California Property Taxation covers the basic concepts and procedures of property taxation in California and explains when real and personal property are considered “taxable property” under California law. Written by W. Scott Thomas, Esq., Morgan Lewis, and Michael D. Herbert, Esq., PricewaterhouseCoopers, LLP, this Portfolio explores the various constitutional and statutory exemptions and rebates available to property taxation. Specific exemptions covered include the agricultural exemption, charitable exemption, homeowner's exemption, and the welfare exemption. Special property tax assistance rebates and property tax postponement are also reviewed.

In addition, this Portfolio discusses California's unique situation concerning the valuation of property in light of Proposition 13.  It covers the ambiguities that result from Proposition 13 restricting property assessment to the fair market value of the property as of 1975 or to the time a change in ownership occurs. This Portfolio also details the variety of transfers that constitute a “change of ownership” and provides rules for exclusions from the “change of ownership” definition. Following this discussion is information concerning the various valuation methods employed by California, including a detailed review of special valuation methods used in certain situations involving historical property, mineral and geothermal properties, or properties falling under the Land Conservation Act.

Further, California Property Taxation provides details on California's administration of property taxes.  Discussions include: 

• Assessment of the tax,
• Situs of the assessment,
• Requirements of property statements,
• Applications and hearings for changed assessment, and
• Payment, liens, and collection of the tax.

This Portfolio finishes with a review of judicial remedies available to taxpayers.

A sample Declaration of Separate Ownership of Real Property and Improvements and a sample Claim for Refund are included.

California Property Taxation allows you to benefit from: 

• Hundreds of hours of original research on specific tax planning topics from leading practitioners in this area.
• Invaluable practice documents including tables, charts and lists.
• Plain-English guidance from world-class experts.
• Real-world and in-depth analysis that lets you explore various options.
• Time-saving access to relevant sections of tax laws, regulations, court cases, IRS documents and more.
• Alternative approaches to both common and unique tax scenarios.

This Portfolio is part of the Premier State Tax Library, a comprehensive series, which covers major state tax transactions and issues with expert, in-depth analysis, and offers commentary on a wide range of multi-state and state-specific taxation topics, including Sales and Use, Corporate Income, Individual Income, Property, Gross Receipts, Limitations on States' Authorities to Tax, Credits and Incentives, Electronic Commerce, Mergers and Acquisitions, Procedure and Administration, Special Industries, and more.

Detailed Analysis

1930.01. OVERVIEW OF TAXES ON PROPERTY

A. Ad Valorem Taxes

B. Other Taxes on Property

1. Special Assessments

2. Special Taxes

3. Documentary Transfer Tax

1930.02. TAXABLE PROPERTY

A. Constitutional Principles

B. Personal Property

C. Real Property

1. Definition of Real Property

2. Less Than Fee Interest

3. Improvements and Fixtures

D. Possessory Interests

1. Real Property Possessory Interests

2. Personal Property Possessory Interests

E. Intangibles

1. Basic Exemption From Tax

2. Intangible Value of Property

a. Computer Programs

b. Business Records

1930.03. IMMUNITY UNDER UNITED STATES CONSTITUTION

Introductory Material

A. Import–Export Clause

B. Goods in Transit

C. United States Property

1930.04. CALIFORNIA CONSTITUTIONAL AND STATUTORY EXEMPTIONS AND REBATES

Introductory Material

A. Welfare Exemption

1. Specifically Exempt Welfare Property

a. Property Owned by Specified Entities

b. Property Owned by Educational Entities

c. Property Used for Environmental Preservation and Open Space

d. Low Income Housing

2. Meaning of “Religious, Hospital, Scientific, or Charitable Purposes”

3. Use of Property

a. Stated Purpose

b. Exclusive Use

c. Leased Property

d. Use Affecting Dedication of Property

4. Other Requirements for Welfare Exemption

a. Requirements of Cal. Rev. & Tax. Code § 214(a)

