EDGE San Francisco

A deadline is fast approaching for registered domestic partners whose California property taxes were reassessed between 2000 and 2006, either due to the death of a partner or a breakup, to apply for an exemption and have their tax bill lowered.

Anyone who qualifies for the tax break has until June 30 to apply with his or her local county tax assessor’s office. Once the person’s application is verified and approved, their property taxes will be rolled back to what they paid before the increase, plus an annual 2 percent inflation adjustment.

The opportunity for tax relief is due to the passage of Senate Bill 559, pushed by out lesbian state Senator Christine Kehoe (D-San Diego.) Her bill became law January 1, 2007 and was prompted, in part, by her next-door neighbor’s experience after their partner passed away and they were stuck with a huge tax hike and feared losing their house.

"We were not hearing from droves of people. But the people who did contact us had very serious tax consequences because of their domestic partner passing away," recalled Kehoe this week when asked why she pushed for the legislation. "It seemed completely unfair that people were being reassessed on homes they had lived in for years. There was no reason for this to be happening to them except for them being gay. It was a double standard I found very unfair."

The tax savings could amount to several thousand dollars a year. If a person bought a home several decades ago and it is now estimated to be worth $800,000, their annual taxes are likely to only cost $3,000 per year (or less) due to Proposition 13, which capped annual property tax increases in the state at 1 percent. But if that house has recently been reassessed, the property tax bill is now likely to be more than $10,000.

"That’s a $7,000 per year difference. In my book, that’s huge," explained Oakland resident Pan Haskins, an out lesbian who works as a CPA.

Kehoe’s legislation was meant to help those LGBT property owners who found themselves in limbo due to the state’s tax codes. In 2005 state lawmakers passed SB 565 - authored by former state Senator Carole Migden (D-San Francisco) - requiring tax assessors to treat domestic partners the same as married spouses when transferring property. The law went into effect on January 1, 2006 but was not retroactive.

The issue of how to tax property held by domestic partners became a flashpoint in 2002 when then-San Francisco Assessor-Recorder Doris Ward enacted a ruling that made her city and county the first not to reassess the property of a same-sex couple when one of the partners’ died.

Ward’s successor, Mabel Teng, expanded the ruling to include the transfer of property during the dissolution of a domestic partnership. Then in 2003, when Migden served as chair of the state’s Board of Equalization, the tax board adopted the rules on a statewide basis.

The decision led several conservative county assessors who opposed the rule changes to file suit in state court. The legal wrangling wasn’t resolved until 2006, at which point the issue had become moot due to passage of Migden’s Senate legislation.

But lawmakers wanted to also offer relief to those domestic partners who saw their properties reassessed between January 1, 2000 and January 1, 2006.

"As of 2006 our registered domestic partnership law cured this problem, so we were taking care of a gap in the law," explained Kehoe.

Deb Kinney, a local tax attorney and out lesbian, helped spearhead the legislation after a client from Marin, Thom Anderson, came to her firm in 2006 seeking help. As she recounts on her firm’s Web site, Anderson lost his partner, Mac, in 2003 and when he changed the title of their home into his name three years later, Marin tax officials slapped him with a 50 percent increase in property taxes. Not only did he see his tax bill rise dramatically, Anderson also owed the county for the back taxes.

"They had always anticipated one would be left alone. They hadn’t contemplated a reassessment," said Kinney, who said her requests that Marin officials treat the couple as spouses were rebuffed. "We were trying to protect people who had been together a long time."

With property taxes largely the purview of the states, lawmakers are not bound by the restrictions federal tax officials face due to the Defense of Marriage Act, which outlaws the U.S. government from recognizing same-sex relationships. Along with the property tax exemptions for domestic partners, the state also allows same-sex couples in recognized relationships to jointly file their state income taxes.

DOMA does come into play in terms of property when a person who has died has an estate valued at more than $3.5 million and it is transferred to their partner. A person in a same-sex relationship must then pay federal estate taxes, but the taxes do not apply "to federally recognized married folks transferring property to their spouses," noted Haskins.

With Democrats now firmly in control in Washington, Kehoe said she is hopeful of seeing DOMA repealed and same-sex couples given federal tax relief.

"We do have questions from LGBT couples on the federal rules that govern not only their property tax but retirement benefits, income tax and other things. Unfortunately, as a state elected official I can’t do anything," she said. "I would like to see the federal government take a fair and equal approach for all Americans. I am hopeful that President Obama, I think, will bring a much fairer point of view to all these issues."

While Obama has said he supports partial repeal of DOMA, no such legislation has been introduced into Congress. And as the Bay Area Reporter reported last month, House Speaker Nancy Pelosi (D-San Francisco) said DOMA repeal is not a priority this year.

Next: Legislation’s impact unclear