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Exceptions to property
tax reassessment
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Dear Mr. Duman:
My sister and I inherited a home from our grandmother. Recently, my sister sold and deeded her half of the property to me.
A few weeks ago, I received a "Notice of Reassessment" from the county tax collector, saying that a "change of ownership" occurred, when my sister deeded me her half of the property, resulting in new, higher property taxes for the property, which I now have to pay.
Isn't there some sort of exception when there is a transfer between sisters? What can you tell me about this?
T.H., Kensington
In brief, the answer is that there is no exception for transfers between siblings.
Your question deals with Proposition 13, passed in l978 by California voters, and subsequently implemented in the form of Revenue and Taxation Code, Sections 50, et seq.).
Readers will recall that the major effect of Proposition 13 was to "roll back" assessed values of real property (for property tax purposes) to l976 rates and limit any annual increases in assessments to an amount not to exceed 2 percent of the prior year's assessed value. In addition, Proposition l3 also provided that county tax assessors must reassess real property at its present-day full cash value, upon either a "change of ownership" or "new construction"
A "change of ownership" includes the creation, renewal, assignment or transfer of a present interest in real property, such as partial or complete title ownership, mineral rights, leaseholds, and reversionary interests. "New construction" includes an addition to or an alteration to the property which constitutes a major rehabilitation or which converts the property to a different use.
There are several statutory exemptions which allow certain transfers
of real property to be excepted from the definition of "change of ownership",
thereby avoiding a reassessment of the value of the transferred property,
and resulting increased taxes.
Examples include certain transfers of property into joint tenancy,
where the transferor is one of the joint tenants or transfers into
a revocable trust, with the settlor also being the beneficiary, transfers
between spouses, as well as transfers between parents and children.
When these exceptions, or others apply, no reassessment will occur.
The reassessment of your property seems to have been proper in that a transfer of a partial ownership interest in property between co-owners will generally constitute a "change of ownership" justifying a re-assessment of the value of your property. From the limited facts you provide, it appears that the transaction did not fall within any of the recognized statutory exemption. Specifically, while there is a statutory reassessment exemption for certain transfers between parents and children, there is no such exception which applies to inter-familial transfers such as one between siblings.
Further questions regarding this subject should be addressed to an experienced real estate attorney, who can provide you with advice appropriate to your specific circumstances.
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