Changes in Ownership

Reappraisals


The Assessor's office reviews all recorded deeds to determine which require reappraisal under the law. The Assessor may also request additional information from the owner about a deed or other change in ownership (the owner's response is strictly confidential and not available to the public). The Assessor then determines the market value of those properties as of the date they changed ownership.

A change in ownership includes almost all transfers of title in real property. Under Proposition 13, real property is reappraised for a change in ownership.
Proposition 13 - The basis for California’s property tax system.
  • Property is appraised then assigned a value and a base date when acquired.
  • Improvements added after the acquisition are given a separate value and base date.
  • All values are indexed by the Consumer Price Index not to exceed 2% annually.
  • The taxable value is the sum of all indexed values.
  • Property may benefit from other assessment methods if applicable.
  • If the Proposition 13 value is the lowest value, it will be used for tax purposes.
Some changes in ownership are excluded from reappraisal.
Note: It is advisable to consult an attorney or other expert before changing your present or future ownership of property. The Assessor's Office cannot give legal advice; only explain which transfers shall be reappraised.

Exclusions from Appraisal

  • Husband and wife - Transfers of property between husband and wife do not cause a reappraisal. This includes transfers due to divorce or death.
  • Refinancing - Refinancing is not considered a change in ownership.
  • Parent and child or grandparent and grandchild - Parent and child or grandparent and grandchild - In some situations, homeowners who transfer from parent to child, from child to parent or from grandparent to grandchild may be able to avoid a higher assessed value. For more information about this type of exclusion, please call our office at (209) 385-7631 or view the California State Board of Equalization website.
  • Senior citizens and the disabled -Persons At Least Age 55/Disabled - In some situations, homeowners who are at least 55 years old or are severely and permanently disabled can avoid higher assessed values when they sell their existing home and acquire another one. For more information about this type of exclusion, please call our office at (209) 385-7631 or view the California State Board of Equalization website.

Deed


A Deed is the most commonly used document to convey ownership of property from one party to another. Most deeds will cause a reassessment of some kind unless an exclusion applies.
See Exclusions for more details

Unrecorded Contracts


A contract that conveys ownership, or a portion of ownership from one party to another is considered a change in ownership regardless of whether or not it was recorded. Upon discovery by the Assessor the unrecorded contract will be evaluated. If it is determined that the property was under-assessed due to an unrecorded contract of sale the Assessor must go back and issue escaped assessments for the effected years.

Legal Entities


It is important for property owners to know that legal entities, such as corporations, limited liability companies and partnerships exist in their own right and are distinct in many ways from the individuals that own shares in them. Some change in ownership laws and exclusions from reassessment that apply to transfers between individuals do not apply to legal entities.

Changes in ownership of legal entities, for assessment purposes, are defined in Revenue and Taxation Code sections 61, 62 and 64 as well as in Board of Equalization Rule 462.180. There are two primary ways that a re-assessment for change in ownership occurs:

Change in Control


A change in controlling interest occurs at the time that one owner of the legal entity gains control of more than 50% of the ownership shares. When this threshold is reached it results in a 100% reappraisal of all real property owned by the entity. Legal entity transfers can be complicated. The following is a simple and straightforward example:
Corporation X is owned by A: 30%, B: 30%, C: 20% and D: 20%.

If owner A (30% interest) acquires owner B's 30% interest, then A would own 60% of corporation X. In this event A would gain controlling interest. The result would be a 100% reassessment of all real property owned by corporation X.
Alternately, if owner A (30% interest) were instead to acquire owner C's 20% interest, then A would own 50% of corporation X. In this event A would not gain controlling interest. The result would be no reassessment of the real estate owned by corporation X.

Change in Ownership Without Change in Control


A reassessment can also occur when the original owners of a legal entity have cumulatively transferred more than 50% of their interests, even if no one person or legal entity has gained a controlling interest in the process. This can frequently occur in family owned entities where parents, as original entity owners, transfer ownership interests to their children or grandchildren over time. (Note: Parent-Child exclusions from reassessment do not apply to transfers of interests within, or to, legal entities.)
Important Note:

Pursuant to Revenue and Taxation code sections 480.1 and 480.2, Changes in Control and Changes in Ownership, as noted above, must be reported to the State of California, Board of Equalization (BOE) within 90 days of the date of change in control or change in ownership. Failure to timely report changes in control or ownership may result in significant penalties and, pursuant to Revenue and taxation code 532(b)(3), will result in the waiving of statutes of limitation for correction of prior-year assessments.

