Wunderlich

The plaintiff homeowners, Kenneth Wunderlich and Jeanette Engelhart, both over 55 years of age, built a new home that would accommodate Wunderlich’s use of a wheelchair due to postpolio syndrome. The new home replaced their original residence, which was located across the street. After selling their original residence for $830,000 and completing construction of their new, wheelchair-friendly house in 2004, the senior homeowners applied for property tax relief under Proposition 60 (Cal. Const., art. XIII A, § 2, subd. (a); Rev. & Tax. Code, § 69.5), 1 which would enable them to transfer the base year value of their original residence, $187,992, to their new home. Having had the foresight to purchase the land for their new home in 1979, they believed that for purposes of Proposition 60 the land portion of their new home would be valued at its 2004 adjusted base year value of $62,477 and therefore their replacement dwelling with a value of $730,877 ($62,477 land plus $668,400 house) would be of equal or lesser value than their original residence.

The homeowners’ request for property tax relief under Proposition 60 was denied by the County of Santa Cruz (County), which determined…

*686 Opinion

In this case. of first impression, we are called upon to interpret Proposition 60, voter-enacted constitutional tax relief implemented through legislation. (Cal. Const., art. XIII A, § 2, subd. (a); Rev. & Tax. Code, § 69.5.) Proposition 60 allows qualified homeowners to transfer the property tax basis of their principal residence to a replacement dwelling of equal or lesser value. The dispute in this case concerns valuation of the replacement dwelling. The specific issue before us is this: When an applicant for Proposition 60 tax relief builds a new residence on land purchased years earlier, is the value of the replacement dwelling calculated using the land’s current value (its fair market value when construction is complete) or the land’s historic value (its base year value under Prop. 13)? We conclude that the land must be valued currently, as of the date that construction of the structure is completed. We therefore reverse the summary judgment granted to the homeowners here.

BACKGROUND

The parties to this appeal are plaintiffs and respondents Kenneth Wunderlich and Jeanette Engelhart (the homeowners), and defendants and appellants the County of Santa Cruz and…

Appellant Santa Cruz County (the County) challenges the trial court’s order requiring it to grant plaintiffs’ application for a property tax basis transfer. The issue is whether, when a replacement dwelling is constructed on a lot already owned by a person prior to the sale of the person’s original property, the value of the lot for “equal or lesser value” purposes under Revenue and Taxation Code section 1 69.5 is based on the lot’s value at the time it was purchased or the lot’s value when construction is completed on the replacement dwelling. I write separately to explain why, in my view, the language of the statute and the legislative purpose underlying it require us to conclude that the value of the replacement dwelling for “equal or lesser value” purposes must be determined as of the date when both purchase and construction have been completed.

I. Facts

The facts are undisputed. Plaintiffs Kenneth Wunderlich and Jeanette Engelhart owned a home (the original property) in Santa Cruz and a lot across the street from the original property. They had purchased the lot in 1979, and, as of 2004, it was assessed at $62,477 for property tax purposes. In January 2004, they sold the…

McADAMS, J.—

In this case of first impression, we are called upon to interpret Proposition 60, voter-enacted constitutional tax relief implemented through legislation. (Cal. Const., art. XIII A, § 2, subd. (a); Rev. & Tax. Code, § 69.5.) Proposition 60 allows qualified homeowners to transfer the property tax basis of their principal residence to a replacement dwelling of equal or lesser value. The dispute in this case concerns valuation of the replacement dwelling. The specific issue before us is this: When an applicant for Proposition 60 tax relief builds a new residence on land purchased years earlier, is the value of the replacement dwelling calculated using the land's current value (its fair market value when construction is complete) or the land's historic value (its base year value under Prop. 13)? We conclude that the land must be valued currently, as of the date that construction of the structure is completed. We therefore reverse the summary judgment granted to the homeowners here.

The parties to this appeal are plaintiffs and respondents Kenneth Wunderlich and Jeanette Engelhart (the homeowners), and defendants and appellants the County of Santa Cruz and its assessor…