Laws, Regulations & Annotations

Property Taxes Law Guide – Revision 2013
 

Revenue and Taxation Code

Property Taxation

Part 0.5. Implementation of Article XIII A of the California Constitution

Chapter 2. Change in Ownership and Purchase

Section 63.1

63.1. Transfers between parents and their children. (a) Notwithstanding any other provision of this chapter, a change in ownership shall not include the following purchases or transfers for which a claim is filed pursuant to this section:

(1) (A) The purchase or transfer of real property which is the principal residence of an eligible transferor in the case of a purchase or transfer between parents and their children.

(B) A purchase or transfer of a principal residence from a foster child to the child's biological parent shall not be excluded under subparagraph (A) if the transferor child received that principal residence, or interest therein, from a foster parent through a purchase or transfer that was excluded under subparagraph (A).

(2) The purchase or transfer of the first one million dollars ($1,000,000) of full cash value of all other real property of an eligible transferor in the case of a purchase or transfer between parents and their children.

(3) (A) Subject to subparagraph (B), the purchase or transfer of real property described in paragraphs (1) and (2) of subdivision (a) occurring on or after March 27, 1996, between grandparents and their grandchild or grandchildren, if all of the parents of that grandchild or those grandchildren, who qualify as the children of the grandparents, are deceased as of the date of purchase or transfer. Notwithstanding any other provision of law, for the lien date for the 2006–07 fiscal year and each fiscal year thereafter, in determining whether "all of the parents of that grandchild or those grandchildren, who qualify as the children of the grandparents, are deceased as of the date of purchase or transfer," a son-in-law or daughter-in-law of the grandparent that is a stepparent to the grandchild need not be deceased on the date of the transfer.

(B) A purchase or transfer of a principal residence shall not be excluded pursuant to subparagraph (A) if the transferee grandchild or grandchildren also received a principal residence, or interest therein, through another purchase or transfer that was excludable pursuant to paragraph (1) of subdivision (a). The full cash value of any real property, other than a principal residence, that was transferred to the grandchild or grandchildren pursuant to a purchase or transfer that was excludable pursuant to paragraph (2) of subdivision (a) and the full cash value of a principal residence that fails to qualify for exclusion as a result of the preceding sentence shall be included in applying, for purposes of paragraph (2) of subdivision (a), the one million dollar ($1,000,000) full cash value limit specified in paragraph (2) of subdivision (a).

(b) (1) For purposes of paragraph (1) of subdivision (a), "principal residence" means a dwelling that is eligible for a homeowners' exemption or a disabled veterans' exemption as a result of the transferor's ownership and occupation of the dwelling. "Principal residence" includes only that portion of the land underlying the residence that consists of an area of reasonable size that is used as a site for the residence.

(2) For purposes of paragraph (2) of subdivision (a), the one-million-dollar ($1,000,000) exclusion shall apply separately to each eligible transferor with respect to all purchases by and transfers to eligible transferees on and after November 6, 1986, of real property, other than the principal residence, of that eligible transferor. The exclusion shall not apply to any property in which the eligible transferor's interest was received through a transfer, or transfers, excluded from change in ownership by the provisions of either subdivision (f) of Section 62 or subdivision (b) of Section 65, unless the transferor qualifies as an original transferor under subdivision (b) of Section 65. In the case of any purchase or transfer subject to this paragraph involving two or more eligible transferors, the transferors may elect to combine their separate one-million-dollar ($1,000,000) exclusions and, upon making that election, the combined amount of their separate exclusions shall apply to any property jointly sold or transferred by the electing transferors, provided that in no case shall the amount of full cash value of real property of any one eligible transferor excluded under this election exceed the amount of the transferor's separate unused exclusion on the date of the joint sale or transfer.

(c) As used in this section:

(1) "Purchase or transfer between parents and their children" means either a transfer from a parent or parents to a child or children of the parent or parents or a transfer from a child or children to a parent or parents of the child or children. For purposes of this section, the date of any transfer between parents and their children under a will or intestate succession shall be the date of the decedent's death, if the decedent died on or after November 6, 1986.

