Can the County Assessor reassess our property taxes, if all we did is change a joint tenancy to a tenancy-in-common?
The short answer? Yes (according to at least one California court).
The not-so-short answer? This is troubling news for California taxpayers and legal practitioners who've always believed the answer should be "no".
You see, transfers between co-owners that change the method of holding title to the real property without changing the proportional interests of the co-owners are generally exempt from property tax reassessment (CA R&T62(a)(1)).
But in the case of Benson v. Marin County Assessment Appeals Board (Mikkelsen) - filed September 26, 2013, First District, Div. One (2013 S.O.S. A134340), the court said that rule doesn't apply.
When Peter Mikkelsen inherited his home from his mother, he created a joint tenancy with his brother, James. Nearly a decade later, James deeded his own joint tenancy interest to himself as a tenant-in-common with Peter. They changed only the method of holding title, without changing their proportional interests. But the Marin County Assessor determined that the transfer was a "change in ownership" that triggered a property tax reassessment.
Not to worry, the Mikkelsens sought relief from the Assessment Appeals Board, who ruled in favor of the taxpayers. So the Marin County Assessor appealed to the trial court, who also ruled in favor of the taxpayers.
But then a funny happened on the way to the [next] forum. The California First District Court of Appeal held that "the change in the method of holding title exception set forth in [the California Constitution], does not apply to the termination of family joint tenancy." That's code for "we agree with the taxman, and NOT the taxpayer."
The full text of the case can be found here http://www.metnews.com/sos.cgi?0913//A134340
The take-home lesson? California property tax law is tricky, even for seasoned tax lawyers and CPAs. If you're uncertain about your own case, check with a tax attorney or CPA before you transfer the real property.
For information only; may NOT be relied upon as legal advice. For specific questions about your own property tax case, please call 818.707.8200 to to schedule a legal consultation.