BILL ANALYSIS
AB 2735
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Date of Hearing: May 19, 2010
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 2735 (De Leon) - As Introduced: February 19, 2010
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, 2011 and
January 1, 2021, 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)The Board of Equalization (BOE) estimates that this bill will
result in annual property tax reductions ranging from $175,000
to $525,000 in 2011-12, $350,000 to $1.050 million in 2011-12,
and increasing amounts in 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 2735
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$65,000 and $200,000 in 2011-12, $130,000 to $400,000 in
2012-13, and increasing amounts 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." The assessed valuation growth is then
limited to no more than 2% per year until another change in
ownership occurs. Generally, a when a death of an individual
results in the transfer of interest in property to a co-owner,
the portion of ownership that that is transferred is
reassessed to market value. However, there are many exclusions
from the change-in-ownership reassessment. 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.
3)Related legislation . This bill is identical to AB 103 (De
Leon) from last year, and SB 153 (Migden) from 2008. AB 103
was held under submission by this Committee and SB 153 was
vetoed by the governor.
Analysis Prepared by: Brad Williams / APPR. / (916) 319-2081