California Property Tax Lawyer

Skilled Guidance with Real and Personal Property Tax Issues in San Jose, the San Francisco Bay Area, and Throughout California

In 1978, the voters of California passed the People's Initiative to Limit Real Property Taxation (a.k.a. Prop 13) because of concern over property taxes rising sharply due to increases in property values. Prop 13 limited the amount real property taxes can increase in any given year to just 2%; meaning that no matter how much the value of the real property increased, property tax for California homeowners and commercial property owners could not go up by more than 2% annually.

Personal property taxes are not subject to Prop 13 but are an additional area in which John D. Teter Law Offices can provide knowledgeable assistance.

While Prop 13 has generally helped keep property taxes for Californians lower, it has also spawned some unintended consequences, particularly in transfers of ownership. When the ownership of a property changes, the tax rates are recalculated, potentially triggering large increases. This can happen with inherited property as well if the transfer is not done properly. At John D. Teter Law Offices, we have extensive knowledge of California property tax laws, issues with which property owners regularly deal, and the most effective tax strategies for ensuring successful real estate transactions.

California Property Tax Reassessments

A reassessment of your California property tax based on the current market value of the real estate is required for changes in ownership and completion of new construction. The reassessment results in an increase in property tax due every year. There are certain instances in which a transfer of ownership may be exempt from a property tax reassessment. Some examples include:

• Transfers Between Spouses: Transfers of ownership from one spouse to another are exempt from reassessment. This includes instances when one spouse dies and legal entities (e.g., partnerships, corporations, LLCs, etc.) that are owned by the spouses.
• Transfers Between Parents and Children: A principal residence and/or rental real estate with an assessed value of up to $1 million can be transferred from a parent to a child if the property is owned individually or in a trust and not owned by a business entity and the proper paperwork is completed within the allotted time limits.
• Certain Transfers Between Trusts: Property transfers to and from revocable family trusts are exempt from reassessment. Certain transfers to and from irrevocable trusts are also exempt, but parent-child exemptions can be lost without careful planning.
• Certain Transfers Between Legal Entities: Transfers of property ownership between legal entities are only exempt if the proportional ownership interests in each property remains the same within both entities.
• Eminent Domain or Inverse Condemnation: Transfers of property wherein the government mandatorily purchases the property are exempt from reassessment.

California property owners often have tax reassessments triggered due to a simple mistake in the paperwork while filing a transfer. Unfortunately, this type of error is virtually irreversible because once a deed is recorded, it generally cannot be reversed. For this reason, if you are dealing with a property transfer in California, it is important to ensure everything is executed properly so you do not mistakenly incur a significantly higher annual tax rate. Attorney John D. Teter understands the complexities of property tax for California real estate owners, how to overcome common pitfalls during property transfers, and how to keep your tax burden as low as possible. For a consultation with Attorney Teter, contact our office today at 408-866-1810.