Principal Coauthor, Assembly Member Megan Dahle
The California Constitution generally limits ad valorem taxes on real property to 1% of the full cash value of that property, defined as the county assessor’s valuation of real property as shown on the 1975–76 tax bill and, thereafter, the appraised value of the property when purchased, newly constructed, or a change in ownership occurs after the 1975 assessment, subject to an annual inflation adjustment not to exceed 2%. Existing property tax law 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 between grandparents and their grandchildren if all the parents of those grandchildren are deceased, is not a “purchase” or “change in ownership” for purposes of determining the “full cash value” of property for taxation.
Existing provisions of the California Constitution, adopted as Proposition 19 by the voters at the November 3, 2020, general election, beginning on and after February 16, 2021, exclude from the terms “purchase” and “change in ownership” for purposes of determining the “full cash value” of property the purchase or transfer of a family home or family farm, as those terms are defined, of the transferor in the case of a transfer between parents and their children, or between grandparents and their grandchildren if all the parents of those grandchildren are deceased, as specified. In the case of a transfer of a family home, existing law requires that the property continue as the family home of the transferee. Existing law authorizes, if certain conditions are fulfilled, the new taxable value, defined as the base year value determined as provided above plus any inflation adjustment, of the purchased or transferred family home or family farm to be the sum of (1) the taxable value of the property, subject to adjustment, as determined as of the date immediately prior to the transfer or purchase, and (2) a portion, if any, of the assessed value of the property, as specified. In the case of property tax benefits provided to a family home under these provisions, existing law requires the transferee to claim the homeowner’s or disabled veteran’s exemption within one year of the transfer.
This bill would implement these newly adopted constitutional provisions, as provided. The bill would require that the principal residence transferred be the principal residence of the transferor, and that it become the principal residence of the transferee within one year of the transfer. The bill would require, in order to claim the exclusion, that a claim be filed with the assessor. Because the bill would require county assessors to provide new services in relation to family farms, it would impose a state-mandated local program. The bill would require the State Board of Equalization to prescribe a form for claiming eligibility for the exclusion to be filed as provided. The bill would require the State Board of Equalization to adopt emergency regulations in order to implement these provisions, as provided. The bill would also provide that a claim filed under this section is not a public document and is not subject to public inspection, except to specified parties.