Click here to download form BOE-100-B, Statement of Change in Control and Ownership of Legal Entities.
You may also visit the Board of Equalization Legal Entity Ownership Program webpage.

If you have additional questions, please contact the Assessor's Change in Ownership Division at (209) 385-7631.

Long Term Lease

The creation of a long term lease is a change in ownership and is defined in section 61 of the California R&T code as: The creation of a leasehold interest in taxable real property for a term of 35 years or more (including renewal options).

Possessory Interest


Any individual, group, or corporation that has exclusive use of publicly owned property is subject to a possessory interest assessment.

Preliminary Change In Ownership Report (PCOR/COS)


This form is required by State Law to be filed for all property transfers. A fee will be charged if the completed form is not filed at the time of recording. If the form is not filed, or is not filled out completely, the Assessor is then required to mail a "Change of Ownership Statement". Failure to return this statement will result in penalties. This form is used to assist in the appraisal of property and is not open for public inspection.

For further assistance, contact the Change In Ownership department of the Assessor's Office.

Exclusions


Builder's Exclusion


There is an exclusion for new construction from the supplemental assessment. The property must be held for sale and the builder must request the exclusion from the Assessor prior to or within 30 days from the start of construction. If the form is not filed, a supplemental assessment is made to the builder upon completion of the construction. If the form is filed, a supplemental assessment is not made until the property is sold or rented. For more information, call the Residential Department of the Assessor's Office at (209) 385-7631.

Exclusion for the Permanently Disabled


If you are permanently disabled, under certain conditions you may sell your original home and buy or build a replacement of equal or lesser value without reappraisal. This includes changes to an existing home for the purpose of making it more accessible to a severely and permanently disabled resident. For further information, call the Standards Division of the Assessor's Office at (209) 385-7631.

Parent/Child Exclusion


Parent and child or grandparent and grandchild - In some situations, homeowners who transfer from parent to child, from child to parent or from grandparent to grandchild may be able to avoid a higher assessed value. For more information about this type of exclusion, please call our office at (209) 385-7631 or view the California State Board of Equalization website.

Effective as of June 6, 2017 the Merced County Board of Supervisors adopted Ordinance No. 1951 to establish a Late Filing Fee of $175.00; the fee will be charged for each claim where the eligible transferee fails to file a certified claim for exclusion within 45 days of the initial notice of potential eligibility and further fails to file a certified claim for exclusion within 60 days of the date of the second notice of potential eligibility.  

Grandparent/Grandchild Exclusion


Parent and child or grandparent and grandchild - In some situations, homeowners who transfer from parent to child, from child to parent or from grandparent to grandchild may be able to avoid a higher assessed value. For more information about this type of exclusion, please call our office at (209) 385-7631 or view the California State Board of Equalization website.

Effective as of June 6, 2017 the Merced County Board of Supervisors adopted Ordinance No. 1951 to establish a Late Filing Fee of $175.00; the fee will be charged for each claim where the eligible transferee fails to file a certified claim for exclusion within 45 days of the initial notice of potential eligibility and further fails to file a certified claim for exclusion within 60 days of the date of the second notice of potential eligibility.  

Spousal Exclusion


The transfer of property between spouses or registered domestic partners does not require a reappraisal for property tax purposes. This includes transfers resulting from divorce or death.

Reassessment Exclusion for Seniors

 


Persons At Least Age 55/Disabled - In some situations, homeowners who are at least 55 years old or are severely and permanently disabled can avoid higher assessed values when they sell their existing home and acquire another one. For more information about this type of exclusion, please call our office at (209) 385-7631 or view the California State Board of Equalization website.


Replacement Property-Acquired by Governmental Entities
If a government agency acquires your property, you have the right to retain the existing value and transfer it to a replacement property. The replacement property acquired, and an application form must be filed with the Assessor within four (4 years) from the date of acquisition.


For more information, contact the Standards Division of the Assessor's Office at (209) 385-7631.