b. Requirement of Income Tax Exemption

c. Ownership of Property on Lien Date

d. How To Claim Welfare Exemption

B. Exemption for Church and Religious Property

1. Scope of Religious Exemption

2. Church Parking Lot

3. How To Claim Religious Exemption

C. Exemption for Educational Institutions

1. Public Schools

a. Exclusive Use Requirement

b. How To Claim School Exemption

2. Colleges

a. Scope of College Exemption

b. Institutions Within College Exemption

c. Exclusive Use Requirement

d. Nonprofit Requirement

e. How To Claim College Exemption

D. Exemption for State and Local Government Property

E. Agricultural Exemption

F. Veteran's Exemption

G. Exemptions Relating to Home

1. Personal Property in Home

2. Homeowners' Exemption

a. Initial Eligibility for Exemption

b. Official Form: Claim for Homeowners' Property Tax Exemption

c. Maintaining Eligibility for Homeowners' Exemption

H. Business Inventory Exemption

I. Property Tax Assistance

J. Property Tax Postponement

K. Miscellaneous Property Tax Exemptions

1930.05. VALUATION

A. Taxable Value Under Proposition 13

B. Purchase and Change in Ownership: General Rules and Definitions; Reporting

C. Rules for Specific Transfers: Inclusions

1. Joint Tenancies

2. Tenancies In Common

3. Trusts

a. Revocable Trusts

b. Reservation of Present Beneficial Interest

c. Trustor Reversion Trusts

d. Proportional Interests of Beneficiaries Unchanged

e. Distribution to Present Beneficiary

4. Legal Entities

5. Transfers of Ownership Interests in Legal Entities

a. Transfers of Entity Control

b. Transfer of Interest of Original Co–Owners

6. Leases, Life Estates, and Estates for Years

a. Leases

b. Life Estates

c. Estates for Years

7. Other Transfers Constituting a Change of Ownership

a. Foreclosures

b. Tax Sale

c. Mineral Production Rights

d. Possessory Interests

e. Stock of a Cooperative Housing Corporation

f. Sale and Leaseback

D. Rules for General Exclusions

1. Exclusion for Transfers Between Spouses and Domestic Partners

2. Exclusion of Most Transfers to Parent/Grandparent or Child/Grandchild

3. Exclusion of Transfers Resulting in Mere Change in Method of Holding Title

4. Other Exclusions From Change in Ownership

a. Transfers Conforming to True Intent

b. Transfers To Perfect Title: Transfers of Units in Group Trusts, Pooled Funds

c. Transfers Between Certain Religious or Public Benefit Corporations

5. Security Transactions

6. Holding Agreements

7. Transfers of Residences to or Among Minor or Disabled Children

8. Transfers Involving Employee Benefit Plans

9. Replacement of Condemned Property

10. Replacement of Property Substantially Destroyed by Disaster

11. Replacement of Principal Residence by Seniors and Severely Disabled Homeowners

12. Transfer of Mobilehome Parks

13. Presumption as to Names on Deed

14. Date of Change in Ownership

E. New Construction

1. Definition of New Construction

2. Disaster Relief Reconstruction Exclusion

3. Seismic Safety Improvements Exclusion

4. Solar Energy System Exclusion

5. Fire Protection Systems Exclusion

6. Access for Severely Disabled Exclusion

F. Valuation Methods

1. Comparable Sales Method

2. Income Method

3. Replacement Cost Method

4. Trade Level Valuation of Tangible Personal Property

5. Special Valuation Methods

a. Land Conservation Act (Williamson Act)

