OVERVIEW OF PROPERTY TAX DISASTER RELIEF PROVISIONS September 2015 Governor-Proclaimed State of Emergency

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1 September 2015 Governor-Proclaimed State of Emergency Revenue and Taxation Code 1 Property Type Type of Relief Available Section 170 All property types New construction exclusion Section 69 All property types Base year transfer within same county Section 69.3 Principal place of residence Base year transfer to another county Sections 172 & Section 5825 Section 194 Manufactured home (license fee or property tax) Manufactured home (property tax only) Real property and manufactured homes Base year transfer New construction exclusion; Base year transfer Property tax deferral Type of Disaster ; Any disaster or calamity Any disaster or calamity NEW CONSTRUCTION EXCLUSION (SECTION 170) If your property has been damaged or destroyed by a disaster, you may request that the property be reassessed downward immediately to reflect its current value in the damaged condition. This relief is applicable to all property subject to property taxation. Qualifying owners may be individuals, partnerships, corporations, or other legal entities. Specific requirements of the section 170 provisions include: The disaster may be the result of either a state of emergency or other types of disaster. The total value of the damage to all taxable property (land, improvements, and personalty) must exceed $10,000. An application may be filed with the county assessor within the time specified in the county ordinance or within 12 months after the damage or destruction, whichever is later. Forms are available from your assessor's office or from the assessor's website (see last page). 1 All statutory references are to the Revenue and Taxation Code unless otherwise specified.

2 The downward reassessment is accomplished by reducing the adjusted base year value in the same proportion as the decline in the fair market value of the property due to the damage. This downward assessment results in a reduction of property taxes for the current year, prorated to reflect the number of months remaining in the year after the damage occurred, including the month in which the damage occurred. This temporary assessment (plus the annual inflation adjustment) remain on the property until the damage is restored, repaired, reconstructed, or another reassessable event occurs. Any reduced taxes are refunded to the property owner. When the damaged property is restored, repaired, or reconstructed, the factored base year value of the improvements will be restored. However, if the rebuilt property is larger than the property prior to damage or destruction, a new base year value will be established for the excess portion. Upon the completion of the reconstruction, the assessor will make an additional assessment prorated for the period between the date of completion and the ensuing lien date. An additional assessment is a means of restoring value to the roll as a result of the completion of restoration, repair or reconstruction of a property that was assessed at a reduced value. An additional assessment is the difference between a new taxable value as of the date of completion of reconstruction and the taxable value on the current assessment roll. Depending on the time of year in which the completion of reconstruction occurs, either one or two additional assessments may be generated for that event: one for the current roll (prorated for the portion of the year remaining after the completion date), and one for the roll being prepared (for a completion date that occurs between January 1 and May 31). BASE YEAR VALUE TRANSFER WITHIN THE SAME COUNTY (SECTION 69) If you own real property that has been substantially damaged or destroyed in a Governorproclaimed disaster, you may transfer the base year value of the damaged property to a property within the same county that is acquired or constructed as a replacement. This relief is available for all types of real property; however, the original property and the replacement property must be of the same property type: residential, commercial, agricultural, or industrial. Other requirements for the section 69 relief include: Either the land or the improvements must have sustained physical damage amounting to more than 50 percent of its current market value immediately prior to the damage. The replacement property must be acquired or newly constructed within 5 years after the disaster. If the base year value is transferred, the new construction exclusion is not available if the damaged property is rebuilt. Comparability. The replacement property is considered comparable if it is similar in size, utility, and function to the destroyed property. Size is associated with value, not physical characteristics. Property is similar in size and utility if the market value of the acquired property does not exceed 120 percent of the fair market value of the replaced property in its pre-damaged condition. If the 2

3 market value of the replacement property exceeds 120 percent, the excess above 120 percent is considered to have undergone a change in ownership when the replacement property is acquired or newly constructed. Property is similar in function if the replacement property is subject to similar governmental restrictions, such as zoning. The replacement property should be used in the same manner as the damaged or destroyed property. Properties are similar in use if they fall within the same broad property type (e.g., residential, commercial, agricultural, industrial). Any portion of the replacement property that is not similar in function is considered to have undergone a change in ownership when the replacement property is acquired or newly constructed. The following procedures will be used by the county assessor in determining the appropriate base year value of comparable replacement property: If the full cash value of the replacement property does not exceed 120 percent of the full cash value of the property prior to damage, then the adjusted base year value of the pre-damaged property will be transferred to the replacement property as its base year value. If the full cash value of the replacement property exceeds 120 percent of the full cash value of the property prior to damage, then the amount exceeding 120 percent will be added to the adjusted base year value of the pre-damaged property. The sum of these amounts will be transferred to the replacement property as its base year value. Damaged Property New Construction. If you transfer your base year value to a replacement property, then the damaged property will not be eligible for the new construction exclusion if you later reconstruct the damaged property. Filing. Please contact the county assessor for a copy of the claim form. BASE YEAR VALUE TRANSFER TO ANOTHER COUNTY (SECTION 69.3) If your principal residence was damaged or destroyed in a disaster, you may transfer the base year value of your pre-damaged home to a home acquired or constructed as a replacement in another county, if that county has enacted an ordinance accepting intercounty transfers. The following ten counties have enacted such an ordinance: Contra Costa Modoc San Francisco Solano Sutter Los Angeles Orange Santa Clara Sonoma Ventura Specific requirements of the section 69.3 provisions include: The original property and the replacement property must be the principal place of residence of the person claiming the relief. Either the land or the improvements must have sustained physical damage amounting to more than 50 percent of its current market value immediately prior to the damage. The replacement property must be acquired or newly constructed within 3 years after the damage to the original property. 3

