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 - A principal residence and other property up to $1,000,000 assessed value may transfer without reappraisal if the transfer qualifies. An application must be filed with the Assessor's office. For more information about these exclusions, view the Parent-Child Change in Ownership Exclusions Fact Sheet or call (209) 385-7631.
  • Senior citizens and the 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. The market value of the replacement home must be equal or lesser value of the home sold. There are some conditions and an application must be filed with the Assessor. Call (209) 385-7631 between 8:00 am and 5:00 pm for more information.

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 at http://www.boe.ca.gov/proptaxes/leop.htm.

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).

Possesory 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


The transfer of the principal place of residence between parents and children (and the transfer of up to $1 million of any other real property between parents and children) is also excluded from reappraisal if an application is timely filed. Transfers between grandparents and grandchildren may also be excluded from reappraisal when both parents of the grandchild are deceased. Applications are available by writing or calling the Assessor's Office at (209) 385-7631.

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


The transfer of the principal place of residence between parents and children (and the transfer of up to $1 million of any other real property between parents and children) is also excluded from reappraisal if an application is timely filed. Transfers between grandparents and grandchildren may also be excluded from reappraisal when both parents of the grandchild are deceased. Applications are available by writing or calling the Assessor's Office at (209) 385-7631.

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


Under certain circumstances owners may avoid property tax increases when they sell their existing home and buy or build a replacement home. You or your spouse must be 55 years of age or older, and the property must be the principal place of residence. In addition, there are limits on the value of the replacement home. If you buy it before you sell, it has to be the same or less value than the house you sold. If on the other hand, you buy after you sell, a house bought in the first year may have up to 105% of the value of the house you sold, or 110% if bought in the second year.

There is no partial exclusion allowed if these values are exceeded. The replacement residence must be purchased within two years from the sale of the original property.

Finally, both the original and replacement properties must be eligible for a Homeowners' Exemption and be located within Merced County.

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.