Change of Ownership FAQ
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Change of Ownership FAQ for Possible Property Tax Reduction
Does a transfer of a present interest in real property occur only when there is a sale or purchase of a property?
Once the county assessor has determined that a change in ownership has occurred, Proposition 13 requires the county assessor to reassess the property to its current fair market value as of the date ownership changed. Since property taxes are based on the assessed value of a property at the time of acquisition, a current market value that is higher than the previously assessed Proposition 13 adjusted base year value will increase the property taxes.
Conversely, if the current market value is lower than the previously assessed Proposition 13 adjusted base year value, then the property taxes on that property will decrease. Only that portion of the property that changes ownership, however, is subject to reappraisal. For example, if 50 percent of the property is transferred, the assessor will reassess only 50 percent of the property at its current fair market value as of the date of the transfer, and deduct 50 percent from any existing Proposition 13 base year value.
In most cases, when a person buys a residence, the entire property undergoes a change in ownership and 100 percent of the property is reassessed to its current market value.
If a transfer of real property results in the transfer of the present interest and beneficial use of the property, the value of which is substantially equal to the value of the fee interest, then such transfer would constitute a change in ownership unless a statutory exclusion applies. While a transfer of real property may constitute a change in ownership, the legislature has created a number of exclusions so that some types of transfers are excluded, by law, from the definition of change in ownership. Thus, for these types of transfers, the real property will not be reappraised.
An exclusion occurs when the assessor does not reassess a property because the property or portions of the property are automatically excluded from reassessment or is eligible to be excluded if the owner properly files a claim. The following list covers most changes in ownership that are excluded from reassessment, either automatically or by claim; however, there may be other excludable qualifying transactions not listed here. Thus, you should contact your local assessor or an attorney if you have a specific transaction that you would like to discuss.
Changes in ownership that require a claim to be filed to avoid reassessment include the following:
- Transfers of the principal place of residence between parents and their children (there is no limit on the value of the residence) if a completed application is filed timely with the county assessor’s office.
- Transfers of up to $1 million of real property between parents and their children, other than a principal place of residence, if a completed application is filed timely with the county assessor’s office.
- Transfers of a principal place of residence from grandparents to their grandchildren, but not vice versa (and the transfer of up to $1 million of other real property from grandparents to their grandchildren) provided that:
- the transfer occurs on or after March 26, 1996;
- the grandchild(ren)’s parent (grandparent’s child) died on or before the date of transfer; and
- a completed application is timely filed with the county assessor’s office.
- Transfers of the principal residence between two cotenants that occur upon the death of one of the cotenants, provided that:
- The two cotenants together owned 100 percent of the property as tenants in common or joint tenants.
- The two cotenants must be owners of record for the one-year period immediately preceding the death of one of the cotenants.
- The property must have been the principal residence of both cotenants for the one-year period immediately preceding the death of one of the cotenants.
- The surviving cotenant must obtain a 100 percent interest in the property.
- The surviving cotenant must sign an affidavit affirming that he or she continuously resided at the residence for the one-year period preceding the decedent cotenant’s date of death.
- The purchase of a replacement dwelling by a person who is 55 years of age or older, where the replacement dwelling will be that person’s principal place of residence and is equal or lesser in value than the original residence. In such cases, the base year value of the previous home may be transferred to the new home so that the new home will not be reassessed to its current fair market value but will be able to retain the old home’s base year value. The original and replacement residences must generally be located in the same county; however, as of May 2008, seven counties allow a transfer of the base year value from the original property located in another county to a replacement dwelling located in that county.
- The purchase of a replacement property if the original property was taken by governmental action, such as eminent domain or inverse condemnation.
- The purchase of a new principal residence by a person who is severely disabled (Proposition 110-same as Propositions 60/90).
- Transfers of real property between registered domestic partners that occurred between January 1, 2000 and January 1, 2006 (section 62(p) of the Revenue and Taxation Code). County assessors are required to reverse any reassessments that resulted from any transfers of real property between registered domestic partners that occurred during this time period if the taxpayer files a timely claim. However, relief for such a reversal is applied only on a prospective basis. The registered domestic partners will not receive any refunds.
