(Super. Ct No. 1244393) (Santa Barbara County), Denise de Bellefeuiille, Judge.
The opinion of the court was delivered by: Yegan, J.
CERTIFIED FOR PUBLICATION
County of Santa Barbara (County) appeals a tax refund judgment entered in favor of David W. Grotenhuis, as an individual and trustee of the Grotenhuis Family Living Trust (Grotenhuis) and Grotenhuis Investments, Inc., a closely held corporation (corporation). The trial court ruled that Grotenhuis, as the alter ego of corporation, can claim a homeowner's property tax exemption (Rev. & Taxation Code, § 218)*fn1 and transfer the base year value of a former residence to a new residence of which corporation is owner of record. (§ 69.5) There is no statutory provision or precedent for this ruling and we reverse.
Subject to certain conditions, a homeowner over the age of 55 may sell a principle residence that qualifies for a homeowner's property tax exemption ( § 218), purchase a replacement dwelling of equal or lesser value in the same county, and transfer the property tax basis of the principal residence to the replacement dwelling. (§ 69.5, subd. (a).) The Legislature calls this a "transfer of base year value." (§ 69.5, subd. (g)(2) & (j)(1).)*fn2
Unless the original residence and replacement residence qualify for a homeowner's property tax exemption, the tax basis of the original residence may not be transferred to the replacement residence. (§ 69.5, subd. (b)(2) & (b)(4).) Section 69.5, subdivision (a)(1) provides that a natural "person" (i.e., a person over the age of 55 years or a severely and permanently disabled person) may transfer the tax basis of his or her principal residence. " 'Person' means any individual, but does not include any firm, partnership, association, corporation, company, or other legal entity or organization of any kind." (§ 69.5, subd. (g)(11).)
Grotenhuis concedes that corporation is the owner of record of the replacement residence but contends that he is the true "owner" and qualifies for a homeowner's property tax exemption and a base year value transfer. We reject the contention. Grotenhuis did not sell the original principal residence, did not purchase the replacement residence, and rents the replacement residence from corporation.
Grotenhuis and his wife purchased a lot and structure on Padaro Lane in Carpinteria in 1994. They tore down the existing shack and built a house that was used as their principal residence. In 1999, Grotenhuis conveyed title to corporation of which Grotenhuis is the sole shareholder. County granted a homeowner's exemption on the Padaro Lane property, which was a mistake because corporation was the owner of record.
In 2002 Grotenhuis refinanced the property, conveying title to himself and back to corporation. Grotenhuis notified County that the transfer was to refinance the property and that the property should not be reassessed for tax purposes. County continued the homeowner's exemption even though corporation was owner of record.
In 2004, corporation sold the Padaro Lane property for $5.05 million and bought a replacement residence on Ten Acre Road, Montecito which has an assessed value of $3.35 million. After title was taken in the corporation's name, Grotenhuis signed a back-dated lease to rent the residence.
On April 22, 2005, Grotenhuis filed a claim to transfer the base year value of the Padaro Lane property which would entitle him to a $24,000-a-year reduction in property taxes on the Montecito residence. County denied the claim because corporation was the owner of record of the original and replacement properties.
Grotenhuis alone appealed to the Santa Barbara County Appeals Board (Board) for an assessment reduction and tax refund. Grotenhuis offered imaginary deeds (corrective deeds) to show that he intended to qualify the Montecito residence for a base year value transfer. Grotenhuis, however, admitted that he was a tenant of the Padaro Lane property before it was sold. Grotenhauis also introduced evidence that he signed a 35 year lease on April 3, 2005, that was backdated to October 8, 2004 (the date the Montecito residence was purchased) to somehow show that the property was eligible for a homeowner's exemption.
Board denied the application for changed assessment and tax refund, rejecting Grotenhuis' mistake and estoppel arguments. It found that Grotenhuis was "sophisticated enough to know that corporate transfers of real property did not qualify for transfers of base year value... and that [he] did not inform the Assessor of this fact even though the corporation enjoyed the benefit of the homeowners exemption for about 6 to 7 years. Instead of supporting [his] claim for equitable relief, [ his] ...