Laws, Regulations & Annotations

Property Taxes Law Guide – Revision 2013
 

Revenue and Taxation Code

Property Taxation

Part 1. General Provisions

Chapter 1. Construction

Section 110.1

110.1. "Full cash value" under Article XIII A. (a) For purposes of subdivision (a) of Section 2 of Article XIII A of the California Constitution,

"full cash value" of real property, including possessory interests in real property, means the fair market value as determined pursuant to Section 110 for either of the following:

(1) The 1975 lien date.

(2) For property which is purchased, is newly constructed, or changes ownership after the 1975 lien date, either of the following:

(A) The date on which a purchase or change in ownership occurs.

(B) The date on which new construction is completed, and if uncompleted, on the lien date.

(b) The value determined under subdivision (a) shall be known as the base year value for the property.

(c) Notwithstanding Section 405.5, for property which was not purchased or newly constructed or has not changed ownership after the 1975 lien date, if the value as shown on the 1975–76 roll is not its 1975 lien date base year value and if the value of that property had not been determined pursuant to a periodic reappraisal under Section 405.5 for the 1975–76 assessment roll, a new 1975 lien date base year value shall be determined at any time until June 30, 1980, and placed on the roll being prepared for the current year; provided, however, that for any county over four million in population the board of supervisors may adopt a resolution granting the assessor of that county until June 30, 1981, the authority to determine those values. Regardless of the foregoing restrictions, property that escaped taxation for 1975 and was not merely underassessed for that year, shall be added to the roll in any year in which the escape is discovered at its 1975 base year value indexed to reflect inflation as provided in subdivision (f). In determining the new base year value for that property, the assessor shall use only those factors and indicia of fair market value actually utilized in appraisals made pursuant to Section 405.5 for the 1975 lien date. The new base year values shall be consistent with the values established by reappraisal for the 1975 lien date of comparable properties which were reappraised pursuant to Section 405.5 for the fiscal year. In the event that determination is made, no escape assessment may be levied and the newly determined "full cash value" shall be placed on the roll for the current year only; provided, however, the preceding shall not prohibit a determination which is made prior to June 30 of a fiscal year from being reflected on the assessment roll for the current fiscal year.

(d) If the value of any real property as shown on the 1975–76 roll was determined pursuant to a periodic appraisal under Section 405.5, that value shall be the 1975 lien date base year value of the property.

(e) As used in subdivisions (c) and (d), a parcel of property shall be presumed to have been appraised for the 1975–76 fiscal year if the assessor's determination of the value of the property for the 1975–76 fiscal year differed from the value used for purposes of computing the 1974–75 fiscal year tax liability for the property, but the assessor may rebut that presumption by evidence that, notwithstanding the difference in value, that parcel was not appraised pursuant to Section 405.5 for the 1975–76 fiscal year.

(f) For each lien date after the lien date in which the full cash value is determined pursuant to this section, the full cash value of real property, including possessory interests in real property, shall be adjusted by an inflation factor, which shall be determined as provided in subdivision (a) of Section 51.