b. Nonprofit Golf Courses

c. Historical Property

d. Wildlife Habitat Contracts

e. Open Space Easements

f. Enforceable Restrictions: Cal. Rev. & Tax. Code § 402.1

g. Conservation Easements

h. Hazardous Waste

i. Mineral and Geothermal Properties

j. Miscellaneous

1930.06. TAX ADMINISTRATION

Introductory Material

A. Tax Rate

B. Lien Date

1. Significance of Lien Date

2. Destruction of Property After Lien Date

C. Who Is Assessed the Tax

1. Separate Ownership of Real Property and Improvements

2. Separate Ownership and Possession

a. Sales of Real Property

b. Sales of Personal Property

c. Leases

(1) Real Property Leases

(2) Personal Property Leases

3. Miscellaneous Relationships

a. Pawnbrokers

b. Warehouse Operators

c. Trustees and Agents

D. Where Property Assessed

1. Tangible Personal Property With Fixed Situs

2. Tangible Personal Property Without Fixed Situs

a. Movable Property

b. Leased and Consigned Goods

c. Aircraft and Vessels

d. Goods in Transit

e. Artificial Satellites

E. Property Statements and Audits

1. Property Statement

2. Official Form: Business Property Statement

3. Filing Requirements

4. Penalties for Failure To File Property Statement

5. Mandatory Audits by Assessor

F. Assessment Rolls

1. Supplemental Rolls

2. Notifying Taxpayer

3. Negotiating With Assessor

4. Escape Assessments

a. When Authorized

b. Statute of Limitations on Escape Assessments

c. When Escape Assessment Entered on Roll

d. Use of Escape Assessments To Correct Prior Assessments

G. Application for Changed Assessment

1. Parties Authorized to File

2. Application Requirements

3. Filing Periods

a. Regular Filing Period

b. Filing Period for Supplemental and Escape Assessments and Roll Corrections

c. Decline in Value Filing Period

d. Base Year Value Filing Period

e. Calamity Reassessment Filing Period

4. Hearing on an Application for Reduction

a. Preparation for Hearing

(1) Examination of Assessor's Records

(2) Written Request for Findings

(3) Issuance of Subpoenas

(4) Exchange of Information

b. Hearing Procedures

(1) Notice and Appearance of Applicant

(2) Order of Presentation; Burden of Proof

(3) Rules of Evidence

(4) Board's Decision

5. Equalization by Assessment Appeals Boards

6. Special Appeals

7. Appeal to State Board of Equalization

8. Recovery of Interest

H. Payment of Tax

1. When Taxes Due

a. Property on Secured Roll

b. Property on Unsecured Roll

c. Payment and Equalization of Escape Assessments

2. Medium of Payment

3. When Payment Deemed Made

I. Lien for Property Taxes

1. Real Property; Improvements

2. Personal Property

3. Priority of Liens

4. Removal of Lien

J. Collection of Taxes on Secured Roll

1. Tax Certificates

2. Sale of Tax–Defaulted Property

a. Procedure for Sale of Property

b. Effect of Sale

3. Redemption of Tax–Sold Property

a. Persons Entitled To Redeem

b. Period of Redemption

c. Law Governing Redemption

d. Payment of Redemption Price

e. Redemption Procedure

(1) Partial Redemption

(2) Installment Redemption

K. Collection of Taxes on Unsecured Roll

1. Suit for Taxes

2. Summary Judgment Procedure

3. Lien by Recordation of Certificate of Delinquency

4. Seizure and Sale

a. Procedure for Seizure and Sale

b. Effect on Other Security Interests

L. Other Enforcement Measures: Notice to Department of Motor Vehicles

1930.07. JUDICIAL REMEDIES

A. Form: Claim for Refund

B. Suit for Refund

1. Recovery of Attorney's Fees

2. Suit if Installment Plan of Redemption Used

C. Court Review of County Boards

D. Other Court Remedies

Working Papers

Item Description Sheet

Worksheet 1 Sample Declaration of Separate Ownership of Real Property and Improvements

Worksheet 2 Sample Claim for Refund

Worksheet 3 California Attorney General's Responses to Hypothetical Questions Concerning § 64(c)

Worksheet 4 CALIFORNIA CONSTITUTION ARTICLE XIIIA

Bibliography

Bibliography