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SB-562 Property taxation: exemption: principal residence: veterans and their unmarried surviving spouses.(2019-2020)

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Date Published: 06/19/2019 09:00 PM
SB562:v97#DOCUMENT

Amended  IN  Assembly  June 19, 2019
Amended  IN  Senate  March 25, 2019

CALIFORNIA LEGISLATURE— 2019–2020 REGULAR SESSION

Senate Bill
No. 562

Introduced by Senator Morrell
(Coauthors: Senators Bates, Chang, Nielsen, and Wilk)
(Coauthors: Assembly Members Choi, Dahle, Flora, Gray, Mathis, and Voepel)

February 22, 2019

An act to amend Section 205.5 of the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.


LEGISLATIVE COUNSEL'S DIGEST


SB 562, as amended, Morrell. Property taxation: exemption: principal residence: veterans and their unmarried surviving spouses.
Existing property tax law, pursuant to the authorization of the California Constitution, provides a disabled veteran’s property tax exemption for the principal place of residence of a veteran, the veteran’s spouse, or the veteran and veteran’s spouse jointly, and the unmarried surviving spouse of a veteran, as provided, if the veteran is blind in both eyes, has lost the use of 2 or more limbs, or is totally disabled as a result of injury or disease incurred in military service, or if the veteran has, as a result of a service-connected injury or disease, died while on active duty in military service. Existing law exempts that part of the full value of the residence that does not exceed $100,000, or $150,000 if the household income of the claimant does not exceed $40,000, as adjusted for inflation, as specified.
This bill, for the 2020–21 fiscal year and for each fiscal year thereafter, to the 2029–30 fiscal year, inclusive, would increase these exemption amounts to $200,000, or $250,000 if the household income of the claimant does not exceed $65,000, as adjusted for inflation. The bill would require county assessors to report to the State Board of Equalization on the use of the increased property tax exemption and for the board to consolidate this information in a report to the Legislature. By adding to the duties of county assessors in this regard, 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.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: NOYES  

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


SECTION 1.

 Section 205.5 of the Revenue and Taxation Code is amended to read:
205.5.

(a)Property that constitutes the principal place of residence of a veteran, that is owned by the veteran, the veteran’s spouse, or the veteran and the veteran’s spouse jointly, is exempted from taxation on that part of the full value of the residence that does not exceed two hundred thousand dollars ($200,000), as adjusted for the relevant assessment year as provided in subdivision (h), if the veteran is blind in both eyes, has lost the use of two or more limbs, or if the veteran is totally disabled as a result of injury or disease incurred in military service. The two hundred thousand dollar ($200,000) exemption shall be two hundred fifty thousand dollars ($250,000) as adjusted for the relevant assessment year as provided in subdivision (h), in the case of an eligible veteran whose household income does not exceed the amount of sixty-five thousand dollars ($65,000), as adjusted for the relevant assessment year as provided in subdivision (g).

205.5.
 (a) (1) For property tax lien dates before the lien date for the 2020–21 fiscal year, and for property tax lien dates for the 2030–31 fiscal year and each fiscal year thereafter, property that constitutes the principal place of residence of a veteran, that is owned by the veteran, the veteran’s spouse, or the veteran and the veteran’s spouse jointly, is exempted from taxation on that part of the full value of the residence that does not exceed one hundred thousand dollars ($100,000), as adjusted for the relevant assessment year as provided in subdivision (h), if the veteran is blind in both eyes, has lost the use of two or more limbs, or if the veteran is totally disabled as a result of injury or disease incurred in military service. The one-hundred-thousand-dollar ($100,000) exemption shall be one hundred fifty thousand dollars ($150,000), as adjusted for the relevant assessment year as provided in subdivision (h), in the case of an eligible veteran whose household income does not exceed the amount of forty thousand dollars ($40,000), as adjusted for the relevant assessment year as provided in subdivision (g).
(2) For the property tax lien dates for the 2020–21 fiscal year and for each fiscal year thereafter to the 2029–30 fiscal year, inclusive, property that constitutes the principal place of residence of a veteran, that is owned by the veteran, the veteran’s spouse, or the veteran and the veteran’s spouse jointly, is exempted from taxation on that part of the full value of the residence that does not exceed two hundred thousand dollars ($200,000), as adjusted for the relevant assessment year as provided in subdivision (h), if the veteran is blind in both eyes, has lost the use of two or more limbs, or if the veteran is totally disabled as a result of injury or disease incurred in military service. The two-hundred-thousand-dollar ($200,000) exemption shall be two hundred fifty thousand dollars ($250,000) as adjusted for the relevant assessment year as provided in subdivision (h), in the case of an eligible veteran whose household income does not exceed the amount of sixty-five thousand dollars ($65,000), as adjusted for the relevant assessment year as provided in subdivision (g).
(b) (1) For purposes of this section, “veteran” means either of the following:
(A) A person who is serving in or has served in and has been discharged under other than dishonorable conditions from service in the United States Army, Navy, Air Force, Marine Corps, or Coast Guard, and served either in time of war or in time of peace in a campaign or expedition for which a medal has been issued by Congress, or in time of peace and because of a service-connected disability was released from active duty, and who has been determined by the United States Department of Veterans Affairs to be eligible for federal veterans’ health and medical benefits.
(B) Any person who would qualify as a veteran pursuant to subparagraph (A) except that the person, as a result of a service-connected injury or disease, died while on active duty in military service. The United States Department of Veterans Affairs shall determine whether an injury or disease is service connected.
(2) For purposes of this section, property is deemed to be the principal place of residence of a veteran, disabled as described in subdivision (a), who is confined to a hospital or other care facility, if that property would be that veteran’s principal place of residence were it not for confinement of the veteran to a hospital or other care facility, provided that the residence is not rented or leased to a third party. For purposes of this paragraph, a family member who resides at the residence is not a third party.
(c) (1) (A) For property tax lien dates before the lien date for the 2020–21 fiscal year, and for property tax lien dates for the 2030–31 fiscal year and each fiscal year thereafter, property that is owned by, and that constitutes the principal place of residence of, the unmarried surviving spouse of a deceased veteran is exempt from taxation on that part of the full value of the residence that does not exceed one hundred thousand dollars ($100,000), as adjusted for the relevant assessment year as provided in subdivision (h), in the case of a veteran who was blind in both eyes, had lost the use of two or more limbs, or was totally disabled, provided that either of the conditions of paragraph (2) are met.

