On February 18, Assemblyman Mike Gipson (D-Carson) introduced Assembly Bill 1199, to impose an annual excise tax for the privilege of renting or leasing out qualified property. The bill would add Article 8 (commencing with Section 12280) to Chapter 3 of Part 2 of Division 3 of Title 2 of the Government Code, and to add Part 6.8 (commencing with Section 11951) to Division 2 of the Revenue and Taxation Code. The bill contains an urgency clause, which means the bill would need a 2/3 vote by each house of the Legislature and that it would take effect immediately upon being signed by the Governor.
Section One of the bill would add Article 8, which would be titled “Reporting Requirements for Qualified Entities.” Prior to February 1, 2023, and annually thereafter, a qualified entity that owns qualified property would be required to report specified information to the Secretary of State in the form and manner as required by the Secretary of State. The information would include:
- The identity of the beneficial owner of each qualified property owned by the qualified entity in the previous calendar year.
- The number of units for each qualified property owned by the qualified entity in the previous calendar year that were offered for rent or lease.
The Secretary of State would be required to create a searchable database, updated annually, on its internet website, with the information provided by qualified entities. A “qualified entity” is defined as a limited liability company or a limited partnership.
Section Two of the bill would add Part 6.8, which would be titled “Homes for Families and Corporate Monopoly Transparency Excise Tax.” The bill defines numerous terms such as “affordable housing unit,” “multifamily dwelling,” “persons and families of low or moderate income,” “qualified property,” and “qualified taxpayer.”
The bill would impose an annual excise tax upon a qualified taxpayer for the privilege of renting or leasing out qualified property in this state at a rate of ___ percent of the gross receipts of the qualified taxpayer that are derived from rental income. Moreover, it states that it is “the intent of the Legislature to enact legislation that would increase the rate specified if the qualified taxpayer receives a certain number of code violations issued by the building department or health department of a city or county.”
The California Department of Tax and Fee Administration would administer and collect the excise tax and would be able to adopt regulations to implement this law. The bill also specified that this excise cannot be passed through to tenants by way of higher rents. The measure would also create in the State Treasury “The Homes for Families Fund.” Monies deposited in this fund would be appropriated for specified purpose.
AB 1199 contains an urgency clause that is deemed necessary “in order to discourage landlords from raising rents and displacing tenants, to provide relief to tenants facing evictions, and to provide support for home ownership during a health and economic crisis. The bill would get its first hearing in March.
View Comments (48)
So now we are imposing taxes on "the privilege of owning a rental property." And adding on more rent control?? I am not real savvy on reading some of these bills but this was my outtake, am I right or wrong?
It sounds like another way to keep Californians from making a living so they must rely on the government. Whats mine is yours? Help me out here Showandtell, educate me on this one.
Stacy, you give me WAY too much credit. :) But for what it's worth I'm taking away from this what you are. Dem legislature hates landlords, thinks they should be punished, adds more burdens on them through taxes and regulations, the end result of which will be fewer landlords willing to put up with this nonsense, thus fewer rentals in the state. Less available housing is of course the exact opposite of what these Dems SAY they want. The usual upside-down B.S. thinking. Right?
I agree with everything you said, Showandtell, except I would change two words:
"...the end result of which will be NO PRIVATE landlords willing to put up with this nonsense,"
Furthermore, change the word 'fewe'r to:
"...thus NOT ONE DECENT LIVABLE rental(s) in the state."
Ask every tenant - who would you prefer running your building - your current landlord or Government?
I'd bet everything on the answer to that survey.
Moe, these apartments will soon become projects. Small ghettos that will sadly spill crime and violence to the nearest community. Unfortunately, the Government and city are the largest Slum-lords. Look at all their government-owned and run properties. Some are completely abandoned, creating such eye-sores and creating ghettos, with no real oversight. But yet they want to control and run all housing.
And less available housing means available housing will be much more expensive. Also the exact opposite of what Democrats want. But they fought for the livable $15/hour minimum wage so we should all be good......????????♀️
They are idiots I have rentals In 2 different cities and both charge me a business was license - $175 & $165 Started few years ago considered 2 or more Motel business license . I also report Income maybe time we sell Do THEY realize renters need places to live ? I bought with my money my income wasn’t fairly told no evictions
"The Secretary of State would be required to create a searchable database, updated annually, on its internet website, with the information provided by qualified entities. A “qualified entity” is defined as a limited liability company or a limited partnership."
Quick question: How can/are they going to update annually when State & local government can't even update voter registration it seems?
Great point!
That was my thought exactly!!!! I guess if its for their benefit than they can make it happen.????
Excellent point. T would prefer they spent time updating voters registration over taxing us more money to try and increase our living. If you’re a senior owning a home and want to help increase a lousy social security pit-tins, they want to punish you for trying to improve your income. In doing that they are discouraging you from making available shelter gor someone in need. What are they thinking? I know. They have to make up revenue for all those large companies that have gone to TEXAS.
forgiving the payment of rent for the past year, now they want to add more tax to the property owners. this should glut the market with sales further reducing housing for renters and reduce the property values for us all.
landlords will sell their properties and the rent is going to skyrocket!!!
I believe people who provide rental property have already been taxed at 100% given the eviction moratoria in place for the last year.
If this goes into law, people will sell or abandon their rental properties - or move back into them for two years then sell them as primary residences thus avoiding capital gains and the ridiculous tax on the privilege of providing rental housing.
Geez are these legislators truly this tone deaf?!
I was thinking the same thing. I have a rental property and I'm going to sell my home and move into the rental until I can leave this state. The governor has made it his mission to utterly destroy this state
https://recallgavin2020.com/petition/
This appears to be aimed narrowly at limited liability corporations engaged in renting residential properties, primarily to low income tenants. I suspect that this is really about closing a loophole, or pandering to a specific campaign donor at the expense of other business interests. Either way, it's always the ordinary working citizen who'll end up paying. I hope that the Globe will follow up with a more in depth analysis.
Excellent point
don't those that rent out property already pay proper taxes, utilities, etc... Gee, wonder why people are leaving California and why there isn't any affordable housing? Also, the fund would just be gobbled up from all the increase "construction fee/permits"
Yes, please follow up on this. Is it a publicity stunt by a legislator? Unfortunately probably not.
I spoke with someone in San Francisco who said with the virus rents are down about 25% but they are put in the terrible position for both them and potential rental customers of leaving units vacant as rents some years can only be increased 1 %. If they rent out a vacant unit at 25% less they are forever then tied to increases based on the temporary lower priced rental market. Unintended consequences that are bad for everyone. I have left rents lower for existing tenants for years, especially single parents. Legislators, do not take away that flexibility. Legislators are FORCING some rent increases. I have lived on $225 a month after paying mortgage, taxes, and insurance before owning any rentals, and try to work with tenants.
Private property rights are America's foundation. Why are they trying to say renting out property is a privilege? It is a RIGHT!
"Why are they trying to say renting out property is a privilege? It is a RIGHT!"
Simple answer, because communists don't believe in private property.
I have a choice to be a landlord, and this B.S. guarantees that I will not be a landlord in California. Ca. Is becoming a good place to be from, not a good place to reside.
This is bullshit