Avoiding Real Estate Tax Revaluations

by Steven Singer, CPA

As a result of the passage of Proposition 13 almost thirty years ago, real estate owners currently enjoy paying property taxes based on the property’s purchase price, value of improvements and an annual increase of 2% over the previous years’ assessed value. As a result of its passage, owners pay significantly lower property taxes than if their property was valued under current market conditions.

Property Value Guidelines Under Proposition 13

Most owners believe that unless they sell their property, the assessed value will not increase over the proscribed limits of Proposition 13. However, a change in ownership of real estate through gift, transfer, inheritance, or the addition or removal of an owner, may cause a revaluation for real property tax purposes. There are many types of exemptions available to the property tax owner that will not increase their property tax values. For families, partnerships or corporations that own real property and have changed the owner, through inheritance, transfer or stock ownership change, ignorance of these exemption can result in thousands of lost dollars paid for increased property value assessment.

Avoiding Property Tax Reassessment

Failure to take advantage of these exemptions may cause a substantial increase in your real estate tax bills for the life that you hold the property. Proper planning in partnership with a firm familiar with available exemption can help you avoid paying an increased property tax bill. Each owner has different circumstances that dictate which exemption may be used. The following are the most common kinds of exemption:

Types of Exemptions Available

• Transfers between husband and wife
• Transfers between parents and children
• Transfers in jointly held property
• Inherited Property
• Transfers to and from trusts
• Seniors over 55 may keep the same property tax bill as old residence for newly acquired personal residences.
• Transfers of interests in Corporation and Partnerships owning real property

Greenstein, Rogoff and Olsen & Co, LLP -- Experienced Real Estate Planners

Our firm has substantial experience helping our clients in real property transfers. We can navigate and explain rules regarding reporting, exemptions and planning for you, which may result in substantial savings.

If you wish to learn more about these exemptions and how they apply in your situation, please contact Steven Singer at 510-797-8661 or email him at ssinger@groco.com

For a more detailed listing and explanation of the exemptions available, please download our 13-page report, How to Avoid or Defer Property Tax Reassessments (PDF, 213k).