(c)(1)Property

(B) For the property tax lien dates for the 2020–21 fiscal year and for each fiscal year thereafter to the 2029–30 fiscal year, inclusive, property that is owned by, and that constitutes the principal place of residence of, the unmarried surviving spouse of a deceased veteran is exempt from taxation on that part of the full value of the residence that does not exceed two hundred thousand dollars ($200,000), as adjusted for the relevant assessment year as provided in subdivision (h), in the case of a veteran who was blind in both eyes, had lost the use of two or more limbs, or was totally disabled provided that either of the following conditions is met: conditions of paragraph (2) are met.

(A)

(2) (A) The deceased veteran during the veteran’s lifetime qualified for the exemption pursuant to subdivision (a), or would have qualified for the exemption under the laws effective on January 1, 1977, except that the veteran died prior to January 1, 1977.
(B) The veteran died from an injury or a disease that was service connected as determined by the United States Department of Veterans Affairs.
(3) (A) For the property tax lien dates before the lien date for the 2020–21 fiscal year, and for property tax lien dates for the 2030–31 fiscal year and each fiscal year thereafter, the one-hundred-thousand-dollar ($100,000) exemption shall be one hundred fifty thousand dollars ($150,000), as adjusted for the relevant assessment year as provided in subdivision (h), in the case of an eligible unmarried surviving spouse whose household income does not exceed the amount of forty thousand dollars ($40,000), as adjusted for the relevant assessment year as provided in subdivision (g).

The two hundred thousand dollar

(B) For the property tax lien dates for the 2020–21 fiscal year and for each fiscal year thereafter to the 2029–30 fiscal year, inclusive, the two-hundred-thousand dollar ($200,000) exemption shall be two hundred fifty thousand dollars ($250,000), as adjusted for the relevant assessment year as provided in subdivision (h), in the case of an eligible unmarried surviving spouse whose household income does not exceed the amount of sixty-five thousand dollars ($65,000), as adjusted for the relevant assessment year as provided in subdivision (g).
(4) (A) For the property tax lien date for the 1994–95 fiscal year to the property tax lien date for the 2019–20 fiscal year, inclusive, and for the property tax lien date for the 2030–31 fiscal year and each fiscal year thereafter, property that is owned by, and that constitutes the principal place of residence of, the unmarried surviving spouse of a veteran as described in subparagraph (B) of paragraph (1) of subdivision (b) is exempt from taxation on that part of the full value of the residence that does not exceed one hundred thousand dollars ($100,000), as adjusted for the relevant assessment year as provided in subdivision (h). The one-hundred-thousand-dollar ($100,000) exemption shall be one hundred fifty thousand dollars ($150,000), as adjusted for the relevant assessment year as provided in subdivision (h), in the case of an eligible unmarried surviving spouse whose household income does not exceed the amount of forty thousand dollars ($40,000), as adjusted for the relevant assessment year as provided in subdivision (g).

(2)Commencing with

(B) For the property tax lien date for the 1994–95 2020–21 fiscal year, year and for each fiscal year thereafter to the 2029–30 fiscal year, inclusive, property that is owned by, and that constitutes the principal place of residence of, the unmarried surviving spouse of a veteran as described in subparagraph (B) of paragraph (1) of subdivision (b) is exempt from taxation on that part of the full value of the residence that does not exceed two hundred thousand dollars ($200,000), as adjusted for the relevant assessment year as provided in subdivision (h). The two hundred thousand dollar ($200,000) exemption shall be two hundred fifty thousand dollars ($250,000), as adjusted for the relevant assessment year as provided in subdivision (h), in the case of an eligible unmarried surviving spouse whose household income does not exceed the amount of sixty-five thousand dollars ($65,000), as adjusted for the relevant assessment year as provided in subdivision (g).