(2) "Purchase or transfer of real property between grandparents and their grandchild or grandchildren" means a purchase or transfer on or after March 27, 1996, from a grandparent or grandparents to a grandchild or grandchildren if all of the parents of that grandchild or those grandchildren who qualify as the children of the grandparents are deceased as of the date of the transfer. For purposes of this section, the date of any transfer between grandparents and their grandchildren under a will or by intestate succession shall be the date of the decedent's death. Notwithstanding any other provision of law, for the lien date for the 2006–07 fiscal year and each fiscal year thereafter, in determining whether "all of the parents of that grandchild or those grandchildren, who qualify as the children of the grandparents, are deceased as of the date of purchase or transfer," a son-in-law or daughter-in-law of the grandparent that is a stepparent to the grandchild need not be deceased on the date of the transfer.

(3) "Children" means any of the following:

(A) Any child born of the parent or parents, except a child, as defined in subparagraph (D), who has been adopted by another person or persons.

(B) Any stepchild of the parent or parents and the spouse of that stepchild while the relationship of stepparent and stepchild exists. For purposes of this paragraph, the relationship of stepparent and stepchild shall be deemed to exist until the marriage on which the relationship is based is terminated by divorce, or, if the relationship is terminated by death, until the remarriage of the surviving stepparent.

(C) Any son-in-law or daughter-in-law of the parent or parents. For the purposes of this paragraph, the relationship of parent and son-in-law or daughter-in-law shall be deemed to exist until the marriage on which the relationship is based is terminated by divorce, or, if the relationship is terminated by death, until the remarriage of the surviving son-in-law or daughter-in-law.

(D) Any child adopted by the parent or parents pursuant to statute, other than an individual adopted after reaching the age of 18 years.

(E) Any foster child of a state-licensed foster parent, if that child was not, because of a legal barrier, adopted by the foster parent or foster parents before the child aged out of the foster care system. For purposes of this paragraph, the relationship between a foster child and foster parent shall be deemed to exist until terminated by death. However, for purposes of a transfer that occurs on the date of death, the relationship shall be deemed to exist on the date of death.

(4) "Grandchild" or "grandchildren" means any child or children of the child or children of the grandparent or grandparents.

(5) "Full cash value" means full cash value, as defined in Section 2 of Article XIII A of the California Constitution and Section 110.1, with any adjustments authorized by those sections, and the full value of any new construction in progress, determined as of the date immediately prior to the date of a purchase by or transfer to an eligible transferee of real property subject to this section.

(6) "Eligible transferor" means a grandparent, parent, or child of an eligible transferee.

(7) "Eligible transferee" means a parent, child, or grandchild of an eligible transferor.

(8) "Real property" means real property as defined in Section 104. Real property does not include any interest in a legal entity. For purposes of this section, real property includes an interest in a unit or lot within a cooperative housing corporation, as defined in subdivision (i) of Section 61.

(9) "Transfer" includes, and is not limited to, any transfer of the present beneficial ownership of property from an eligible transferor to an eligible transferee through the medium of an inter vivos or testamentary trust.

(10) "Social security number" also includes a taxpayer identification number issued by the Internal Revenue Service in the case in which the taxpayer is a foreign national who cannot obtain a social security number.

(d) (1) The exclusions provided for in subdivision (a) shall not be allowed unless the eligible transferee, the transferee's legal representative, the trustee of the transferee's trust, or the executor or administrator of the transferee's estate files a claim with the assessor for the exclusion sought and furnishes to the assessor each of the following:

(A) A written certification by the transferee, the transferee's legal representative, the trustee of the transferee's trust, or the executor or administrator of the transferee's estate, signed and made under penalty of perjury that the transferee is a parent, child, or grandchild of the transferor and that the transferor is his or her parent, child, or grandparent. In the case of a grandparent-grandchild transfer, the written certification shall also include a certification that all the parents of the grandchild or grandchildren who qualify as children of the grandparents were deceased as of the date of the purchase or transfer and that the grandchild or grandchildren did or did not receive a principal residence excludable under paragraph (1) of subdivision (a) from the deceased parents, and that the grandchild or grandchildren did or did not receive real property other than a principal residence excludable under paragraph (2) of subdivision (a) from the deceased parents. The claimant shall provide legal substantiation of any matter certified pursuant to this subparagraph at the request of the county assessor.

