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Leonard Hamai, Both Buyer and Seller in Irvine, CA

Hi, I had a question regarding a commercial building. If we were to change the title to the property from Husband and Wife into a Corporation that is

Asked by Leonard Hamai, Irvine, CA Mon Mar 22, 2010

owned by the same people, would this cause the property to be reassessed? I just want to make sure the property taxes do not incase significantly because the building was purchased a lot lower than what it is worth now.

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Hi Leonard,

No problem - you're welcome. Yes, I would use that deed recital language - it would exempt the parties from having to pay the documentary transfer taxes at the time of the deed recording. I think that the reassessment is another issue and based on the info provided in the PCOR.

Best,
John Barry

John Barry
DRE #01856079
Coldwell Banker Residential Brokerage
Cell: 323-810-7976
Email: john.barry@coldwellbanker.com
Facebook: http://www.facebook.com/RealtorJB
Twitter: http://twitter.com/RealtorJB
0 votes Thank Flag Link Mon Mar 22, 2010
I really hope you consult a CPA first, I have heard transfering to a corp can have tax issues
0 votes Thank Flag Link Tue Apr 19, 2011
Hi John,

Just wanted to update you regarding this transfer in case you ever come across the same issue. I was able to transfer the property without any reassessment using the property R & T code. After the recording, the county will mail you a letter requesting documentation to show proof that the grantor and grantee are the same party. In my case, the grantee was a LLC so I had to submit the articles of organization and operating agreement which showed the husband and wife owning equal shares of the company. If it was a corp, I'd assuming you will need to submit the articles of incorporation along with the bylaws and corporate resolution. Thanks again for your help!
0 votes Thank Flag Link Tue Apr 19, 2011
Thank you. I was planning on using the R & T code 11923(d) which states both grantor and grantee are comprised from the same parties and they both hold the same interest. I know this would prevent transfer taxes but I guess I should double check with an attorney. Thank you
0 votes Thank Flag Link Mon Mar 22, 2010
Hi Leonard,

It is my understanding that the property WOULD be reassessed in this case, as the situation you described above would likely constitute a change of ownership in the eyes of the assessor. The only exclusions from reassessment that I am aware of are if the transaction is a transfer between parents and children or from grandparents to grandchildren, or if the transaction is to replace a principal residence by someone 55 or older or severely disabled. In any of these situations, you can file a claim for property tax reassessment exclusion - otherwise, the property would be reassessed upon transfer based on the information provided in the Preliminary Change of Ownership Report (PCOR) filed with the assessor at the time of recording.

I would recommend speaking to a real estate lawyer or your CPA for confirmation, as this does not constitute tax advice - just my understanding of the situation. Hope this info helps..

Good luck!

John Barry
DRE #01856079
Coldwell Banker Residential Brokerage
Cell: 323-810-7976
Email: john.barry@coldwellbanker.com
Facebook: http://www.facebook.com/RealtorJB
Twitter: http://twitter.com/RealtorJB
Web Reference: http://www.jbknowsthevalley.com
0 votes Thank Flag Link Mon Mar 22, 2010
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