Don’t Neglect the Property Tax Consequences
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Change in Real Estate Ownership Can Trigger Reassessment
If you own a business or real estate in California, a change in ownership, especially over 50%, can trigger a property tax reassessment at the current market value. That can mean a surprising tax hike. Understanding when reassessment applies can help you avoid unexpected costs and better protect your investment.
WHAT ENTITIES QUALIFY? California’s property tax rules apply to entities like
partnerships, LLCs, corporations, trusts, and estates that own real estate. If more than 50% of original ownership interests change — whether by sale or inheritance — the property may be fully reassessed. The Board of Equalization tracks these changes through the Legal Entity Ownership Program (LEOP) to ensure compliance. ARE THERE EXEMPTIONS? Some ownership transfers are exempt from property tax reassessment, like those between spouses, in divorce, or changes that don’t alter ownership percentages. Other exemptions may apply for certain trusts, co-owner exchanges, or joint tenancy setups. Because the rules are complex, it’s best to consult an attorney to see if your transfer qualifies. REASSESSMENT OFTEN MEANS INCREASED TAXES FOR NEW OWNERSHIP. When property is reassessed, its taxable value updates to current market rates, often leading to higher taxes. If your transaction triggers reassessment, plan for the increase. While it’s not always avoidable, understanding the process can help you make smarter decisions and possibly reduce the impact. ADDRESSING THE LEGAL AND FINANCIAL ELEMENTS OF A CHANGE IN OWNERSHIP. Dealing with ownership changes and the tax consequences requires careful legal and financial planning. Thinking ahead about reassessment can help you avoid surprises and protect what you’ve built. Bringing these rules into your overall business and estate plans gives you more control over the outcome. Our team at Dahl Law Group in Sacramento and San Diego provides personalized legal support to help you manage ownership changes and minimize their impact on your property and business goals. If you’re preparing for a change in ownership and need assistance with the legal details or help in determining the best tax strategy moving forward, contact our firm to book a consultation.
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