What is the “Primary Residence” or “Principal Place of Residence” For California Property Tax Reassessment Exclusion Purposes?

What is a primary residence? What is a principal place of residence? This article will explore these topics for property tax reassessment exclusion purposes.

We have written extensively on?Proposition 19?and its negative impacts on family property transfers and inheritance.? There is some good news however, some inherited properties may still qualify for a property tax reassessment exclusion, and?those 55 and older can transfer their property tax basis to a new residence anywhere in the state, providing certain qualifications are met.? (See our extensive other articles on those requirements linked above.)

A key requirement to those benefits, is that the property must be the “Primary Residence” or “Principal Place of Residence”.?

So, what, exactly, is a “Primary Residence” or “Principal Place of Residence”?? This article will explore this key topic.?

PRIMARY RESIDENCE OR PRINCIPAL PLACE OF RESIDENCE

One of the foremost factors in any property tax reassessment exclusion is a requirement of primary residence or principal place of residence.? What constitutes a dwelling as a principal place of residence???

Per the Board of Equalization, for property tax purposes, the relative definition of a principal place of residence or primary residence is the same as, or closely parallels to, the legal doctrine of domicile.?

Under this doctrine, a person’s domicile depends on two factors:?

1) physical presence and?

2) intention.?

The combination of both factors should be used to make the final determination of a claimant’s primary residence for purposes of a property tax reassessment exclusion.??

Physical Presence Factor

Physical presence is the place where:

• A person is physically present and makes his or her home.

• A person customarily returns after work and between trips or absences due to work, pleasure, or otherwise, even if the absence is extended. A member of the armed services who is on active military service outside of California does not lose their residency under the Servicemembers Civil Relief Act.

• Clothes and personal belongings are kept.

• Housekeeping (preparing meals, sleeping, bathing, entertaining) is set up.

• The person files income tax returns as a resident.

• A driver’s license is issued.

• The person has listed for voter registration.

For the physical presence factor, the individual facts as they relate to each other as a whole should be reviewed in each claim, as not all elements listed are necessary to satisfy this requirement.

Intention Factor

Intention factor is the intent of the claimant to remain at the residence and not the intent to stay there only for a temporary purpose and return to a legal domicile elsewhere. Of the two factors, intention is essential and required.

If the Homeowners’ Exemption or the Disabled Veterans’ Exemption was not granted earlier on the property, then proof that the real property was the principal residence may be requested. Proof of residency may include vehicle registration, voter registration, bank accounts, or income tax records.

– Devin Lucas

Author Devin R. Lucas is a Real Estate Attorney, Broker and REALTOR?, specializing in Newport Beach, Costa Mesa and Orange County coastal communities, including in matters of California property tax reassessment rules for family transactions, serving individual, trustees and investors in residential real estate.

Lucas Real Estate – Attorney Devin Lucas and CPA Courtney Lucas – are experts in residential real estate transactions, tax considerations, Trustee representation, family sales, and California’s Proposition 19.

Questions??– Paid one-hour confidential legal consultations are conducted daily via Zoom and address virtually all questions, options, tax implications and strategies. (Book a consultation here.)

Sources:

• BOE Letter to Assessors No. 2013/021
• BOE Annotation 505.0078 Principal Residence. Whether a dwelling located in California is a person’s principal place of residence is a question of fact. To qualify for the exemption, a dwelling must be the person’s true, fixed and permanent home and principal establishment to which he/she, whenever absent, intends to return. In-state presence, vehicle registration, voter registration, bank accounts, and state income tax filings are among the matters to be considered in determining residency, which, for exemption purposes, is equivalent to domicile.