Changes in ownership that are automatically excluded from reassessment include the following:
- Transfers of real property between spouses, which include transfers in and out of a trust for the benefit of a spouse, the addition of a spouse on a deed, transfers upon the death of a spouse, and transfers pursuant to a divorce settlement or court order (section 63 of the Revenue and Taxation Code; Rule 462.220).
- Transfers of real property between registered domestic partners that occur on or after January 1, 2006, which include transfers in and out of a trust for the benefit of a partner, the addition of a partner on a deed, transfers upon the death of a partner, and transfers pursuant to a settlement agreement or court order upon termination of the domestic partnership (section 62(p) of the Revenue and Taxation Code).
- Transactions only to correct the name(s) of the person(s) holding title to real property or transfers of real property for the purpose of perfecting title to the property (for example, a name change upon marriage).
- Transfers of real property between coowners that result in a change in the method of holding title to the property without changing the proportional interests of the coowners, such as a partition of a tenancy in common.
- Transfers between an individual or individuals and a legal entity or between legal entities, such as a cotenancy to a partnership, or a partnership to a corporation, that results solely in a change in the method of holding title to the real property and in which proportional ownership interests of the transferors and the transferees, whether represented by stock, partnership interest, or otherwise, in each and every piece of real property transferred, remains the same after the transfer.
- The creation, assignment, termination, or reconveyance of a lender’s security interest in real property or any transfer required for financing purposes only (for example, co-signor).
- The substitution of a trustee of a trust or mortgage.
- Transfers that result in the creation of a joint tenancy in which the transferor remains as one of the joint tenants.
- Transfers of joint tenancy property to return the property to the person who created a joint tenancy (i.e., the original transferor).
- Transfers of real property to a revocable trust, where the transferor retains the power to revoke the trust or where the trust is created for the benefit of the transferor or the transferor’s spouse.
- Transfers of real property into a trust that may be revoked by the creator/grantor who is also a joint tenant, and which names the other joint tenant(s) as beneficiaries when the creator/grantor dies.
- Transfers of real property to an irrevocable trust for the benefit of the creator/grantor or the creator/grantor’s spouse.
My brother and I together own two investment condominiums but we have now decided to hold title to each one separately. If I transfer my 50 percent ownership interest to my brother on one of them and he transfers his 50 percent ownership interest on the other to me, will both properties be reassessed?
I bought a house under a contract of sale but we did not have it recorded. Do I need to file any change of ownership form?
In those cases where a deed or other recorded documents are filed, the deeds and certain other recorded documents must be accompanied by a Preliminary Change of Ownership Report (PCOR) at the time of the recording; otherwise, the taxpayer may file the PCOR at another time, but the county recorder may charge a $20 fee for filing the PCOR without the accompanying documents.
If the PCOR is not filed, or is improperly completed, the county assessor may mail you a COS. Failure to return the COS may result in penalties. These forms are used to assist in the appraisal of property and are not open for public inspection.
My mom, sister, and I purchased a commercial property as joint tenants. If mom grants her interest to me and my sister, does this transfer constitute a change in ownership?
If I add a friend or sibling on as a joint tenant to my property, would this cause a reappraisal at today's market value? What if I add them as tenants-in-common?
My brother and I purchased a house a number of years ago. We took title as joint tenants and have been living there ever since. If my brother dies, will his share be reassessed?
My domestic partner and I live in a home that I own. May I transfer one-half of my ownership interest in the property to my partner so that we could hold title as tenants-in-common without the transfer being a change in ownership reassessment?
- The creation of a leasehold interest in taxable real property for a term of 35 years or more (including written renewal options).*
- The termination of a leasehold interest in taxable real property (where the property leased returns to the lessor), which had an original term of 35 years or more (including written renewal options).*
- Any transfer of a leasehold interest having a remaining term of 35 years or more (including written renewal options).*
- The transfer (sale) of the lessor’s interest in taxable real property subject to a lease with a remaining term (including written renewal options) of less than 35 years.*
- When real property subject to a lease changes ownership (as in 1 through 4 above), the entire property is reappraised, including leasehold and leased fee.*
* Only that portion of a property subject to such lease or transfer shall be considered to have undergone a change in ownership. For instance, a qualifying lease of one shop in a shopping center requires reappraisal of only that shop.
