Tax break upheld for domestic partners

of property for gays, seniors

SACRAMENTO -- Domestic partners are entitled to the same tax breaks as married couples when they transfer ownership of property from one to the other, a state appeals court said Tuesday.

A three-judge panel of the 3rd District Court of Appeal ruled unanimously that provisions of Proposition 13 that can allow significant increases in taxes when a home or property changes hands don't apply to gay and senior couples who register as domestic partners.

"The exclusion for registered domestic partners is not palpably arbitrary and is supported by a rational basis," Presiding Justice Arthur Scotland wrote in a decision that was supported by Justices Rod Davis and Harry Hull.

Proposition 13, approved by voters in 1978, capped property taxes at 1 percent of the full cash value of land or a building, while allowing annual adjustments in that value of as much as 2 percent to account for inflation.

But it authorized county assessors to lift the 2 percent limit and reassess property to its full value during a change of ownership.

The Legislature and voters later exempted property exchanges between married couples and parents and children from the definition of a change in ownership. The move was designed to protect widows and other heirs from losing their homes because of huge property tax increases.

A state tax board, in 2003, and the Legislature, in 2005, gave the same protection to domestic partners, a group that enjoys most of the legal benefits of marriage conferred by the state. Gay and lesbian couples account for most of California's 45,000 domestic partner couples, though unmarried heterosex-ual couples, one of whom must be at least 62 years old, also are eligible.

Counties' assessors fought exemptions

A coalition of county assessors filed a lawsuit challenging the Legislature's and Board of Equalization's decisions, contending that it would take a constitutional amendment approved by voters to extend the exemption to domestic partners.

Upholding a decision by a Sacramento County judge, the appeals court ruled Tuesday that the Legislature has the power to "define the scope of 'change of ownership' and to create exclusions from the general definition for nonarbitrary, rational policy reasons."

The Legislature, Scotland said, adopted the exclusion for domestic partners to "guarantee equality for all Californians, regardless of gender or sexual orientation," and to help protect them from "the potentially severe economic and social consequences of abandonment, separation, the death of a partner and other life crises."

Geoff Kors, executive director of Equality California, a gay rights group that intervened in the lawsuit on the side of the state, praised the ruling, saying it would protect domestic partners from "an incredibly unfair tax burden."

"For domestic partners to have their property reassessed when their partner dies, when that doesn't happen to married spouses, is extremely offensive and has resulted in people losing their homes that they've had for 30 or 40 years," he added.

Tom Bordonaro, San Luis Obispo County assessor and an officer with the California Assessors' Association, did not return a call seeking comment on the ruling.

The state Senate approved a bill this year that would allow any heterosexual adults who are eligible to marry to register as domestic partners. But the measure didn't get out of the Assembly.

Sponsor Sen. Carole Migden, D-San Francisco, can bring the bill up again in 2008.