Laws, Regulations & Annotations

Property Taxes Law Guide – Revision 2013

Property Tax Annotations

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Annotation 220.0720

220.0720 Tracking Undivided Ownership Interests. Revenue and Taxation Code section 50 requires that valuation on the first lien date following a change in ownership of real property must be accomplished by treating each fractional interest separately to determine whether the base year value or current market value is the lower amount. Section 51 controls the taxable value for all lien dates following the lien date on which the base year value is first enrolled. Thus, if A and B owned real property as equal co-owners, A's base year value for the 1985-86 tax roll was $50,000 and B's base year value therefor was $75,000 ($125,000 enrolled value), and B sold his one-half interest to C in November of 1985 for $90,000, an amount representative of market value:

1. The value of the entire property would then be $180,000.

2. The new base value of the property as of the date of transfer of B's interest would be $140,000 (A's $50,000 plus C's $90,000).

3. The supplemental assessment to the 1985-86 roll would be $15,000 ($140,000 minus $125,000).

If as of March 1, 1986, the fair market value of the entire property had declined from $180,000 to $160,000, the value placed on the 1986-87 tax roll would be $131,000 (the factored base year value of A's interest—$50,000 x 1.02, plus the fair market value of C's interest on the lien date—$80,000). Assuming that the decline in value was being measured as of March 1, 1987, the value placed on the 1987-88 tax roll would be $142,800 ($140,000 x 1.02). Since the current market value of the entire property (assume $160,000, the same as on March 1, 1986) is greater than the factored base year value, the factored base year value would be enrolled. LTA 8/19/1985 (No. 85/85); LTA 1/8/1986 (No. 86/04).