History—Added by Stats. 1978, Ch. 292, effective June 24, 1978. Stats. 1978, Ch. 332, in effect June 30, 1978, under subdivision (b) changed the number 405.61 to 405.6. Stats. 1978, Ch. 576, in effect August 31, 1978, added the phrase "including possessory interests in real property" to subdivisions (a) and (c). Also added the same phrase to paragraph (2) of subdivision (a). Stats. 1979, Ch. 49, in effect May 2, 1979, substituted "fair market value" for "full cash value" in subdivision (a), and restated subdivision (a); and substituted subdivision (b) for former subdivision (b) which provided that "The value determined pursuant to subdivision (a) shall be the 'Base Year Value.' If property has not been appraised pursuant to Section 405.5 to its appropriate base year value, 'full cash value' means the reappraised value of such property as of the base year lien date. Such reappraisals may be made at any time, notwithstanding the provisions of Section 405.6." Stats. 1979, Ch. 1188, in effect September 30, 1979, relettered subdivision (b) as subdivisions (b), (c), (d), and (e), and relettered former subdivision (c) as subdivision (f); added "; provided, however, that for counties over 4 million in population the Board of Supervisors may adopt a resolution granting the assessor of such county until June 30, 1981, to determine such values" after "year" in the first sentence of subdivision (c); substituted "subdivisions (c) and (d)" for "this subdivision" in the first sentence of subdivision (e); and substituted "this section" for "subdivision (a) and (b)" in the first sentence of subdivision (f). Stats. 1983, Ch. 1281, in effect September 30, 1983, deleted "or 405.6" after "405.5", substituted "any county" for "counties" before "over," and added "the authority" after "June 30, 1981" in the first sentence of subdivision (c), and substituted "that, those, or the" for "such" in subdivisions (c), (d), (e), and (f). Stats. 1984, Ch. 1164, in effect January 1, 1985, substituted "be adjusted by . . . Section 51" for "reflect the percentage change in cost of living, as defined in Section 2212; provided, that the value shall not reflect an increase in excess of 2 percent of the full cash value of the preceding lien date" after "shall" in subdivision (f). Stats. 1985, Ch. 186, effective January 1, 1986, added "of the following" after "Section 110 for either" in subdivision (a), substituted "." for "; or" after "date" in subsection (1) thereof, and added ", either of the following" after "date" in subsection (2) thereof; and deleted "any provisions of" after "Notwithstanding" in the first sentence, and added the second sentence to subdivision (c).

Note.—Section 2 of Stats. 1979, Ch. 49, provided that (a) Section 1 of this act shall be applied to the 1978–79 fiscal year and fiscal years thereafter.

(b) Except as otherwise provided in this subdivision, if the value of any property is reduced pursuant to Section 110.1 of the Revenue and Taxation Code, the reduced taxes resulting therefrom shall be reflected in a corresponding reduction in the next succeeding tax installment or installments for such property in the 1979–80 fiscal year unless there was a change in the assessee or assessees of record between July 1, 1978, and June 30, 1979, in which case a refund of such reduced taxes shall be prorated between such assessees of record in the same proportion as they participated in the payment of such taxes. In the event that the current address of a former assessee of record of such property entitled to share in any such refund is not known to the county, that portion of such refund shall be withheld by the county and the assessee may claim a refund from the county treasurer at any time prior to July 1, 1980. No reduction or refund shall be given pursuant to this subdivision of any amount previously collected to pay the interest and redemption charges on any indebtedness approved by the voters prior to July 1, 1978. Sec. 3 thereof provided that it is the intent of the Legislature to correct an improper assessment practice which has resulted from the misinterpretation of Article XIII A of the California Constitution, as added to the California Constitution pursuant to the approval by the voters, of Proposition 13 on the ballot for the Direct Primary Election held June 6, 1978, and Section 110.1 of the Revenue and Taxation Code, as added by Chapter 292 of the Statutes of 1978, amended by Chapter 332 of the Statutes of 1978, and further amended by Chapter 576 of the Statutes of 1978.

It is further the intent of the Legislature that this act be construed as an act necessary for the implementation of Proposition 13, and, as such, is not a cost mandated by the state.

No appropriation is made by this act, nor is any obligation created thereby, pursuant to Section 2231 or 2234 of the Revenue and Taxation Code. Moreover, no claim shall be considered with respect to this act by the State Board of Control pursuant to Section 905.2 of the Government Code or Section 2250 of the Revenue and Taxation Code, and the Department of Finance shall not review or report on this act pursuant to Section 2246 of the Revenue and Taxation Code. Sec. 4 thereof provided that this act clarifies the intent of Article XIII A of the California Constitution and Chapters 292 and 332 of the Statutes of 1978, to correct the administrative interpretation of such provisions which has resulted in the incorrect assessment of certain properties, and does not make a substantive change. It is the intent of the Legislature that counties which have established base year values in conformity with the intent of Section 110.1 of the Revenue and Taxation Code, as clarified by this act, shall not be required to redetermine such base year values.

Note.—Section 7 of Stats. 1979, Ch. 1188, amended Section 2 of Stats. 1979, Ch. 49, to provide that (a) Section 1 of this act shall be applied to the 1978–79 fiscal year and fiscal years thereafter.

