Trusts and Estates

Ca. Trs. & Estates Quarterly Volume 15, Issue 3, Fall 2009


By Dibby Allan Green, ACP (Advanced Certified Paralegal)*

New property tax penalties for not reporting a change in ownership were added to the California Revenue and Taxation Code ("Revenue Code") effective January 1, 2010, including a new mandatory penalty if a change of control or ownership of a legal entity is not reported within 45 days of a transfer1 – and there is no extension to 150 days for a death as there is for a transfer of real property outside of an entity. (Update your decedent’s estate checklists!)

This article and its accompanying chart attempt to summarize the property tax reporting requirements, the various consequences of not reporting, and certain benefits obtained from reporting, even if late. These materials cover reporting requirements for transfers of interests in real property, including a manufactured home that is subject to local property taxation and is assessed by the county assessor under Revenue Code section 480(a), but not including properties such as public utilities that are not locally assessed. The materials also include requirements as they apply to transfers of ownership interests in legal entities owning California real property, but not reporting requirements for business or personal property.

Change in Ownership. A "change in ownership" of real property, which is what triggers reassessment unless some exclusion is available, occurs upon "a transfer of a present interest in real property, including the beneficial use thereof, the value of which is substantially equal to the value of the fee interest."2 State Board of Equalization Property Tax Rule ("Rule") 462.001 adds, "Every transfer of property qualified as a ‘change in ownership’ shall be so regarded whether the transfer is voluntary, involuntary, by operation of law, by grant, gift, devise, inheritance, trust, contract of sale, addition or deletion of an owner, property settlement, or any other means. A change in the name of an owner of property not involving a change in the right to beneficial use is excluded from the term ‘transfer’ as used in this section."3

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