- The transfer (sale) of the lessor’s interest in taxable real property subject to a lease with a remaining term of 35 years or more (including renewal options).
- The transfer of a leasehold interest, to other than the lessor, in taxable real property with a remaining term of less than 35 years.
- The transfer of the lessor’s interest in residential property that is eligible for the homeowners’ exemption on the basis that the lessee owns the dwelling and resides in it as a principal residence.
If the transfer is recorded— At the time of recording
If the transfer is not recorded or change in ownership report not filed at time of recording— Within 90 days of the date of transfer
If the change in ownership was the result of a death and there is no probate— Within 150 days of the date of death
If the change in ownership was the result of a death and the estate is probated— At the same time that the “inventory and appraisal” is filed
These forms and various other change in ownership reporting forms may be available from your county assessor’s website, or you may call their office to request that a form be sent to you.
If the statement is filed at the time of recording, the owner may file a Preliminary Change in Ownership Report (PCOR), BOE 502-A. If a PCOR is not filed at the time of recording, the owner must file a Change in Ownership Statement, BOE-502-AH, within the specified time period.
Ordinarily, when sales or transfers of property are recorded with the county recorder, whoever records the deed also files a Preliminary Change In Ownership Report (PCOR) for the owner. It is a two-page questionnaire requesting information on the property, principals involved in the transfer, type of transfer, purchase price and terms of sale, if applicable, and other such pertinent data. The PCOR normally satisfies the change in ownership reporting requirements unless the form is returned incomplete.
If at the time of recording the owner chooses not to file a PCOR or if the transfer deed is not recorded, the owner is still obligated to file a Change in Ownership Statement with the county assessor within the prescribed time limits. The recorder may charge an additional $20 recording fee if a PCOR is not filed at the time the transfer document is presented to be recorded. The PCOR is to be signed and certified by the filer.
The county assessor may also request other information about a deed or other matters related to the transfer after reviewing the PCOR. The county assessor will send out a Change of Ownership Statement (COS) to the owner when a Preliminary Change of Ownership Report (PCOR) is either not filed when the transfer is recorded or is filed incomplete. The COS contains the same questions as those in the PCOR. The county assessor also sends this form to owners of unique or specialized-type properties when they change ownership.
What are the penalties for not filing a Preliminary Change of Ownership Report or Change of Ownership Statement?
What is the statute of limitations on an escape assessment if I haven't filed a Change in Ownership Statement?
If the owner responds within 90 days of a request to complete a Change of Ownership Statement from the county assessor but not within 90 days from the date of transfer, can a penalty be imposed?
Do I still have to file a Change of Ownership Statement if the property was held in the decedent’s trust?
In all other cases in which an interest in real property is transferred by reason of death, including a transfer through a medium of a trust, the change in ownership statement shall be filed with the county assessor by the trustee (if the property was held in trust) or the transferee within 150 days after the date of death.
Will the property be reassessed if the decedent’s property passes to the spouse or registered domestic partner?
Is there a deadline for filing a Claim for Reassessment Exclusion for Transfer between Parent and Child?
If the above time requirements have expired, and the property has not been transferred to a third party, a claim can still be filed, however, the exclusion will only apply to future tax years. Click on Reassessment Exclusion for Real Property Transfers Between Parent and Child for more details.
No other transfers of property between family members are excluded from reassessment, including transfers between siblings.
-Claim for Reassessment Exclusion for Transfer between Parent and Child ((BOE-58,Own-88) ( if applicable)
-Copy of Registered State of California Declaration of Domestic Partner (if applicable)
-Additional Documents needed if: The decedent held the property in a trust:
-Copy of the entire trust, including amendments and attachments.
The decedent had a will:
-A copy of the signed will.
The decedent died without a will:
-Letters of administration
-List of heirs showing relationship to the decedent.
Or select Death of Real Property Owner for a check list of documents.
A Preliminary Change of Ownership Report (PCOR) is required whenever a document evidencing a change of ownership is recorded. If a PCOR is not received, the Assessor Department will mail you a Change of Ownership Statement (COS). The owner of the property is required to complete and return the form, under Section 480 of the Revenue and Taxation Code. Failure to file a completed COS will result in a penalty bill of up to $2,500.