BILL ANALYSIS �
AB 1700
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Date of Hearing: April 18, 2012
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 1700 (Butler) - As Amended: April 17, 2012
Policy Committee: Local
GovernmentVote:6-3
Revenue and Taxation 7-1
Urgency: No State Mandated Local Program:
Yes Reimbursable: No
SUMMARY
This bill provides that a transfer, occurring on or after
January 1, 2013, of a co-tenancy interest in real property from
one co-tenant to the other that takes effect upon the death of
the transferor co-tenant, does not constitute a change in
ownership if specified requirements are satisfied. Because
there would then be no change of ownership under the law, a
reassessment of the property's value will not be triggered.
FISCAL EFFECT
1)This bill would lead to a reduction in property tax payments
for all local governments, including schools, which could
require the state to backfill a portion of the losses.
However, the Board of Equalization (BOE) estimates that few
co-owners would benefit from this bill and BOE estimates
property taxes would be reduced statewide by approximately
$100,000. Assuming that approximately 50 percent of property
taxes are allocated to schools, the expected increase in state
backfill is about $50,000. The cost of this bill is
correlated with residential property values. The losses to
the state would be higher if home values were to increase.
2)The bill provides there will be no state reimbursement of
property tax loss to other units of local government from
implementing this bill.
3)BOE estimates that it would incur minor absorbable costs to
implement the bill. This bill is keyed a state-mandated local
program as assessors could incur some very minor reimbursable
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costs to adjust property tax bills.
COMMENTS
1)Rationale . According to the author, this bill protects
surviving co-owners from the financial hardship of property
reassessment when a loved one passes away. The author notes
that people who live and own a home together and are
unmarried, whether by choice or because of the law, should be
treated equally to married couples. The sponsor, Equality
California, writes that California has a strong policy
interest in keeping surviving co-owners in their homes,
especially in times of crisis or when they are grieving the
loss of a loved one. Equality California believes that AB
1700 would benefit many Californians, including same-sex
couples, seniors and families.
2)Background . Existing law protects from property tax increase
transfers of real property between married people, registered
domestic partners, parents and their children, grandparents
and their grandchildren, and also joint tenants who are
"original transferors," that is, the creators of the joint
tenancy.
This bill creates an exclusion from property tax reassessment
for transfers of interest in principal residences between any
two people who live together, including unmarried people,
persons who are not registered domestic partners, siblings,
friends, companions or just roommates who share the cost of
housing. While existing law names family members, this bill
widens the exemption further in the case of co-tenants who are
not family members.
3)Previous legislation . Similar legislation in prior years
includes AB 2735 (De Leon, 2010), which would have applied to
transfers between the dates of January 1, 2011 and January 1,
2021, and AB 103 (De Leon, 2009) which would have applied to
transfers between the dates of January 1, 2010 and January 1,
2020. Both bills were held on the Suspense File of this
committee. Another similar bill, SB 153 (Migden, 2008), was
vetoed by Governor Schwarzenegger.
Analysis Prepared by : Roger Dunstan / APPR. / (916) 319-2081
AB 1700
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