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California Revenue and Taxation Code Section 63.1

Legal Research Home > California Laws > Revenue and Taxation Code > California Revenue and Taxation Code Section 63.1

63.1.  (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).

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Last modified: March 17, 2014