Property Tax, Transfer Of Ownership, Tax Assessment

Asked over 1 year ago - San Jose, CA

In California, a property's tax base is reassessed at the "market" value upon change of ownership. Suppose Peter owns a house, with the tax base at $400,000, and the market value at $1,000,000. Then he sells half the house to Michael for $500,000. What is the tax base for Peter?

Attorney answers (3)

  1. Nicholas Basil Spirtos

    Contributor Level 20

    1

    Lawyer agrees

    Answered . The best way to get an answer to this specific question is to contact the tax assessor and ask them. Or go see a local real estate attorney who can review your specific factual situation.

  2. Richard Gordon Stack

    Contributor Level 13

    1

    Lawyer agrees

    Answered . Your assumption that a property's tax base is reassessed at "market" value upon a change of ownership is not entirely correct. The tax base of a property depends upon the sales price which, in the vast majority of cases, fairly approximates market value.

    As I understand it, in stating that Peter sells "half the house" to Michael, I take that to mean that Michael is purchasing a 50% tenancy in common interest in the house from Peter. In your hypothetical, since Peter is selling 50% of his interest in the house to Michael, his property tax base should accordingly be reduced by 50%, from $400,000 to $200,000. In turn, Michael's property tax base in his 50% interest in the house should be $500,000, the amount that he paid to purchase an interest in the house.

    Disclaimer - I am not an expert in real estate taxation, so you will need to contact a real estate lawyer or the County Assessor to obtain a definitive answer to this question, as one of my colleagues has suggested.

    The answer to this question does not establish an attorney-client relationship. Moreover, this attorney is... more
  3. Bruce Givner

    Contributor Level 19

    1

    Lawyer agrees

    Answered . Peter's property tax base is now $200,000 for the half that he has retained.

Related Topics

Residential property

Residential property is real estate that has been developed or zoned to be used for living, such as single family houses, apartments or mobile home parks.

Property tax

Property tax is a levy local governments assess on property, usually based on its value, to pay for local services like schools, public safety and road repair.

Can't find what you're looking for? Ask a Lawyer

Get free answers from experienced attorneys.

 

Ask now

32,220 answers this week

3,542 attorneys answering

Ask a Lawyer

Get answers from top-rated lawyers.

  • It's FREE
  • It's easy
  • It's anonymous

32,220 answers this week

3,542 attorneys answering