Grotenhuis

County of Santa Barbara (County) appeals a tax refund judgment entered in favor of David W. Grotenhuis, as an individual and trustee of the Grotenhuis Family Living Trust (Grotenhuis) and Grotenhuis Investments, Inc., a closely held corporation (Corporation). The trial court ruled that Grotenhuis, as the alter ego of corporation, can claim a homeowner’s property tax exemption (Rev. & Tax. Code, § 218) and transfer the base year value of a former residence to a new residence of which Corporation is the owner of record. (§ 69.5.) There is no statutory provision or precedent for this ruling and we reverse.

Subject to certain conditions, a homeowner over the age of 55 may sell a principal residence that qualifies for a homeowner’s property tax exemption (§ 218), purchase a replacement dwelling of equal or lesser value in the same county, and transfer the property tax basis of the principal residence to the replacement dwelling. (§ 69.5, subd. (a).) The Legislature calls this a “transfer of base year value.” (§ 69.5, subds. (g)(2) & (j)(l).)

Unless the original residence and replacement residence qualify for a homeowner’s property tax exemption, the tax basis of the original…