California Code of Regulations › Title 18 - Public Revenues › Division 1 - State Board of Equalization-Property Tax (California Department of Tax and Fee Administration - Timber Yield Tax, See Chapter 11) › Chapter 4 - Equalization by State Board › Article 4 - Change in Ownership and New Construction › Section 462.040 - Change in Ownership-Joint Tenancies

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
(a) General Rule. The creation, transfer, or
				  termination of a joint tenancy interest is a change in ownership of the
				  interest transferred.
Example 1: The purchase of property by A and B, as joint
					 tenants, is a change in ownership of the entire property.
Example 2: The transfer from A and B, as joint tenants, to
					 C and D, as joint tenants, is a change in ownership of the entire
					 property.
Example 3: The transfer from C and D, as joint tenants, to
					 C, as sole owner, is a change in ownership of 50 percent of the
					 property.
(b) Exceptions.
				  The following transfers of property do not constitute a change in ownership:
(1) The transfer creates or transfers any
				  joint tenancy interest and after such creation or transfer, all transferor(s)
				  are among the joint tenants. Upon the creation of such a joint tenancy
				  (hereafter, a joint tenancy described in subdivision (b)(1)), a transferor who
				  is also a transferee is an "original transferor" for purposes of determining
				  the property to be reappraised upon subsequent transfers. All other initial and
				  subsequent joint tenants are considered to be "other than original
				  transferors." To create original transferor status, a transaction must occur
				  that either changes title to joint tenancy or adds an additional person to
				  title as one of the joint tenants. The purchase of property as joint tenants
				  does not create original transferor status. The elimination of a joint tenant
				  does not create "original transferor" status in any of the remaining joint
				  tenants.
Example 4: A and B own property as tenants in common and
					 transfer the property to A and B as joint tenants. The joint tenancy of A and B
					 is a joint tenancy described in subdivision (b)(1) of this rule, and A and B
					 are both "original transferors."
Example 5: A and B purchase property as joint tenants. A
					 and B transfer to A, B, C, and D as joint tenants. No change in ownership
					 because the joint tenancy of A, B, C, and D is a joint tenancy described in
					 subdivision (b)(1) of this rule. A and B, the transferors, are included among
					 the transferees and are, therefore, "original transferors." C and D are "other
					 than original transferors." Likewise, if A, as the sole owner, had transferred
					 to A, B, C, and D as joint tenants, no change in ownership because the joint
					 tenancy of A, B, C, and D is a joint tenancy described in subdivision (b)(1) of
					 this rule. A would be an "original transferor" and B, C, and D would be "other
					 than original transferors."
Example 6: A and B acquire real property as joint tenants.
					 A and B transfer the property to B, C, and D, as joint tenants. 66 
					 2/3 percent
					 change in ownership of the transferred interests because the joint tenancy of
					 B, C, and D is not a joint tenancy described in subdivision (b)(1) of this rule
					 since both of the transferors are not transferees, and B has only retained an
					 undivided 33 1/3 percent interest in the real property, as a joint tenant,
					 after the transfer. B does not become an "original transferor" since this is
					 not a joint tenancy described in subdivision (b)(1) of this rule.
(A) Spouse of "Original Transferor." If a
				  spouse of an "original transferor" acquires an interest in the joint tenancy
				  property either during the period that the "original transferor" holds an
				  interest or by means of a transfer from the "original transferor," such spouse
				  shall also be considered to be an "original transferor." "Spouse" includes a
				  registered domestic partner who shall have the same rights, protections, and
				  benefits, and shall be subject to the same responsibilities and obligations as
				  granted to and imposed upon spouses pursuant to section
				  297.5 of the
				  Family Code.
Example 7: A and B acquire property as joint tenants. A and
					 B transfer the property to A, B, C, D and E as joint tenants. E is B's wife. No
					 change in ownership because the joint tenancy of A, B, C, D, and E is a joint
					 tenancy described in subdivision (b)(1) of this rule since A and B, the
					 transferors, are included among the transferees and are, therefore, "original
					 transferors." E, the wife of an "original transferor," is also an "original
					 transferor." C and D are "other than original transferors."
Example 8: A is the sole owner of property. A grants the
					 property to A, B, and C as joint tenants. The joint tenancy of A, B, and C is a
					 joint tenancy described in subdivision (b)(1) of this rule; A is an "original
					 transferor," and B and C are "other than original transferors." A dies while D
					 is A's husband. A's interest in the property passes by operation of law to B
					 and C, resulting in a 100 percent change in ownership because, after A's death,
					 the only original transferor is no longer on title (as explained in subdivision
					 (b)(1)(B) of this rule). Subsequently, B and C transfer the property to B, C,
					 and D as joint tenants. The new joint tenancy of B, C, and D is a joint tenancy
					 described in subdivision (b)(1) of this rule. B and C are transferors who are
					 among the transferees and thereby become "original transferors." However, D
					 does not become an "original transferor" because he did not acquire his
					 interest from A during the period that A held an interest in the initial joint
					 tenancy of A, B, and C.
Example 9: A transfers property to A and B as joint
					 tenants. The joint tenancy of A and B is a joint tenancy described in
					 subdivision (b)(1) of this rule; A is an "original transferor," and B is an
					 "other than original transferor." A and B, as joint tenants, transfer the
					 property to A, B, and C as joint tenants. C is A's registered domestic partner.
					 C is an "original transferor" because he is the registered domestic partner of
					 an "original transferor" and acquired his interest in the joint tenancy during
					 the period that A was an "original transferor." B becomes an "original
					 transferor" because he is a transferor who is among the transferees.
