
community college districts would be offset by the GF. This
would translate into increased annual GF costs of between
AB 103
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$65,000 and $200,000 in 2010-11, with the amounts increasing
in subsequent years.
COMMENTS
1)Background . Under existing property tax law, real property is
reassessed to its current fair market value whenever there is
a "change in ownership." Generally, a transfer of interest in
property between two people that own real property due to the
death of one results in a change in ownership in proportion to
the percentage of the property interest that is transferred,
unless the transfer qualifies for one of the many
change-in-ownership exclusions available under existing law.
Exclusions are currently provided for transfers between
spouses, registered domestic partners, parents and children,
and persons that own property in a joint tenancy form of
ownership where the surviving joint tenant has original
transferor status.
However, under existing law, there is no exclusion for
transfers of real property between two unrelated persons who
own the home as tenants in common. Individuals in this
situation may include: seniors, veterans, or others who own a
home together and choose not to marry because of the loss of
various benefits; siblings or other members of a family;
friends or companions that choose not marry or register as
domestic partners; family members such as siblings; a person
and his or her care provider; or any two people who live
together to share the cost of housing.
2)Purpose . The intent of the bill is to protect a surviving
co-owner from an upward adjustment in the home's assessment,
thereby allowing the survivor to continue paying the same
amount of property tax on the home after the other person's
death. The author states that, "California has a vested
interest in keeping surviving co-owners in their homes. One
of the premises of Proposition 13 is to prevent unexpected,
sudden increases in property taxes for owners who choose to
stay in their homes. AB 103 builds upon this very principle
by protecting surviving co-owners from the financial hardship
of property reassessment when they are most vulnerable - after
a loved one passes away."
Analysis Prepared by : Brad Williams / APPR. / (916) 319-2081