(B) A written certification by the transferor, the transferor's legal representative, the trustee of the transferor's trust, or the executor or administrator of the transferor's estate, signed and made under penalty of perjury that the transferor is a grandparent, parent, or child of the transferee and that the transferor is seeking the exclusion under this section and will not file a claim to transfer the base year value of the property under Section 69.5.

(C) A written certification shall also include either or both of the following:

(i) If the purchase or transfer of real property includes the purchase or transfer of residential real property, a certification that the residential real property is or is not the transferor's principal residence.

(ii) If the purchase or transfer of real property includes the purchase or transfer of real property other than the transferor's principal residence, a certification that other real property of the transferor that is subject to this section has or has not been previously sold or transferred to an eligible transferee, the total amount of full cash value, as defined in subdivision (c), of any real property subject to this section that has been previously sold or transferred by that transferor to eligible transferees, the location of that real property, the social security number of each eligible transferor, and the names of the eligible transferees of that property.

(D) If there are multiple transferees, the certification and signature may be made by any one of the transferees, if both of the following conditions are met:

(i) The transferee has actual knowledge that, and the certification signed by the transferee states that, all of the transferees are eligible transferees within the meaning of this section.

(ii) The certification is signed by the transferee as a true statement made under penalty of perjury.

(E) In the case of a transfer between a foster parent and foster child, the claim filed with the assessor shall include a certified copy of the court decision regarding the foster child status of the individual and a certified statement from the appropriate county agency stating that the foster child was not, because of a legal barrier, adopted by the foster parent or foster parents. Upon a request by the county assessor, the claimant also shall provide to the assessor legal substantiation of any matter certified under this subparagraph.

(2) If the full cash value of the real property purchased by or transferred to the transferee exceeds the permissible exclusion of the transferor or the combined permissible exclusion of the transferors, in the case of a purchase or transfer from two or more joint transferors, taking into account any previous purchases by or transfers to an eligible transferee from the same transferor or transferors, the transferee shall specify in his or her claim the amount and the allocation of the exclusion he or she is seeking. Within any appraisal unit, as determined in accordance with subdivision (d) of Section 51 by the assessor of the county in which the real property is located, the exclusion shall be applied only on a pro rata basis, however, and shall not be applied to a selected portion or portions of the appraisal unit.

(e) (1) The State Board of Equalization shall design the form for claiming eligibility. Except as provided in paragraph (2), any claim under this section shall be filed:

(A) For transfers of real property between parents and their children occurring prior to September 30, 1990, within three years after the date of the purchase or transfer of real property for which the claim is filed.

(B) For transfers of real property between parents and their children occurring on or after September 30, 1990, and for the purchase or transfer of real property between grandparents and their grandchildren occurring on or after March 27, 1996, within three years after the date of the purchase or transfer of real property for which the claim is filed, or prior to transfer of the real property to a third party, whichever is earlier.

(C) Notwithstanding subparagraphs (A) and (B), a claim shall be deemed to be timely filed if it is filed within six months after the date of mailing of a notice of supplemental or escape assessment, issued as a result of the purchase or transfer of real property for which the claim is filed.

(2) In the case in which the real property subject to purchase or transfer has not been transferred to a third party, a claim for exclusion under this section that is filed subsequent to the expiration of the filing periods set forth in paragraph (1) shall be considered by the assessor, subject to all of the following conditions:

(A) Any exclusion granted pursuant to that claim shall apply commencing with the lien date of the assessment year in which the claim is filed.

(B) Under any exclusion granted pursuant to that claim, the adjusted full cash value of the subject real property in the assessment year described in subparagraph (A) shall be the adjusted base year value of the subject real property in the assessment year in which the excluded purchase or transfer took place, factored to the assessment year described in subparagraph (A) for both of the following:

(i) Inflation as annually determined in accordance with paragraph (1) of subdivision (a) of Section 51.

(ii) Any subsequent new construction occurring with respect to the subject real property.