(b) Except as otherwise provided in this subdivision, if the value of any property is reduced pursuant to Section 110.1 of the Revenue and Taxation Code, the reduced taxes resulting therefrom shall be refunded or shall be reflected in a corresponding reduction in the next succeeding tax installment or installments for such property in the 1979–80 fiscal year unless there was a change in the owner or owners of record between July 1, 1978, and June 30, 1979, in which case a refund of such reduced taxes shall be prorated between such owners of record in proportion to the time they owned the property during the fiscal year. In the event that the current address of a former owner of record of such property entitled to share in any such refund is not known to the county, that portion of such refund shall be withheld by the county and the owner may claim a refund from the county treasurer at any time prior to July 1, 1980. No reduction or refund shall be given pursuant to this subdivision of any amount previously levied to pay the interest and redemption charges on any indebtedness approved by the voters prior to July 1, 1978. Sec. 13 of Stats. 1979, Ch. 1188, provided no payment by state to local governments because of this act.

Note.—Section 20 of Stats. 1985, Ch. 186, provided that it is the intent of the Legislature in enacting Sections 11 and 11.3 of this act, which amend Sections 110.1 and 532.3 of the Revenue and Taxation Code, to clarify the application of these provisions to property which existed on the 1975 lien date, but escaped taxation entirely and was not identified and placed on the roll prior to June 30, 1980 (or June 30, 1981, in the case of counties over four million in population). In these cases, it is the intent of the Legislature that any of these properties which escaped taxation shall be placed on the current roll even though the property was not discovered until after the dates of June 30, 1980, and June 30, 1981. Sec. 21 thereof provided reimbursement to local governments for costs mandated by the State pursuant to this act.

Construction.—In an action alleging that in interpreting the section as amended in 1979, the assessor erred in determining the 1978–79 tax roll by factored increases rather than by physical reappraisals conducted pursuant to Section 405.5, and in rolling back the 1978–79 tax roll (which then reflected 100 percent of the 1975 fair market value of all property) to the original 1975–76 tax levels without a periodic physical reappraisal, the relief sought was barred by the limitation in the section which permitted determination of new 1975 lien date base year values only until June 30, 1980. Further, the assessor had complied with the provisions of the section by rolling back the 1978–79 assessment roll to the original 1975 year values. Since the real property in the county had been appraised for the 1975–76 fiscal year by computer factoring and the property values determined for that fiscal year differed from the values in the previous year's assessment roll, the presumption of the section arose that the real property had been reappraised for 1975–76 and that as a consequence the 1978–79 appraisal made by the previous assessor was improper. And it was within the assessor's discretion not to rebut this presumption. Swicegood v. Rosh, 148 Cal.App.3d 119.

Inflation factor.—Requiring adjustment of 1975–76 base values for the three tax years between establishment of the full cash value base in 1975 and the 1978 effective date of Article XIII A represented a valid exercise of legislative power. Armstrong v. San Mateo County, 146 Cal.App.3d 597.

Lands owned by local governments and located outside their boundaries.—Subdivision (a) of this section, by defining "full cash value" as fair market value as of a given date, does not prevent the application of Article XIII A of the Constitution to lands owned by a local government and located outside the government's boundaries. Section 51 defines "taxable value" as the lesser of either the "base year value" of the property compounded annually by an inflation factor of no more than 2 percent or the current fair market value of the property (in cases where the property has declined in value). This section, in turn, provides several definitions of "base year value." Under subdivision (d) of this section, if the value of the property as shown on the 1975–1976 roll was determined pursuant to a periodic appraisal under Section 405.5, that value is the 1975 lien date base year value of the property. Periodic appraisals under Section 405.5 include appraisals made on a restricted value basis such as the appraisal of extraterritorial land under the valuation limitations of Article XIII, Section 11. Thus, for such land owned at the time of the 1975 assessment, this section's base year value is not the fair market value but the 1975 Article XIII, Section 11 valuation. San Francisco v. San Mateo County, 10 Cal.4th 554.

Geothermal resources.—Once proved reserves have been established, the property interest of a lessee under a geothermal lease must be assigned a base year value, which is adjusted annually to reflect the depletion of reserves. It is also adjusted when appropriate to reflect the discovery of new reserves. Phillips Petroleum Co. v. Lake County, 15 Cal.App.4th 180.