RECENT DEVELOPMENTS IN OWNERSHIP RULES: WHAT T & E PRACTITIONERS SHOULD KNOW

By Frayda L. Bruton^*

A number of articles have been published over the years on the subject of California property tax.¹ Much of what has been written in previous articles remains unchanged; however, several recent legislative changes are worth reviewing. These include the passage of the California Domestic Partner Rights & Responsibilities Act of 2003, several components of which affect property tax assessments, a change in the interpretation of the joint tenancy rules, and administrative changes that affect certain filing procedures. This article will conclude with a review of how to handle non-pro rata allocations, a subject I have been asked about on numerous occasions.

I. A REVIEW OF FUNDAMENTALS

Real property not entitled to special assessment treatment or exemption is valued at the lower of (1) fair market value on the lien date of the year in question, or (2) a base year value determined under Proposition 13 guidelines adjusted for inflation.²"Base year" value is defined as the value of real property on March 1, 1975, or the fair market value on a later date when a present interest in the property is transferred or when improvements are newly constructed.³ The tax rate is 1% of "assessed value" which cannot be increased by more than 2% per year.⁴ The method of calculation is determined with reference to the date of acquisition by the owner of the interest in the property. The critical event and inquiry becomes when a "change in ownership" occurs.