(3) (A) Unless otherwise expressly provided, the provisions of this subdivision shall apply to any purchase or transfer of real property that occurred on or after November 6, 1986.

(B) Paragraph (2) shall apply to purchases or transfers between parents and their children that occurred on or after November 6, 1986, and to purchases or transfers between grandparents and their grandchildren that occurred on or after March 27, 1996.

(4) For purposes of this subdivision, a transfer of real property to a parent or child of the transferor shall not be considered a transfer to a third party.

(f) The assessor may report quarterly to the State Board of Equalization all purchases or transfers, other than purchases or transfers involving a principal residence, for which a claim for exclusion is made pursuant to subdivision (d). Each report shall contain the assessor's parcel number for each parcel for which the exclusion is claimed, the amount of each exclusion claimed, the social security number of each eligible transferor, and any other information the board may require in order to monitor the one million dollar ($1,000,000) limitation in paragraph (2) of subdivision (a). In recognition of the state and local interests served by the action made optional in this subdivision, the Legislature encourages the assessor to continue taking the action formerly mandated by this subdivision.

(g) This section shall apply to both voluntary transfers and transfers resulting from a court order or judicial decree. Nothing in this subdivision shall be construed as conflicting with paragraph (1) of subdivision (c) or the general principle that transfers by reason of death occur at the time of death.

(h) (1) Except as provided in paragraph (2), this section shall apply to purchases and transfers of real property completed on or after November 6, 1986, and shall not be effective for any change in ownership, including a change in ownership arising on the date of a decedent's death, that occurred prior to that date.

(2) This section shall apply to purchases or transfers of real property between grandparents and their grandchildren occurring on or after March 27, 1996, and, with respect to purchases or transfers of real property between grandparents and their grandchildren, shall not be effective for any change in ownership, including a change in ownership arising on the date of a decedent's death, that occurred prior to that date.

(i) A claim filed under this section is not a public document and is not subject to public inspection, except that a claim shall be available for inspection by the transferee and the transferor or their respective spouse, the transferee's legal representative, the transferor's legal representative, the trustee of the transferee's trust, the trustee of the transferor's trust, and the executor or administrator of the transferee's or transferor's estate.

(j) (1) If the assessor notifies the transferee in writing of potential eligibility for exclusion from change in ownership under this section, a certified claim for exclusion shall be filed with the assessor within 45 days of the date of the notice of potential eligibility. If a certified claim for exclusion is not filed within 45 days, the assessor may send a second notice of potential eligibility for exclusion, notifying the transferee that a certified claim for exclusion has not been received and that reassessment of the property will commence unless a certified claim for exclusion is filed within 60 days of the date of the second notice of potential eligibility. The second notice of potential eligibility shall indicate whether a certified claim for exclusion that is not filed within 60 days will be subject to a processing fee as provided in paragraph (2).

(2) If a certified claim for exclusion is not filed within 60 days of the date of the second notice of potential eligibility and an eligible transferee subsequently files a claim and qualifies for the exclusion, the assessor may, upon authorization by a county board of supervisors, require an eligible transferee to pay a one-time processing fee, collected at the time the claim is submitted, and reimbursed by the assessor if the claim is ineligible. The fee shall be subject to the provisions of Chapter 12.5 (commencing with Section 54985) of Part 1 of Division 2 of Title 5 of the Government Code and shall not exceed the amount of the actual and reasonable costs incurred by the assessor for reassessment work done due to failure to file the claim for exclusion or one hundred seventy-five dollars ($175), whichever is less.

(3) The failure to file a certified claim for exclusion within the filing periods specified by this subdivision shall not be construed to limit any exclusion from being granted pursuant to a claim filed within the filing periods specified by subdivision (e).