(3)

(5) Beginning with the 2012–13 fiscal year and for each fiscal year thereafter, property is deemed to be the principal place of residence of the unmarried surviving spouse of a deceased veteran, who is confined to a hospital or other care facility, if that property would be the unmarried surviving spouse’s principal place of residence were it not for confinement of the unmarried surviving spouse to a hospital or other care facility, provided that the residence is not rented or leased to a third party. For purposes of this paragraph, a family member who resides at the residence is not a third party.
(d) As used in this section, “property that is owned by a veteran” or “property that is owned by the veteran’s unmarried surviving spouse” includes all of the following:
(1) Property owned by the veteran with the veteran’s spouse as a joint tenancy, tenancy in common, or as community property.
(2) Property owned by the veteran or the veteran’s spouse as separate property.
(3) Property owned with one or more other persons to the extent of the interest owned by the veteran, the veteran’s spouse, or both the veteran and the veteran’s spouse.
(4) Property owned by the veteran’s unmarried surviving spouse with one or more other persons to the extent of the interest owned by the veteran’s unmarried surviving spouse.
(5) That portion of the property of a corporation that constitutes the principal place of residence of a veteran or a veteran’s unmarried surviving spouse when the veteran, or the veteran’s spouse, or the veteran’s unmarried surviving spouse is a shareholder of the corporation and the rights of shareholding entitle one to the possession of property, legal title to which is owned by the corporation. The exemption provided by this paragraph shall be shown on the local roll and shall reduce the full value of the corporate property. Notwithstanding any law or articles of incorporation or bylaws of a corporation described in this paragraph, any reduction of property taxes paid by the corporation shall reflect an equal reduction in any charges by the corporation to the person who, by reason of qualifying for the exemption, made possible the reduction for the corporation.
(e) For purposes of this section, being blind in both eyes means having a visual acuity of 5/200 or less, or concentric contraction of the visual field to 5 degrees or less; losing the use of a limb means that the limb has been amputated or its use has been lost by reason of ankylosis, progressive muscular dystrophies, or paralysis; and being totally disabled means that the United States Department of Veterans Affairs or the military service from which the veteran was discharged has rated the disability at 100 percent or has rated the disability compensation at 100 percent by reason of being unable to secure or follow a substantially gainful occupation.
(f) An exemption granted to a claimant pursuant to this section shall be in lieu of the veteran’s exemption provided by subdivisions (o), (p), (q), and (r) of Section 3 of Article XIII of the California Constitution and any other real property tax exemption to which the claimant may be entitled. No other real property tax exemption may be granted to any other person with respect to the same residence for which an exemption has been granted pursuant to this section; provided, that if two or more veterans qualified pursuant to this section coown a property in which they reside, each is entitled to the exemption to the extent of their interest.
(g) Commencing on January 1, 2002, 2021, and for each assessment year thereafter, the household income limit shall be compounded annually by an inflation factor that is the annual percentage change, measured from February to February of the two previous assessment years, rounded to the nearest one-thousandth of 1 percent, in the California Consumer Price Index for all items, as determined by the California Department of Industrial Relations.
(h) Commencing on January 1, 2021, and for each assessment year thereafter, the exemption amounts set forth in subdivisions (a) and (c) shall be compounded annually by an inflation factor that is the annual percentage change, measured from February to February of the two previous assessment years, rounded to the nearest one-thousandth of 1 percent, in the California Consumer Price Index for all items, as determined by the California Department of Industrial Relations.
(i) The amendments made to this section by Chapter 871 of the Statutes of 2016 shall apply for property tax lien dates for the 2017–18 fiscal year and for each fiscal year thereafter.

(j)The amendments made to this section by the act adding this subdivision shall apply for property tax lien dates for the 2020–21 fiscal year and for each fiscal year thereafter.

SEC. 2.

 (a) It is the intent of the Legislature to apply the requirements of Section 41 of the Revenue and Taxation Code to this act.
(b) The data collection requirements for the expanded veterans’ and their unmarried surviving spouses’ tax exemption are as follows:
(1) Each county assessor shall report to the State Board of Equalization regarding the use of the expanded veterans’ and their unmarried surviving spouses’ tax exemption.
(2) The State Board of Equalization shall consolidate the information provided pursuant to paragraph (1) and provide an annual report, pursuant to Section 9795 of the Government Code, to the Legislature.

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. 2.SEC. 4.

 Notwithstanding Section 2229 of the Revenue and Taxation Code, no appropriation is made by this act and the state shall not reimburse any local agency for any property tax revenues lost by it pursuant to this act.

SEC. 3.SEC. 5.

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