California Legislature—2013–14 Regular Session

Assembly Bill No. 2097

Introduced by Assembly Member Morrell

February 20, 2014

An act to amend Sections 218 and 17053.5 of the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.

LEGISLATIVE COUNSEL’S DIGEST

AB 2097, as introduced, Morrell. Taxation: homeowners’ exemption and renters’ credit.

(1) Existing property tax law provides, pursuant to the authority of a specified provision of the California Constitution, for a homeowners’ exemption in the amount of $7,000 of the full value of a “dwelling,” as defined, and authorizes the Legislature to increase this exemption.

This bill, beginning with the lien date for the 2015-16 fiscal year, would increase the homeowners’ exemption from $7,000 to $20,000 of the full value of a dwelling. This bill would also require, for the 2016-17 fiscal year and for each fiscal year thereafter, the county assessor to adjust the amount of the homeowners’ exemption by the percentage change, for the first 3 quarters of the prior calendar year, in the House Price Index for California, as specified.

(2) The California Constitution requires the Legislature, whenever it increases the homeowners’ property tax exemption, to provide a comparable increase in benefits to qualified renters. The Personal Income Tax Law authorizes various credits against the taxes imposed by that law, including a credit for qualified renters in the amount of $120 for married couples filing joint returns, heads of household, and surviving spouses if adjusted gross income is $50,000 or less, and in the amount of $60 for other individuals if adjusted gross income is $25,000 or less. Existing law requires the Franchise Tax Board to annually adjust for inflation these adjusted gross income amounts.

This bill would, for taxable years beginning on and after January 1, 2015, increase this credit for a qualified renter to $340 for married couples filing joint returns, heads of household, and surviving spouses if adjusted gross income is $50,000 or less, as adjusted for inflation, and to an amount equal to $170 for other individuals if adjusted gross income is $25,000 or less, as adjusted for inflation. The bill would also require, for taxable years beginning on or after January 1, 2016, the Franchise Tax Board to annually adjust for inflation, based upon the California Consumer Price Index, the amount of these credits. The bill would also make technical, nonsubstantive changes to the renters’ credit.

(3) By requiring county assessors to implement a new amount for the property tax homeowners’ exemption, this bill would impose a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that, if the Commission on State Mandates determines that the bill contains costs mandated by the state, reimbursement for those costs shall be made pursuant to these statutory provisions.

(4) This bill would take effect immediately as a tax levy.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: yes.

The people of the State of California do enact as follows:

SECTION 1.  

Section 218 of the Revenue and Taxation Code
is amended to read:

218.  

(a) The homeowners’ property tax exemption is in the
amount of the assessed value of the dwelling specified in this
section, as authorized by subdivision (k) of Section 3 of Article
XIII of the begin delete California end delete Constitution. That exemption begin delete shall be in the
amount of seven thousand dollars ($7,000) of the full value of the
dwelling. end delete begin insert is in the following amounts: end insert

begin insert

(1) Seven thousand dollars ($7,000) of the full value of the
dwelling through the 2014-15 fiscal year.

end insert begin insert

(2) (A) Beginning with the lien date for the 2015-16 fiscal year,
twenty thousand dollars ($20,000) of the full value of the dwelling.

end insert begin insert

(B) Beginning with the lien date for the 2016-17 fiscal year and
for each fiscal year thereafter, the assessor shall adjust the
exemption amount of the prior fiscal year by the percentage
change, rounded to the nearest one-thousandth of 1 percent, in
the House Price Index for California for the first three quarters
of the prior calendar year, as determined by the federal Housing
Finance Agency.

end insert

(b) (1) The exemption does not extend to property that is rented,
vacant, under construction on the lien date, or that is a vacation or
secondary home of the owner or owners, nor does it apply to
property on which an owner receives the veteran’s exemption.

(2) Notwithstanding paragraph (1), if a person receiving the
exemption is not occupying the dwelling on the lien date because
the dwelling was damaged in a misfortune or calamity, the person
shall be deemed to occupy that same dwelling as his or her
principal place of residence on the lien date, provided the person’s
absence from the dwelling is temporary and the person intends to
return to the dwelling when possible to do so. Except as provided
in paragraph (3), when a dwelling has been totally destroyed, and
thus no dwelling exists on the lien date, the exemption provided
by this section shall not be applicable until the structure has been
replaced and is occupied as a dwelling.