History.—Added by Stats. 1987, Ch. 48, in effect June 17, 1987. Stats. 1988, Ch. 769, in effect January 1, 1989, added the second sentence, and substituted the balance of the third sentence for "may jointly sell or transfer property with a full cash value of not more than the combined amount of their separate exclusions" after "election," in paragraph (2) of subdivision (b); added the second sentence to subparagraph (B) of paragraph (2) of subdivision (c); deleted the period after "parents" and added the balance of the first sentence and the second sentence to subparagraph (C) of paragraph (2) of subdivision (C); added "and the full value of any new construction in progress," after "sections," in paragraph (3) of subdivision (c); added paragraph (7) to subdivision (c); added the second sentence to the first paragraph and added a new second paragraph to subparagraph (C) of paragraph (2) of subdivision (d); and deleted the period after "1986" and added ", and shall not be effective for any change in ownership, including a change in ownership arising on the date of a decedent's death, which occurred prior to that date." in subdivision (f). Stats. 1990, Ch. 126, in effect June 11, 1990, deleted "while the relationship of parent and son-in-law or daughter-in-law exists" after "parents" in subparagraph (C) of paragraph (2) of subdivision (c); added "the Social Security number of each eligible transferor," after "that real property" in subparagraph (B) of paragraph (2) of subdivision (d); and substituted "Social Security" for "tax identification" after "claimed, the" in the second sentence of the third paragraph of subdivision (d). Stats. 1990, Ch. 1494, in effect September 30, 1990, added ", or prior to . . . whichever is earlier" after "claim is filed" in the second sentence of the second paragraph of subdivision (d). Stats. 1992, Ch. 1180, in effect January 1, 1993, added "For purposes . . . November 6, 1986" after "or children" as the second sentence in paragraph (1) of subdivision (c); added paragraph number (1) after subdivision letter (d); changed former paragraph numbers (1) and (2) of subdivision (d) to subparagraphs (A) and (B), respectively, of paragraph (1) of subdivision (d); relettered subparagraphs (A) and (B) of former paragraph (2) of subdivision (d) as subsections (i) and (ii), respectively, of subparagraph (B) of paragraph (1) of subdivision (d); changed former subparagraph (C) of former paragraph (2) of subdivision (d) to paragraph (2) of subdivision (d); created new subdivision (e) with the former second paragraph of the former subparagraph (C) of former paragraph (2) of subdivision (d); added a colon after "shall be filed" in the newly created subdivision (e); created paragraph (1) in the newly created subdivision (e) and added "For transfers . . . September 30, 1990" after "(1)"; added a period after "claim is filed" in the newly created paragraph (1) of subdivision (e) and created new paragraph (2) of subdivision (e) by adding "For transfers . . . is filed," before "or prior to"; created new subdivision (f) with the former third paragraph of the former subparagraph (C) of former paragraph (2) of subdivision (d); deleted "this" after "pursuant to", and added "(d)" after "subdivision" in the first sentence of the newly created subdivision (f); and relettered former subdivisions (e) and (f) as subdivisions (g) and (h), respectively. Stats. 1993, Ch. 709, in effect January 1, 1994, added ", the transferee's . . . estate" after "transferee" in paragraph (1) and in subparagraph (A) of paragraph (1), substituted "that" for "which" in subdivision (ii), and substituted "from" for "of" in paragraph (2) of subdivision (d); added paragraphs (3) and (4) to subdivision (e); deleted "as" after "information" in the second sentence of paragraph (f); added the second sentence to paragraph (g); and substituted "that" for "which" after "death," in paragraph (h). Stats. 1994, Ch. 1222, in effect January 1, 1995, added paragraph (8) to subdivision (c). Stats. 1996, Ch. 1087, in effect January 1, 1997, deleted "either of" after "shall not include" in the first sentence, and added paragraph (3) of subdivision (a); substituted "homeowners'" for "homeowner's" and "veterans' " for "veteran's" in paragraph (1) of subdivision (b); added subparagraphs (2) and (4), and renumbered former subparagraphs (2), (3), (4), (5), (6), (7) and (8) as (3), (5), (6), (7), (8), (9) and (10), respectively, of subdivision (c), added "grandparent," to renumbered subparagraph (6), deleted "or" before "child" and added ",or grandchild" after "child" to renumbered subparagraph (7); substituted "grandparent, parent, child, or grandchild" for "parent or child" in the first sentence of subparagraph (A), and added the second and third sentences to subparagraph (A) in paragraph (1) of subdivision (d), added "grandparent," after "the transferor is a" in subparagraph (B); added "and for the purchase or transfer of real property between grandparents and their grandchildren occurring on or after March 27, 1996," after "September 30, 1990," to subparagraph (2) of subdivision (e); substituted "social security" for "Social Security" after "the" in the second sentence of subdivision (f); and substituted "(1) Except as provided by paragraph (2), this section" for "This section", and added paragraph (2) of subdivision (h). Stats. 