Cotenant Residency

Assembly Bill 1700, approved by the Governor on September 30, 2012, provides for a change in ownership exclusion from property taxes from a transfer of an interest in real property between cotenants that takes effect upon the death of one cotenant.

The transfer of a co-tenancy interest from one cotenant to the remaining cotenant which occurs due to the death of one cotenant on or after January 1, 2013 may be excluded from reassessment if the following conditions are met:

• The transfer is solely by and between two individuals who together own 100 percent of the real property in joint tenancy or tenancy in common.
• As a result of the death of the transferor cotenant, the deceased cotenant’s interest in the real property is transferred to the surviving cotenant, resulting in the surviving cotenant owning 100 percent of the real property, and thereby terminating the co-tenancy.
• For the one-year period immediately preceding the death of the transferor cotenant, both the cotenants were owners of record and both cotenants continuously resided in the real property as their principal residence.
• The surviving cotenant must sign, under penalty of perjury, an affidavit affirming that he or she continuously resided in the real property with the deceased cotenant for the one-year immediately preceding the date of death.

Filing Requirements:

A claim form must be completed and signed by the surviving co-tenant and filed with the Assessor.

There is no filing deadline.

Revenue and Taxation code 62.3 is silent on how the property is acquired by the cotenants. Revenue and Taxation Code 62.3(a)(3) requires that the two cotenants be owners of record for the one-year period immediately preceding the transferor cotenant’s death.

Yes. The exclusion applies as long as the cotenants both have been on title for at least one year prior to the date of death.

One year is defined as a period of 365 days (leap year is 366 days). The exclusion requires the transferor and transferee to have continuously resided at the residence for the one-year period preceding the transfer. For example, if the transferor died on January 2, 2013, the one year period would be from January 3, 2012 thru January 2, 2013.

Once residency is established, it is presumed that residency will be continuous until another property becomes the principal residence. Whether the transferor and the transferee actually continuously reside at a residence for the one year period preceding the transfer is a question of fact for the assessor to determine on a case-by-case basis if evidence indicates otherwise.

Principal residence is defined as a property eligible to receive Homeowners’ Exemption or the Disabled Veterans’ Exemption. If the exemption is not claimed, then vehicle registration, voter registration, bank accounts, and state income tax filings are documents to be reviewed by the assessor to determine on a case-by-case basis as evidence.

If there are other exclusions, such as the inter-spousal exclusion, then the inter-spousal exclusion will be applied. The co-tenancy exclusion is used if there are no other applicable exclusions.

If the life tenant does not have 100 percent present interest in the property, the co-tenancy exclusion does not apply. This exclusion requires upon the death of one cotenant, the remaining cotenant must have 100 percent present interest in the property.

If the beneficiary of the trust is the remaining cotenant who acquired 100 percent present interest in the property, then this co-tenancy exclusion is applicable provided all other conditions are met.