4 The current market value of the replacement property must be equal or lesser than the market value of the damaged property immediately prior to the damage. A replacement property is considered comparable if the full cash value does not exceed one of the following: 105 percent of the full cash value of the original property immediately prior to the disaster if the replacement property is purchased or newly constructed within the first year following the date of the damage of the original property. 110 percent of the full cash value of the original property immediately prior to the disaster if the replacement property is purchased or newly constructed within the second year following the date of the damage of the original property. 115 percent of the full cash value of the original property immediately prior to the disaster if the replacement property is purchased or newly constructed within the third year following the date of the damage of the original property. A claim for relief must be filed with the county assessor of the county in which the replacement property is located. 2 The claim must be filed within 3 years after the replacement property is acquired or newly constructed. A principal residence is a person's true, fixed, and permanent home and principal establishment to which the owner, whenever absent, intends to return. If a homeowners' exemption has not been granted on the property, the assessor may ask for proof of residency. Proof of residency may include vehicle registration, voter registration, bank accounts, or income tax records. Property that is acquired prior to the date of the disaster is not eligible. However, if an owner of property that has been substantially damaged or destroys constructs a new home on vacant land that was already owned, the land and newly constructed home may qualify if the completion date is within 3 years of the date of the disaster and the market value of the land and improvements on the date of completion meets the value comparison test. MANUFACTURED HOMES (SECTIONS 172 AND AND 5825) If your manufactured home (also commonly called a mobilehome) is completely destroyed, you may replace it with a comparable unit and retain the property tax base year value. Specific requirements of the sections 172 and provisions include: The disaster must be the result of a state of emergency. The replacement manufactured home must be comparable in size, utility, and location with the destroyed manufactured home. A manufactured home must be destroyed by a disaster. For assessment purposes, this means the manufactured home must have sustained damage in excess of the economic cost to cure the damage, or be declared a total loss for insurance purposes. 2 Form BOE-65-PT, Claim for Intercounty Transfer of Base Year Value from Principal Residence Damaged or Destroyed in a Governor-Declared Disaster to Replacement Property. 4

5 There are no pro rata tax reduction provisions, and no relief is available where a manufactured home has been only partially damaged. The owner of a destroyed manufactured home is assured that, if he or she replaces the home with a comparable unit, the property taxes or annual vehicle license fee will not suddenly increase. A claimant whose replacement manufactured home is subject to local property taxation must apply to the county assessor for relief. The county assessor will enroll the replacement manufactured home at a taxable value calculated to produce either: 1. The same property tax amount as was last due for the destroyed manufactured home; or 2. The same amount as the vehicle license and registration fees due on the destroyed home for the year prior to its destruction. If the county assessor determines that the replacement home is not comparable, in addition to number (1) or (2) above, the county assessor will enroll as new construction that portion of the reconstructed or replaced home that exceeds substantial equivalence to the destroyed manufactured home. The value calculated for the replacement home will be adjusted annually by the inflation factor. If the replacement manufactured home is subject to the vehicle license fee, the Department of Housing and Community Development will handle the fee adjustments necessary to maintain equivalence to the prior license fee or local property tax. If your manufactured home is either damaged or destroyed, you may receive property tax relief under section This relief is available only if your home is assessed by the county assessor instead of being licensed. Specific requirements of the section 5825(c) provisions include: The reconstruction or replacement of a damaged or destroyed manufactured home must be done timely. The reconstructed or replacement manufactured home must be substantially equivalent to the damaged or destroyed manufactured home. Any reconstruction or replacement of a manufactured home, subject to local property taxation, which is not substantially equivalent to the damaged or destroyed manufactured home will be deemed to be new construction and only that portion which exceeds substantially equivalent reconstruction or replacement will have a new base year value. The sum of the base year value of the damaged manufactured home plus the value of any new construction will be enrolled as the base year value for the reconstructed or replacement manufactured home. If a manufactured home subject to the vehicle license fee is destroyed or damaged and is replaced by a substantially equivalent manufactured home subject to local property taxation, the county assessor will determine a base year value for the replacement home so that the property taxes levied will be the same amount as the vehicle license fee for the destroyed home for the year prior to its destruction or damage. 5

6 PROPERTY TAX DEFERRAL Sections 194 et seq. allow an owner of eligible property to apply to a county assessor for deferral of the next property tax installment on the regular secured roll or tax payments on the supplemental roll, without penalties or interest, whenever an application for reassessment under section 170 (disaster relief) is filed. Specific requirements of the section 194 provisions include: The disaster must be the result of a state of emergency. The provisions apply to real property and manufactured homes. For real property and manufactured homes that have received the homeowners' exemption or are eligible for the exemption as of the most recent lien date, the total value of the damage must be at least 10 percent of its fair market value or $10,000, whichever is less. For all other real property, the total value of the damage must be at least 20 percent of its fair market value immediately preceding the disaster. A claim for tax deferral must be filed with the county assessor at the same time or after a section 170 application for reassessment is filed. When a timely claim for deferral is filed, the next property tax installment payment is deferred without penalty or interest until the county assessor has reassessed the property and a corrected tax bill prepared pursuant to section 170 has been sent to the property owner. ADDITIONAL INFORMATION Frequently Asked Questions on disaster relief may be viewed from the Board of Equalization's website at If you have questions regarding these disaster relief provisions, please contact either your county assessor or the Board of Equalization's County-Assessed Properties Division at Amador County Assessor s Office 810 Court Street Jackson, CA Website: Calaveras County Assessor s Office Government Center, 891 Mountain Ranch Road San Andreas, CA Website: 6