1997, Ch. 941 (SB 542), in effect January 1, 1998, substituted "subdivision (d)" for "subdivision (e)" after "accordance with" in the second sentence of paragraph (2) of subdivision (d); added paragraph number (1) after subdivision letter (e) and added "Except as provided in paragraph (2)," before "any claim" in the second sentence of newly created paragraph (1), changed former paragraph numbers (1), (2) and (3) to subparagraphs (A), (B) and (C), respectively, substituted "subparagraphs (A) and (B)" for "paragraphs (1) and (2)" after "notwithstanding" in subparagraph (C), added paragraph (2), renumbered former paragraph (4) to paragraph (3), added "(A)" before "Unless otherwise" and added subparagraph (B) to former paragraph (4) in subdivision (e). Stats. 1999, Ch. 941 (SB 1231), in effect January 1, 2000, added paragraph (4) to subdivision (e). Stats. 2001, Ch. 613 (SB 1184), in effect January 1, 2002, added ", signed and" after "estate" and added "and that the transferor is his or her parent, child, or grandparent" after "transferor" in the first sentence of subparagraph (A), deleted the former first sentence of subparagraph (B) which provided that "A copy of a written certification by the transferor, the transferor's legal representative, or the executor or administrator of the transferor's estate made under penalty of perjury that the transferor is a grandparent, parent, or child of the transferee." and substituted "A written" for "The written" before "certification" in the former second sentence therein, and added subparagraph (C) to paragraph (1) of subdivision (d). Stats. 2002, Ch. 775 (SB 2092), in effect January 1, 2003, added a comma after "terminated by divorce" in the second sentence of subparagraph (C) of paragraph (3) of subdivision (c), and added new subparagraph (B) to paragraph (1) of subdivision (d) and relettered former subparagraphs (B) and (C) as subparagraphs (C) and (D), respectively, therein. Stats. 2004, Ch. 227 (SB 1102), in effect August 16, 2004, and Stats. 2004, Ch. 889 (AB 2853), in effect September 29, 2004, substituted "may" for "shall" after "The assessor" in the first sentence, substituted "may" for "shall" after "the board" in the second sentence, and added the third sentence in subdivision (f). Stats. 2005, Ch. 264 (SB 555), in effect January 1, 2006, added the second sentence to subparagraph (A) of paragraph (3) of subdivision (a), added the third sentence to paragraph (2) of subdivision (c), and added subdivision (i). Stats. 2006, Ch. 224 (SB 1607), in effect January 1, 2007, amended the uncodified legislative intent language of Section 2 of the Stats. 1987, Ch. 48 to create new subdivision (a) with the former first sentence of the first paragraph and added "both of the following:" after "the intent of" therein, created new paragraph (1) with the balance of the former first sentence commencing with "Proposition 58" and added paragraph (2) thereto; created new subdivision (b) with the former second and third sentences; and created new subdivision (c) with the former fourth sentence, deleted "nothing in" after "provided herein," and added "not" after "this section shall" therein. Stats. 2007, Ch. 450 (AB 402), in effect January 1, 2008, designated former paragraph (1) of subdivision (a) as subparagraph (A) and added subparagraph (B) thereto; substituted "that is eligible for a homeowners' exemption or a disabled veterans' exemption as a result of the transferor's ownership and occupation of the eligible dwelling" for "for which a homeowners' exemption or a disabled veterans' residence exemption has been granted in the name of the transferor's ownership" after "means a dwelling" and deleted "eligible" after "occupation of the" in the first sentence and deleted "principal" after "'and underlying the" in the second sentence of paragraph (1) and substituted "one-million-dollar" for "one million dollar" twice in the first and third sentences of paragraph (2) of subdivision (b); added subparagraph (E) to paragraph (3) of subdivision (c); and deleted "grandparent," after "transferee is a" in the first sentence of subparagraph (A) of paragraph (1) of subdivision (d) and added subparagraph (E) thereto. Stats. 2008, Ch. 349 (SB 1233), in effect January 1, 2009, added subdivision (j). Stats. 2010, Ch. 654 (SB 1494), in effect January 1, 2011, added "the trustee of the transferee's trust," after "legal representative," three times in the first sentences of paragraph (1), subparagraph (A), and subparagraph (B) of subdivision (d) and added "the trustee of the transferee's trust, the trustee of the transferor's trust," after "legal representative," in the first sentence of subdivision (i). Stats. 2011, Ch. 351 (SB 947), in effect January 1, 2012, added the second sentence to paragraph (8) of subdivision (c) commencing with "For purposes of" and substituted "transferor's" for "transferee's" after "trustee of the" in the first sentence of subparagraph (B) of paragraph (1) of subdivision (d).

