SB 890: Property taxation: change of ownership and base year value transfers.

The California Constitution generally limits ad valorem taxes on real property to 1% of the full cash value of that property. For purposes of this limitation, full cash value is defined as the assessors valuation of real property as shown on the 197576 tax bill under full cash value or, thereafter, the appraised value of that real property when purchased, newly constructed, or a change in ownership has occurred.

Existing property tax law, pursuant to constitutional authorization applicable to purchase or transfers that occurred on or before February 15, 2021, provides that the purchase or transfer of the principal residence, and the first $1,000,000 of other real property, of a transferor in the case of a transfer between parents and their children or, if certain conditions are met, between grandparents and their grandchildren, is not a purchase or change in ownership for purposes of determining the full cash value of property for taxation (prior intergenerational transfer exclusion). Existing property tax law, pursuant to constitutional authorization, excludes, beginning on and after February 16, 2021, from the term change in ownership purchases or transfers of real property that is the principal residence, or is a family farm, of an eligible transferor in the case of a purchase or transfer between parents and their children or, if certain requirements are met, between grandparents and their grandchildren, and certain other requirements are satisfied (intergenerational transfer exclusion).

Existing property tax law provides that a change in ownership does not include certain transfers of a mobilehome park or a floating home marina to a nonprofit corporation, stock cooperative corporation, limited equity stock cooperative, or other entity formed by the tenants of a mobilehome park or floating home marina, respectively, for the purpose of purchasing the mobilehome park or floating home marina, as applicable, if certain requirements relating to tenant rental and participation are met. Existing law provides that if a transfer of a mobilehome park or floating home marina is excluded from a change of ownership pursuant to that provision but the park or floating home marina has not been converted to a condominium, stock cooperative ownership, or limited equity cooperative ownership, then any transfer of shares of the voting stock of, or other ownership or membership interests in, the entity that acquired the park or floating home marina is a change in ownership of a pro rata portion of the real property of the park or floating home marina, unless the transfer is for the purpose of converting the park or floating home marina into one of specified entities or the transfer is excluded from change in ownership pursuant to specified laws, including provisions relating to interspousal transfers.

This bill would also provide that if a transfer of a mobilehome park or floating home marina, as applicable, is excluded from a change of ownership pursuant to the above-described provision but the park or floating home marina has not been converted to a condominium, stock cooperative ownership, or limited equity cooperative ownership, then any transfer of shares of the voting stock of, or other ownership or membership interests in, the entity that acquired the park or floating home marina is a change in ownership of a pro rata portion of the real property of the park or floating home marina, unless the transfer is excluded from change in ownership pursuant to the intergenerational transfer exclusion.

Existing property tax law, pursuant to a constitutional authorization, allows the transfer of the base year value of a qualified contaminated property to a comparable replacement property of equal or lesser value that is located in the same county and is acquired or newly constructed as a replacement for the contaminated property, as described. That law requires the county assessor to determine a new base year value for the original property upon the sale or transfer of that property, as described. That law states that these transfer provisions do not apply unless the sale or transfer of the original property is a change in ownership that subjects the original property to reappraisal at its current fair market value, as described, or results in a base year value determined in accordance with specified laws. That law also prohibits the application of this property tax relief for a replacement property if the owner or owners of the original property receive property tax relief under another law or sign a claim under the prior intergenerational transfer exclusion allowing the base year value to stay with the original property.

Existing law, pursuant to constitutional authorization, allows, beginning on and after April 1, 2021, an owner who is over 55 years of age, severely disabled, or a victim of a wildfire or natural disaster to transfer the taxable value, as described, of a primary residence eligible for either the homeowners exemption or the disabled veterans exemption to a replacement primary residence, located anywhere in this state and regardless of value, that is purchased or newly constructed as that persons principal residence within 2 years of the sale of the original primary residence (age, disability, and disaster base year value transfer).

This bill would authorize the application of the qualified contaminated property base year value transfer provisions if the sale or transfer of the original property results in a base year value determined in accordance with the age, disability, and disaster base year value transfer because the property qualifies under that age, disability, and disaster base year value transfer. The bill would prohibit the application of the qualified contaminated property base year value transfer provisions if the owner or owners of the original property sign a claim under the intergenerational transfer exclusion allowing the base year value to stay with the original property. The bill would also make nonsubstantive changes to the age, disability, and disaster base year value transfer provisions.

By imposing additional duties on local tax officials, the 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 the statutory provisions noted above.

Existing law requires the state to reimburse local agencies annually for certain property tax revenues lost as a result of any exemption or classification of property for purposes of ad valorem property taxation.

This bill would provide that, notwithstanding those provisions, no appropriation is made and the state shall not reimburse local agencies for property tax revenues lost by them pursuant to the bill.

This bill would take effect immediately as a tax levy.