Clients often ask their brokers and agents for advice when adding or removing persons from title in conveyances which are outside of a fee transaction. Such advice would be based on knowledge about conveyances or other transfers which change title and trigger reassessments as dictated by Proposition 13 (Prop. 13).
When a title transfer triggers reassessment, the property will be reassessed establishing a new base year value for the property equal to the market value (current price) of the property at the time of transfer. However, not all transfers trigger reassessment.
Common transactions which DO NOT trigger reassessment include:
- a transfer solely between a husband and wife [Rev & T C §63];
- a transfer between parent(s) and child(ren) [Rev & T C §63];
- a transfer from grandparent(s) to grandchild(ren) where the parents of the grandchild are deceased [Rev & T C §63.1(a)(3)];
- a transfer between registered domestic partners [Rev & T C §62];
- the replacement of a principal residence by a person of 55 years of age or older within the same county where the replacement property is of equal or lesser value than the original residence [Rev & T C §69.5];
- in Alameda, El Dorado, Los Angeles, Orange, Santa Clara, San Diego, San Mateo and Ventura counties, the replacement property may be in another county, and still be exempt from reassessment;
- replacement of a principal residence by a person who is severely disabled [Rev & T C §69.5];
- a title update to properly reflect the name(s) of the person(s) holding title to the property (e.g., a name change upon marriage) [Rev & T C §62];
- a change to title recorded only as a requirement for financing purposes or to create, terminate, or reconvey a security interest (e.g., cosigner) [Rev & T C §62];
- the recording of a document to substitute a trustee of a trust, mortgage, or other similar document [Rev & T C §62];
- a transfer that results in the creation of a joint tenancy in which the seller (transferor) remains as one of the joint tenants [Rev & T C §65]; or
- a transfer that returns the property to the person who created the joint tenancy (original transferor). [Rev & T C §65]
A common transfer which DOES trigger reassessment is a transfer between siblings. Also, be careful when dealing with transfers of partial interests as they may trigger reassessment. Advise your clients to seek legal advice prior to making any title or ownership changes if they are unsure if the modification/transfer will result in reassessment of their property taxes.