California Real Estate Ownership Law to Impact Tax Reassessment

On May 29th 2014, the California General Assemble passed A.B. 2372 by a two-thirds vote which would amend the rules of when a “change of ownership” takes place relative to Real Estate property reassessments.

The law, initially established under Proposition 13, caps property tax assessment increases for original owners and prevents any subsequent reassessments unless there has been a “change in ownership” or commonly referred to as a change in control.

For California businesses that own or control real property, the law defines a “change in ownership” occurs when a purchaser acquires at least 50% or more interest in a real property asset. A.B. 2372 change this rule and triggers reassessment when 90% of the interest in a real property is transferred over a 3-year period. The law exempt, transfers of, among other things that were previously considered in other versions of the law, “stock or interests of a publically traded corporation or a publicly traded partnership in the regular course of a trading activity on an established securities market unless shares are acquired as part of a merger, acquisition, private equity buyout, transfer of partnership shares or any other means by which a change in ownership would otherwise occur”.

This position is supported by a number of business organizations. A.B. 2372 now moves to the Senate where it is expected to gain additional support.

The Hilco National Property Tax practice is available to discuss your California matters, with appeal deadlines approaching this September and November as well as any other state and local matters.

For more information contact:
Frank Lima
Hilco Real Estate Appraisal