Prop. 13/Property Tax Reassessment Avoidance
Passed by California voters in 1978, Proposition 13 rolled back the assessed value of real property to 1975 for the purposes of calculating property taxes. Thereafter, property taxes could only be increased annually based on inflation, but not to exceed 2.0% annually. However, new construction or a change in ownership would trigger a reassessment of the property to a new value based on its current fair market value.
Since the passage of Prop. 13, several other laws have been enacted that affect the application of Prop. 13. Some limit the positive effects of Prop. 13, while others have provided additional opportunities for taking advantage of the benefits of Prop. 13. There are several techniques and exclusions available that would enable a real estate transaction to escape property tax reassessment, but many require careful planning and structuring of deals to be successful.
Property tax planning is a complex area of the law. Contact Collins Law for help avoiding any unnecessary property tax reassessment relating to your California real estate transaction.