Note.—Section 2 of Stats. 1987, Ch. 48 (AB 47), as amended by Section 6 of Stats. 2006, Ch. 224 (SB 1607), provided that:

(a) It is the intent of the Legislature that the provisions of Section 63.1 of the Revenue and Taxation Code shall be liberally construed in order to carry out the intent of both of the following:

(1) Proposition 58 on the November 4, 1986, general election ballot to exclude from change in ownership purchases or transfers between parents and their children described therein.

(2) Proposition 193 on the March 26, 1996, primary election ballot to exclude from change in ownership purchases or transfers between grandparents and their grandchildren described therein.

(b) Specifically, transfers of real property from a corporation, partnership, trust, or other legal entity to an eligible transferor or transferors, where the latter are the sole owner or owners of the entity or are the sole beneficial owner or owners of the property, shall be fully recognized and shall not be ignored or given less than full recognition under a substance-over-form or step-transaction doctrine, where the sole purpose of the transfer is to permit an immediate retransfer from an eligible transferor or transferors to an eligible transferee or transferees which qualifies for the exclusion from change in ownership provided by Section 63.1. Further, transfers of real property between eligible transferors and eligible transferees shall also be fully recognized when the transfers are immediately followed by a transfer from the eligible transferee or eligible transferees to a corporation, partnership, trust, or other legal entity where the transferee or transferees are the sole owner or owners of the entity or are the sole beneficial owner or owners of the property, if the transfer between eligible transferors and eligible transferees satisfies the requirements of Section 63.1.

(c) Except as provided herein, this section shall not be construed as an expression of intent on the part of the Legislature disapproving in principle the appropriate application of the substance-over-form or step-transaction doctrine.

Sec. 3 thereof provided that the Legislature finds that Section 1 of this act mandates a new program or higher level of service on local government by requiring periodic reports to the State Board of Equalization by county assessors with regard to all purchases or transfers of real property specified in subdivision (d) of Section 63.1 of the Revenue and Taxation Code, as added by Section 1 of this act. As required by Section 6 of Article XIII B of the California Constitution, reimbursement to local agencies and school districts for costs mandated by the state, pursuant to this act shall be made pursuant to Part 7 (commencing with Section 17500) of Division 4 of Title 2 of the Government Code and, if the statewide cost of the claim for reimbursement does not exceed five hundred thousand dollars ($500,000), shall be made from the State Mandates Claims Fund.

Note.—Section 4 of Stats. 1988, Ch. 769, provided that except for the addition of paragraph (7) to subdivision (c), the amendments to this section shall apply to purchases and transfers of real property which occur on or after November 6, 1986.

Note.—Section 8 of Stats. 1992, Ch. 1180 provided that the Legislature finds and declares that the amendments made by Section 2 of this act in paragraph (1) of subdivision (e) of this section do not constitute changes in, but are declaratory of, existing law.

Note.—Section 41 of Stats. 1999, Ch. 941 (SB 1231) provided that notwithstanding Section 17610 of the Government Code, 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. If the statewide cost of the claim for reimbursement does not exceed one million dollars ($1,000,000), reimbursement shall be made from the State Mandates Claims Fund.