(3) A dwelling that was totally destroyed in a disaster for which
the Governor proclaimed a state of emergency, that qualified for
the exemption provided by this section prior to the commencement
date of the disaster and that has not changed ownership since the
commencement date of the disaster, shall be deemed occupied by
the person receiving the exemption on the lien date provided the
person intends to reconstruct a dwelling on the property and occupy
the dwelling as his or her principal place of residence when it is
possible to do so.

(c) For purposes of this section, all of the following apply:

(1) “Owner” includes a person purchasing the dwelling under
a contract of sale or who holds shares or membership in a
cooperative housing corporation, which holding is a requisite to
the exclusive right of occupancy of a dwelling.

(2) (A) “Dwelling” means a building, structure, or other shelter
constituting a place of abode, whether real property or personal
property, and any land on which it may be situated. A two-dwelling
unit shall be considered as two separate single-family dwellings.

(B) “Dwelling” includes the following:

(i) A single-family dwelling occupied by an owner thereof as
his or her principal place of residence on the lien date.

(ii) A multiple-dwelling unit occupied by an owner thereof on
the lien date as his or her principal place of residence.

(iii) A condominium occupied by an owner thereof as his or her
principal place of residence on the lien date.

(iv) Premises occupied by the owner of shares or a membership
interest in a cooperative housing corporation, as defined in
subdivision (i) of Section 61, as his or her principal place of
residence on the lien date. Each exemption allowed pursuant to
this subdivision shall be deducted from the total assessed valuation
of the cooperative housing corporation. The exemption shall be
taken into account in apportioning property taxes among owners
of share or membership interests in the cooperative housing
corporations so as to benefit those owners who qualify for the
exemption.

(d) The exemption provided for in subdivision (k) of Section 3
of Article XIII of the California Constitution shall first be applied
to the building, structure, or other shelter and the excess, if any,
shall be applied to any land on which it may be located.

SEC. 2.  

Section 17053.5 of the Revenue and Taxation Code
is amended to read:

17053.5.  

(a) (1) For a qualified renter, there shall be allowed
a credit against his or her “net tax,” as defined in Section 17039.
The amount of the credit shall be as follows:

(A)  begin insert (i) end insert begin insert   end insert For married couples filing joint returns, heads of
household, and surviving spouses, as defined in Section 17046,
the credit shall be equal to one hundred twenty dollars ($120) if
adjusted gross income is fifty thousand dollars ($50,000) or less.

begin insert

(ii) For taxable years beginning on or after January 1, 2015,
the credit shall be equal to three hundred forty dollars ($340) for
taxpayers described in clause (i). For taxable years beginning on
or after January 1, 2016, the Franchise Tax Board shall adjust
the amount of the credit as provided by subdivision (j).

end insert

(B)  begin insert (i) end insert begin insert   end insert For other individuals, the credit shall be equal to sixty
dollars ($60) if adjusted gross income is twenty-five thousand
dollars ($25,000) or less.

begin insert

(ii) For taxable years beginning on or after January 1, 2015,
the credit shall be equal to one hundred seventy dollars ($170) for
taxpayers described in clause (i). For taxable years beginning on
or after January 1, 2016, the Franchise Tax Board shall adjust
the amount of the credit as provided by subdivision (j).

end insert

(2) Except as provided in subdivision (b), a husband and wife
shall receive but one credit under this section. If the husband and
wife file separate returns, the credit may be taken by either or
equally divided between them, except as follows:

(A) If one spouse was a resident for the entire taxable year and
the other spouse was a nonresident for part or all of the taxable
year, the resident spouse shall be allowed one-half the credit
allowed to married persons and the nonresident spouse shall be
permitted one-half the credit allowed to married persons, prorated
as provided in subdivision (e).

(B) If both spouses were nonresidents for part of the taxable
year, the credit allowed to married persons shall be divided equally
between them subject to the proration provided in subdivision (e).

