The county assessor has won a Mill Valley case involving a bid to circumvent Proposition 13.
The state Supreme Court this week declined to review an appellate court decision reversing a Marin court ruling that reduced the assessed value of a Mill Valley property by more than $400,000.
"I guess it's final," said Assessor Rich Benson. "That's good news."
The appellate ruling backed Benson, who sought the higher assessment even though the tax payment at issue was less than $3,000. Benson called it a big case because it could set a precedent, carving a loophole in Proposition 13.
The case involved a Homestead Valley home that was owned by two brothers, Peter and James Mikkelsen.
When their father died in the 1950s, he left the property to his wife Dagmar. She created a "joint tenancy" with Peter. When Mrs. Mikkelsen died in 1997, Peter created a joint tenancy with James. The brothers owned the property until 2007, when James Mikkelsen filed papers granting himself "an interest as a tenant in common."
The county assessor's office said the transfer triggered change in ownership - and thus a new property tax reassessment - under Proposition 13. The county said the assessed value rose from $100,361 to $525,323, increasing the property tax by $2,683.
James Mikkelsen demanded a tax refund and took the dispute to the county Assessment Appeals Board, contending switching from "joint tenancy" to "tenant in common" was not a change in ownership. The appeals voted 2-1 in Mikkelsen's favor. The assessor's office then petitioned Marin Superior Court but Judge Faye D'Opal rejected the petition.
Benson appealed to the First District Court of Appeal in San Francisco, and the State Board of Equalization filed a brief in support. A three-judge panel sided with the assessor's office.
"From the time the Legislature enacted the change in ownership statutes implementing Proposition 13, it has treated family joint tenancies differently," said Associate Justice Kathleen Banke. "While the wisdom of the policy reason for that differential treatment - to accommodate the use of joint tenancy as an estate planning tool - may be a matter of debate, it was within the Legislature's prerogative to craft the change in ownership statutes accordingly.
"What Mikkelsen, the board and the trial court overlooked was that Mikkelsen got the advantage of this policy when his brother created the joint tenancy and no change in ownership was deemed to have occurred. The price for that property tax break, so to speak, was a change in ownership when the family joint tenancy was terminated."
The property was sold in 2010.
©2013 The Marin Independent Journal (Novato, Calif.)
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