Note.—Section 5 of Stats. 2001, Ch. 613 (SB 1184) provided that 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. 6 therein provided that notwithstanding Section 17610 of the Government Code, 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. If the statewide cost of the claim for reimbursement does not exceed one million dollars ($1,000,000), reimbursement shall be made from the State Mandates Claims Fund.

Note.—Section 18 of Stats. 2005, Ch. 264 (SB 555), provided that the Legislature finds and declares that the amendments made by this act to Sections 63.1 and 69.5 of the Revenue and Taxation Code impose limitations on the public's right of access to the meetings of public bodies or the writings of public officials and agencies within the meaning of Section 3 of Article I of the California Constitution. Pursuant to that constitutional provision, the Legislature makes the following findings to demonstrate the interest protected by this limitation and the need for protecting that interest:

(a) Claims filed under Section 63.1 or Section 69.5 contain taxpayer sensitive personal information, including social security numbers, dates of birth, home addresses, home telephone numbers, marital status, adoption status, financial matters, and medical information. Notwithstanding Section 3 of Article I of the California Constitution, county assessors have a responsibility and an obligation to safeguard from public access a taxpayer's personal information with which it has been entrusted.

(b) The right to privacy is a personal and fundamental right protected by Section 1 of Article I of the California Constitution and by the United States Constitution. All individuals have a right of privacy in information pertaining to them.

(c) This state has previously recognized, in Section 408.2 of the Revenue and Taxation Code, the importance of protecting the confidentiality and privacy of an individual's personal and financial information contained in homeowners' exemption claims, property statements, and change of ownership statements filed with county assessors for property tax purposes.

(d) In addition to the right of privacy, there is a need to protect from public disclosure personal information due to the growing prevalence and debilitating nature of identity theft.

(e) It is not the intent of this act to make confidential that a particular property has received a property tax benefit pursuant to Section 63.1 or Section 69.5 of the Revenue and Taxation Code, or the amount of the benefit, but only to protect the personal information contained in the claim form. In addition, the Legislature further finds that in determining the fiscal impact resulting from either of these provisions, county assessors may provide aggregated data on property in their counties that have been extended these property tax benefits.

Construction.—A devisee who inherited real property under his mother's will was not required to submit written certification of the relationship in accordance with Section 63.1(d) in order to qualify for exemption under Article XIII A, Section 2(h) of the Constitution where Section 63.1 did not exist at the time the property passed to him by the probate court's order of distribution and where the devisee did what he was required to do at the time to ripen his claim. Larson v. Duca, 213 Cal.App.3d 324.

Under this section, certain transfers of real property between parents and children are excluded from change in ownership. The exclusion is not applicable to a transfer of real property from a parent to a limited partnership wholly owned by the parent and her adult children, however. The section limits the scope of the exclusion by restricting the definition of "children" to natural persons. Penner v. Santa Barbara County, 37 Cal.App.4th 1672.

Step transaction doctrine.—A reassessment of real property transferred by a parent to a limited partnership wholly owned by herself and her adult children did not violate the step transaction doctrine, even though the exclusion would have been applicable had the owner first transferred the property to herself and her children and then to the partnership. The doctrine treats a series of nominally separate transactional steps as a single transaction if the steps are, in substance, interdependent and focused toward a particular result. However, the doctrine allows certain steps actually taken to be ignored; it does not allow a taxpayer to invent steps that never existed. Having chosen to transfer the real property directly to the limited partnership, the owner was required to accept the tax consequences of that choice. Penner v. Santa Barbara County, 37 Cal.App.4th 1672. Subdivision (e)(4) of this section does not violate the constitutional prohibition against making a gift of public funds pursuant to Article XVI, Section 6 of the Constitution, which generally bars the Legislature from providing relief for taxes which have become fixed and vested, because the tax relief provided falls within the well recognized exception for funds expended for a public purpose. By enlarging the time period for filing claims for exclusion, the subdivision implements the provisions of Article XIII A, Section 2, Subdivision (h)(1) of the Constitution and, thereby, fulfills a valid public purpose of relieving hardship on taxpayers, even though such public purpose was not expressly articulated by the Legislature. Scott v. State Board of Equalization, 50 Cal.App.4th 1597.