Example 10: A transfers property to A and B as joint
					 tenants. The joint tenancy of A and B is a joint tenancy described in
					 subdivision (b)(1) of this rule; A is an "original transferor," and B is an
					 "other than original transferor." A and B, as joint tenants, transfer the
					 property to B and C as joint tenants. C is A's registered domestic partner. C
					 is an "original transferor" because C is the registered domestic partner of A
					 and C acquired an interest by means of a transfer from A. C takes the place of
					 A because C is A's registered domestic partner. Also, B remains on title as a
					 transferor who is also a transferee, and thereby becomes an "original
					 transferor."
(B) Termination
				  of "Original Transferor's" Interest. The transfer terminates an "original
				  transferor's" interest in a joint tenancy described in subdivision (b)(1) of
				  this rule and the interest vests in whole or in part in the remaining "original
				  transferors," except that, upon the termination of the interest of the last
				  surviving "original transferor," there shall be a reappraisal of the property
				  as if it had undergone a 100 percent change in ownership.
Example 11: A transfers property to A and B as joint
					 tenants. The joint tenancy of A and B is a joint tenancy described in
					 subdivision (b)(1) of this rule; A is an "original transferor," and B is an
					 "other than original transferor." A and B transfer the property to B and C as
					 joint tenants. B does not become an original transferor because A is not one of
					 the transferees. 100 percent change in ownership because A, the only original
					 transferor, is no longer on title.
Example 12: A and B transfer property to A, B, C, and D as
					 joint tenants. The joint tenancy of A, B, C, and D is a joint tenancy described
					 in subdivision (b)(1) of this rule; A and B are "original transferors," and C
					 and D are "other than original transferors." A dies or grants his interest in
					 the property to the remaining joint tenants, B, C, and D. No change in
					 ownership because B, an "original transferor," remains as a joint tenant.
					 Subsequently, B dies or grants his interest in the property to C and D. 100
					 percent change in ownership because B was the last surviving "original
					 transferor."
(C) Termination
				  of "Other Than Original Transferor's" Interest. The transfer terminates a joint
				  tenancy interest held by an "other than original transferor" in a joint tenancy
				  described in subdivision (b)(1) of this rule and the interest is transferred
				  either to an "original transferor," or to all the remaining joint tenants,
				  provided that one of the remaining joint tenants is an "original transferor."
				  The "original transferor" status of any remaining joint tenants ceases when a
				  joint tenancy is terminated.
Example 13: A transfers property to A and B as joint
					 tenants. The joint tenancy of A and B is a joint tenancy described in
					 subdivision (b)(1) of this rule; A is an "original transferor," and B is an
					 "other than original transferor." A and B transfer the property to A and C as
					 joint tenants. No change in ownership because A, an "original transferor,"
					 continues to be on title. A remains an "original transferor." C is an "other
					 than original transferor."
Example 14: A and B transfer property to A, B, C, and D as
					 joint tenants. The joint tenancy of A, B, C, and D is a joint tenancy described
					 in subdivision (b)(1) of this rule; A and B are "original transferors," and C
					 and D are "other than original transferors." A dies or grants his interest in
					 the property to the remaining joint tenants, B, C, and D. No change in
					 ownership because B, an "original transferor," remains as a joint tenant. C,
					 not an "original transferor," grants his interest in the property to B and D.
					 No change in ownership because C grants to the remaining joint tenants, B and
					 D, and B is an "original transferor."
Example 15: A and B transfer property to A, B, C, and D as
					 joint tenants. The joint tenancy of A, B, C, and D is a joint tenancy described
					 in subdivision (b)(1) of this rule; A and B are "original transferors," and C
					 and D are "other than original transferors." A dies or grants his interest in
					 the property to the remaining joint tenants, B, C, and D. No change in
					 ownership because B, an "original transferor," remains as a joint tenant. C, an
					 "other than original transferor," grants his interest in the property to B and
					 D as joint tenants. No change in ownership because C grants to the remaining
					 joint tenants, B and D, and B is an "original transferor." D dies and D's joint
					 tenancy interest passes to B by operation of law. Since B is an "original
					 transferor," there is no change in ownership. Upon D's death, the joint tenancy
					 is terminated and B ceases to be an "original transferor."
(D) "Original Transferor" Status Through
				  Trusts. For a transfer of a joint tenancy interest into trust from November 13,
				  2003 to a date before October 1, 2013, any joint tenant may also become an
				  "original transferor" by transferring his or her joint tenancy interest to the
				  other joint tenant(s) through his or her trust if the trust instrument names
				  the other joint tenant(s) as the present beneficiary or beneficiaries.
Example 16: A and B purchase property as joint tenants. On
					 December 12, 2004, A and B transfer their property interests to each other as
					 joint tenants through their respective trusts. A and B are transferors who are
					 among the joint tenants and are, therefore, considered to be "original
					 transferors." If A and B had transferred their interests into trust on or after
					 October 1, 2013, neither A's trust nor B's trust would be considered a joint
					 tenant and neither A nor B would be considered an "original transferor" as a
					 result of the transfer into trust.
Example 17: A and B purchase property as joint tenants. On
					 August 13, 2003, A and B sell a 50 percent interest to C and D, with the deed
					 showing A, B, C and D as joint tenants. A and B become "original transferors."
					 C and D become "other than original transferors." On December 13, 2003, C and D
					 then transfer their joint tenancy interests to their respective trusts for the
					 benefit of the remaining joint tenants. C and D become "original transferors."
					 On January 13, 2004, A and B then sell their remaining 50 percent to C and D,
					 and go off title. Under circumstances where application of the step-transaction
					 doctrine to disregard the form of the transaction would be appropriate due to
					 their intent to avoid a change in ownership, A, B, C and D do not become
					 "original transferors" as the result of their transfers to each other. After
					 collapsing the steps, the transfer from A and B to C and D is a 100 percent
					 change in ownership as of January 13, 2004.