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California Proposition 58, Real Estate Transfers Within Families (1986)
Proposition 58 broadened the circumstances in California under which property tax re-assessments are not required in cases involving the transfer of real property between parents and children. Proposition 58 also placed the existing statutory treatment of property transfers between spouses into the Constitution.
Proposition 58 applied to real estate transfers between parents and their children of the family's principal residence, regardless of value, and to a limited amount of all other real property. The limit on other real property was to the first $1,000,000 of assessed value, regardless of the number of properties transferred. Property transferred after the $1,000,000 assessed value ceiling is reached are subject to reassessment.
Proposition 58 was not retroactive.
The official ballot summary said, "State Constitution Article XIII A, enacted as Proposition 13 in 1978, with certain exceptions, places a limitation on real property taxes equal to 1 percent of its full cash value listed on the 1975-1976 tax bill. Property may be reassessed on "purchase" or other "change of ownership." This measure amends Article XIII A to provide the terms "purchase" and "change of ownership" do not include the purchase or transfer of (1) real property between spouses and (2) the principal residence and the first $1,000,000 of other real property between parents and children."
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- See also: Amending the California Constitution
The fiscal estimate provided by the California Legislative Analyst's Office said,
"The provisions preventing the reassessment of real property transferred between spouses, and between parents and their children under the limited circumstances provided for by existing law, would have no fiscal effect. This is because existing statutory law prevents reassessment in these cases.
The provisions which prevent reassessment of property transferred between parents and their children under circumstances not covered by existing law, however, would reduce local property tax revenues. The scope of the revenue losses would depend on actions taken by the Legislature in defining the terms used in the measure. If these terms were defined broadly, revenues would fall by an estimated $28 million in 1987-88, $60 million in 1988-89, and increasing amounts in subsequent years. Of these amounts, cities, counties and special districts would lose $17 million in 1987-88, $37 million in 1988-89, and increasing amounts in each subsequent year.
The remainder of the losses would affect school districts and community college districts. Under existing law, higher state aid would offset these losses. We estimate that the State General Fund cost for the increased aid would amount to $11 million in 1987-88, $23 million in 1988-89, and increasing amounts in each subsequent year."
Path to the ballot
The California State Legislature voted to put Proposition 58 on the ballot via Assembly Constitutional Amendment 2 (Statutes of 1986, Resolution Chapter 61).
Litigation involving Proposition 58 includes:
- Empire Properties v. County of Los Angeles. 44 Cal. App. 4th 781, 52 Cal. Rptr. 2d 69 (1996).
- Penner v. County of Santa Barbara. 37 Cal. App. 4th 1672, 44 Cal. Rptr. 2d 606 (1995).
- Sea World, Inc. v. County of San Diego. 27 Cal. App. 4th 1390, 33 Cal. Rptr. 2d 194 (1994).
- Larson v. Duca. 213 Cal. App. 3d 324, 261 Cal. Rptr. 559 (1989).