Property Tax after buyout


G

Gary

I currently own 50% of a home with another person as tenants
in common in California. I am going to buy out the other
persons interest in the home. The lawyer is going to make a
buyout agreement and a new Grant Deed that will list me
only. I have been living in this home as my primary
residence for several years. The house is now worth 3x the
original price paid. Will this cause my house to be
reassessed and my property tax increase?

-Gary
 
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S

Stuart A. Bronstein

Gary said:
I currently own 50% of a home with another person as tenants
in common in California. I am going to buy out the other
persons interest in the home. The lawyer is going to make a
buyout agreement and a new Grant Deed that will list me
only. I have been living in this home as my primary
residence for several years. The house is now worth 3x the
original price paid. Will this cause my house to be
reassessed and my property tax increase?
It depends on your relationship with the other person. If
the other person is a spouse, child or parent, you may be
subject to an exemption. Otherwise your property tax will
likely be increased.

Stu
 
A

A.G. Kalman

Gary said:
I currently own 50% of a home with another person as tenants
in common in California. I am going to buy out the other
persons interest in the home. The lawyer is going to make a
buyout agreement and a new Grant Deed that will list me
only. I have been living in this home as my primary
residence for several years. The house is now worth 3x the
original price paid. Will this cause my house to be
reassessed and my property tax increase?
Yes, assuming this other person is not your parent,
grandparent, child or grandchild.
 
A

A.G. Kalman

Or spouse or domestic partner.
The recent law that extended community property law to
registered DPs had no impact on the state property tax laws.
A change in ownership between registered DPs will trigger a
change in assessment except in San Francisco (SF). SF has
had a regulation that provided an exemption for some time.
Other counties may also have extended this exemption but I
am not aware of any.
 
D

D. Stussy

It depends on your relationship with the other person. If
the other person is a spouse, child or parent, you may be
subject to an exemption. Otherwise your property tax will
likely be increased.
Increased: Yes (except as noted above). However, an
important factor will be BY HOW MUCH. Note that your 50%
interest that you currently have should be unaffected
(except for the annual 2% maximum increase). The other
owner's share should be at your buyout amount. Make certain
the assessor doesn't take the ENTIRE property up to FMV or
such.
 
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S

Stuart A. Bronstein

Will this cause my house to be
The recent law that extended community property law to
registered DPs had no impact on the state property tax laws.
While the specific statute dealing with change of ownership
may not have been changed, as I recall the legislation
creating domestic partnerships has an omnibus clause
basically saying that if you're in a DP you have all the
rights of married couples, except when it comes to reporting
income on income tax returns.

Stu
 
S

Stuart A. Bronstein

Increased: Yes (except as noted above). However, an
important factor will be BY HOW MUCH. Note that your 50%
interest that you currently have should be unaffected
(except for the annual 2% maximum increase). The other
owner's share should be at your buyout amount. Make certain
the assessor doesn't take the ENTIRE property up to FMV or
such.
Exactly.

Stu
 
A

A.G. Kalman

Will this cause my house to be
While the specific statute dealing with change of ownership
may not have been changed, as I recall the legislation
creating domestic partnerships has an omnibus clause
basically saying that if you're in a DP you have all the
rights of married couples, except when it comes to reporting
income on income tax returns.
As it was explained to me by a local attorney, the bill (AB
205) granting the additional benefits to registered DPs has
no impact on property taxes because taxation of property and
the exemption from reassessment to a transfer between
spouses is written into Articles XIII and XIIIA of the state
constitution. Only a constitutional amendment can change
those benefits.
 
S

Stuart A. Bronstein

While the specific statute dealing with change of ownership
As it was explained to me by a local attorney, the bill (AB
205) granting the additional benefits to registered DPs has
no impact on property taxes because taxation of property and
the exemption from reassessment to a transfer between
spouses is written into Articles XIII and XIIIA of the state
constitution. Only a constitutional amendment can change
those benefits.
AB205 adds section 297.5(a) to the California Family Code,
reading,

"Registered domestic partners shall have the same rights,
protections, and benefits, and shall be subject to the same
responsibilities, obligations, and duties under law, whether
they derive from statutes, administrative regulations, court
rules, government policies, common law, or any other
provisions or sources of law, as are granted to and imposed
upon spouses."

Section 297.5(h) was enacted to read,

"No public agency in this state may discriminate against any
person or couple on the ground that the person is a
registered domestic partner rather than a spouse or that the
couple are registered domestic partners rather than spouses,
except that nothing in this section applies to modify
eligibility for long- term care plans pursuant to Chapter 15
(commencing with Section 21660) of Part 3 of Division 5 of
Title 2 of the Government Code."

While the law states that it does not modify the
Constitution, the Constitution does not limit a "change in
ownership" and the legislature or the people are competent
to enact laws further defining when a change in ownership
shall or shall not occur. In fact, several statutes have
been passed which clarify and supplement the law with
respect to when there has been a change of ownership.

Consequently, I don't see any reason the law can't add
additional categories to the exemptions of when a change of
ownership exists.

This is my opinion - I have seen no cases on this new law.
But in my opinion your lawyer friend is wrong.

Stu
 
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A

A.G. Kalman

While the specific statute dealing with change of ownership
AB205 adds section 297.5(a) to the California Family Code,
reading,

"Registered domestic partners shall have the same rights,
protections, and benefits, and shall be subject to the same
responsibilities, obligations, and duties under law, whether
they derive from statutes, administrative regulations, court
rules, government policies, common law, or any other
provisions or sources of law, as are granted to and imposed
upon spouses."

Section 297.5(h) was enacted to read,

"No public agency in this state may discriminate against any
person or couple on the ground that the person is a
registered domestic partner rather than a spouse or that the
couple are registered domestic partners rather than spouses,
except that nothing in this section applies to modify
eligibility for long- term care plans pursuant to Chapter 15
(commencing with Section 21660) of Part 3 of Division 5 of
Title 2 of the Government Code."

While the law states that it does not modify the
Constitution, the Constitution does not limit a "change in
ownership" and the legislature or the people are competent
to enact laws further defining when a change in ownership
shall or shall not occur. In fact, several statutes have
been passed which clarify and supplement the law with
respect to when there has been a change of ownership.

Consequently, I don't see any reason the law can't add
additional categories to the exemptions of when a change of
ownership exists.

This is my opinion - I have seen no cases on this new law.
But in my opinion your lawyer friend is wrong.
I think we may have lost sight of the original post. The
post stated that title was as Tenants in Common and that one
tenant was buying out the other tenant's interest. To obtain
some clarification, I spoke with the LA County Assessor's
legal office. They informed me that AB 205 would have no
affect on the referenced transaction. The property would be
reassessed as this change in ownership has nothing to do
with intestate transfers that are affected by AB 205.
Registered DPs who own property as Joint Tenants would avoid
reassessment upon the death of one owner. DPs who own
property as Tenants in Common and change ownership to Joint
Tenancy also avoid reassessment as this change in ownership
method also does not trigger reassessment (this has nothing
to do with AB 205).
 
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