The California State Board of Equalization has promulgated a rule that grants to registered domestic partners certain property tax relief afforded to spouses. County assessors (including the assessors of Los Angeles County, Ventura County, Santa Barbara County and Orange County) unsuccessfully challenged the rule in the trial court and appealed, arguing that it was unconstitutional. The California State Court of Appeal disagreed (you may read the opinion here).
In 1978, California voters adopted Proposition 13, a constitutional amendment, which limits the amount of ad valorem tax assessed on real property unless there has been a “change in ownership.” After the California Legislature defined such a change of ownership to exclude, among other things, real property transfers between spouses, the voters adopted Proposition 58, placing the spousal transfer exclusion in the state Constitution. The California State Board of Equalization then promulgated a rule excluding from the definition of change of ownership a transfer of real property to a registered domestic partner via intestate succession upon the death of the person’s registered domestic partner. Thereafter, the California Legislature amended the statutory scheme to limit change of ownership by excluding any real property transfers between registered domestic partners from the reassessment of full cash value for property tax purposes.
Plaintiffs, who are California county assessors, filed an action for declaratory relief, asserting that neither the Legislature nor the California State Board Equalization had the authority to create the registered domestic partner exclusion from classification as a change in ownership.
As California State Court of Appeal explained, the trial court correctly held (1) the Legislature can create an exclusion from “change in ownership” for registered domestic partners, without violating the California Constitution, (2) when the Legislature amended provisions of the Family Code and Revenue and Taxation Code, it ratified the Board’s rule excluding certain real property transfers between registered domestic partners from the property tax reassessment provisions of Proposition 13, and (3) accordingly, the Board’s rule is not unconstitutional.