(b) For a husband and wife, if each spouse maintained a separate
place of residence and resided in this state during the entire taxable
year, each spouse will be allowed one-half the full credit allowed
to married persons provided in subdivision (a).

(c) For purposes of this section, a “qualified renter” means an
individual who satisfies both of the following:

(1) Was a resident of this state, as defined in Section 17014.

(2) Rented and occupied premises in this state which constituted
his or her principal place of residence during at least 50 percent
of the taxable year.

(d) “Qualified renter” does not include any of the following:

(1) An individual who for more than 50 percent of the taxable
year rented and occupied premises that were exempt from property
taxes, except that an individual, otherwise qualified, is deemed a
qualified renter if he or she or his or her landlord pays possessory
interest taxes, or the owner of those premises makes payments in
lieu of property taxes that are substantially equivalent to property
taxes paid on properties of comparable market value.

(2) An individual whose principal place of residence for more
than 50 percent of the taxable year is with begin delete another end delete begin insert any other end insert person
who claimed that individual as a dependent for income tax
purposes.

(3) An individual who has been granted or whose spouse has
been granted the homeowners’ property tax exemption during the
taxable year. This paragraph does not apply to an individual whose
spouse has been granted the homeowners’ property tax exemption
if each spouse maintained a separate residence for the entire taxable
year.

(e) An otherwise qualified renter who is a nonresident for any
portion of the taxable year shall claim the credits set forth in
subdivision (a) at the rate of one-twelfth of those credits for each
full month that individual resided within this state during the
taxable year.

(f) A person claiming the credit provided in this section shall,
as part of that claim, and under penalty of perjury, furnish that
information as the Franchise Tax Board prescribes on a form
supplied by the board.

(g) The credit provided in this section shall be claimed on returns
in the form as the Franchise Tax Board may from time to time
prescribe.

(h) For purposes of this section, “premises” means a house or
a dwelling unit used to provide living accommodations in a
building or structure and the land incidental thereto, but does not
include land only, unless the dwelling unit is a mobilehome. The
credit is not allowed for any taxable year for the rental of land
upon which a mobilehome is located if the mobilehome has been
granted a homeowners’ exemption under Section 218 in that year.

(i) This section shall become operative on January 1, 1998, and
applies to any taxable year beginning on or after January 1, 1998.

(j) For each taxable year beginning on or after January 1, 1999,
the Franchise Tax Board shall recompute the adjusted gross income
amounts set forth in subdivision (a). begin delete The computation end delete begin insert For each
taxable year beginning on and after January 1, 2016, the Franchise
Tax Board shall also recompute the amount of the credit set forth
in subdivision (a). These computations end insert shall be made as follows:

(1) The Department of Industrial Relations shall transmit
annually to the Franchise Tax Board the percentage change in the
California Consumer Price Index for all items from June of the
prior calendar year to June of the current year, no later than August
1 of the current calendar year.

(2) The Franchise Tax Board shall compute an inflation
adjustment factor by adding 100 percent to begin delete the end delete begin insert that end insert portion of the
percentage change figure begin delete which is end delete furnished pursuant to paragraph
(1) and dividing the result by 100.

(3) The Franchise Tax Board shall multiply the begin delete amount in
subparagraph (B) of end delete begin insert amounts in end insert paragraph (1) of subdivision begin delete (d) end delete
begin insert (a) end insert for the preceding taxable year by the inflation adjustment factor
determined in paragraph (2), and round off the resulting products
to the nearest one dollar ($1).

(4) In computing the amounts pursuant to this subdivision, the
amounts provided in subparagraph (A) of paragraph (1) of
subdivision (a) shall be twice the amount provided in subparagraph
(B) of paragraph (1) of subdivision (a).

SEC. 3.  

If the Commission on State Mandates determines that
this act contains costs mandated by the state, reimbursement to
local agencies and school districts for those costs shall be made
pursuant to Part 7 (commencing with Section 17500) of Division
4 of Title 2 of the Government Code.

SEC. 4.  

This act provides for a tax levy within the meaning of
Article IV of the Constitution and shall go into immediate effect.