Senior Senate State Proposal

SENIOR SENATE PROPOSAL NO. 6
INTRODUCED BY SENIOR SENATOR MACK

LEGISLATIVE COUNSEL’S DIGEST
SP 6: RELATING TO TAXATION.

THE CALIFORNIA CONSTITUTION GENERALLY LIMITS AD VALOREM TAXES ON REAL PROPERTY TO 1 PERCENT OF THE FULL CASH VALUE OF THAT PROPERTY. FOR PURPOSES OF THIS LIMITATION, “FULL CASH VALUE” IS DEFINED AS THE ASSESSOR’S VALUATION OF REAL PROPERTY AS SHOWN ON THE 1975-76 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 INCOME LAW IMPOSES CAPITAL GAINS TAXES UPON THE SALE OF CAPITAL ASSETS.
THIS MEASURE WOULD MEMORIALIZE THE LEGISLATURE AND THE GOVERNOR TO ENACT LEGISLATION THAT WOULD ALLOW SENIORS OVER 65 YEARS OF AGE TO MOVE ANYWHERE IN CALIFORNIA WITHOUT PAYING INCREASED PROPERTY TAXES AS LONG AS THEY ARE MOVING TO A LESS EXPENSIVE RESIDENCE, AND TO ELIMINATE CAPITAL GAINS TAXES ON THE SALE OF THEIR RESIDENCE.
VOTE: MAJORITY.

SP 6: TAXATION: SALE OF PRINCIPAL RESIDENCE

WHEREAS, THE CALIFORNIA CONSTITUTION GENERALLY LIMITS AD VALOREM TAXES ON REAL PROPERTY TO 1 PERCENT OF THE
FULL CASH VALUE OF THAT PROPERTY; AND
WHEREAS, FOR PURPOSES OF THIS LIMITATION, “FULL CASH VALUE” IS DEFINED AS THE ASSESSOR’S VALUATION OF REAL PROPERTY AS SHOWN ON THE 1976-76 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; AND
WHEREAS, THE CALIFORNIA CONSTITUTION AUTHORIZES THE LEGISLATURE TO PROVIDE THAT A SEVERELY DISABLED PERSON
AND A PERSON OVER 55 YEARS OF AGE MAY TRANSFER THE BASE YEAR VALUE, AS DEFINED, OF PROPERTY THAT IS ELIGIBLE FOR THE HOMEOWNERS’ PROPERTY TAX EXEMPTION TO A REPLACEMENT DWELLING THAT IS OF EQUAL OR LESSER VALUE LOCATED WITHIN THE SAME COUNTY AS THE PROPERTY FROM WHICH THE BASE YEAR VALUE IS TRANSFERRED AND THE REPLACEMENT DWELLING IS PURCHASED OR NEWLY CONSTRUCTED WITHIN TWO YEARS OF THE SALE OF THE ORIGINAL PROPERTY, SUBJECT TO CERTAIN CONDITIONS; AND
WHEREAS, FEDERAL AND STATE INCOME TAX LAWS IMPOSE CAPITAL GAINS TAXES UPON THE SALE OF CAPITAL ASSETS; AND
WHEREAS, A TAXPAYER IS ALLOWED TO EXCLUDE FROM INCOME UP TO $250,000 ($500,000 FOR JOINT RETURNS) OF GAIN FROM THE SALE OF A QUALIFYING PRINCIPAL RESIDENCE; AND
WHEREAS, SENIORS ARE SUBJECT TO CAPITAL GAINS TAXES
ON THE SALE OF THEIR HOME EVEN IF THEY MOVE TO ASSISTED LIVING UNITS, WHERE THERE MAY BE HEAVY UP FRONT FEES; AND
WHEREAS, THE DEATH OF A SPOUSE CREATES A DISPARITY IN TAX TREATMENT IN THAT AN ELDERLY COUPLE IS REQUIRED TO
PAY CAPITAL GAINS TAXES UPON THE SALE OF THEIR HOME, BUT A SURVIVING PARTNER CAN REDUCE HIS OR HER CAPITAL GAINS BY VIRTUE OF A STEPPED UP BASIS IN COMPUTING CAPITAL GAINS THAT IS ALLOWED UPON THE DEATH OF HIS OR HER SPOUSE; NOW, THEREFORE, BE IT
RESOLVED, BY THE SENIOR SENATE AND THE SENIOR ASSEMBLY, JOINTLY, THAT THE SENIOR LEGISLATURE OF THE STATE OF CALIFORNIA AT ITS 2009 REGULAR SESSION, A MAJORITY OF THE MEMBERS VOTING THEREFOR, HEREBY PROPOSES THAT LEGISLATION BE ENACTED TO ALLOW SENIORS OVER 65 YEARS OF AGE TO MOVE ANYWHERE IN CALIFORNIA WITHOUT PAYING INCREASED PROPERTY TAXES AS LONG AS THEY ARE MOVING TO A LESS EXPENSIVE RESIDENCE, AND TO ELIMINATE CAPITAL GAINS TAXES ON THE SALE OF THEIR RESIDENCE; AND BE IT FURTHER
RESOLVED, THAT THE SENIOR LEGISLATURE OF THE STATE OF CALIFORNIA RESPECTFULLY MEMORIALIZES THE LEGISLATURE AND THE GOVERNOR OF THE STATE OF CALIFORNIA TO ENACT APPROPRIATE LEGISLATION THAT WOULD ADDRESS THE CONCERNS SET FORTH IN THIS MEASURE; AND BE IT FURTHER
RESOLVED, THAT A COPY OF THIS MEASURE BE TRANSMITTED TO THE PRESIDENT PRO TEMPORE OF THE SENATE, THE SPEAKER OF THE ASSEMBLY, AND THE GOVERNOR OF THE STATE OF CALIFORNIA.
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