As the State Senate revived a bill to freeze speculative evictions in San Francisco, the State Assembly passed a bill designed to expand the definition of a “change of ownership” for properties in California in an attempt to close a Proposition 13 loophole.

Passed by a vote of 57-13 and on to the Senate, Assembly Bill 2372 would expand the definition of a “change of ownership” for properties owned by a legal entity to include the sale or transfer of 90% or more of the ownership interests in the entity within three years versus simply the sale or transfer of 50% or more of the interests to a single entity.  By structuring sales with sub 50% shares to multiple legal entities, buyers had been able to avoid a tax reassessment.

The bill would also increase the penalty for failing to file a “change in ownership” statement from 10% to 15%.

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Comments from “Plugged-In” Readers

  1. Posted by Hitman

    From Bernie Vogel, CEO of the esteemed law firm, Silicon Valley Law Group, in the recent SF Weekly article:

    “When the gist of Ammiano’s proposal was explained to him, Vogel zeroed in on its weak point in a matter of seconds. If the operative percentage of a property needing to be sold or transferred to mandate a change of ownership is 90 percent — why not sell or transfer 89 percent? If the operative time period is three years — why not drag out a deal to three years and one day?”

    I can’t wait to read Ammiano’s revisions to his anti-Ellis legislation. There is sure to be a weakness.

  2. Posted by R

    So we’ve closed a loophole by creating a new one. It would now be in the interest of every party involved in the sale of a property for the original owner to maintain 11% ownership interest for three years and one day before fully divesting. A real reform would be to drop the time limit entirely.

  3. Posted by formerly%whatever

    The real reform would be cutting spending to to be more aligned with tax revenue. All the new construction has added to the tax rolls in addition to the 2% “automatic” increase that they get.

    • Posted by badlydrawnbear

      The real reform would be to repeal Prop 13.

      FTFY

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