Laws, Regulations & Annotations

Property Taxes Law Guide – Revision 2018

Property Tax Annotations

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See Personal Property

735.0009 Limited Liability Company. Ownership of a limited liability company (LLC) that owns real property is not equivalent to direct ownership of that real property. The separate entity theory is equally applicable to limited liability companies as it is to corporations. Under Corporations Code section 17300, members of an LLC hold no direct ownership interest in an LLC's assets. Thus, real property that is owned by an LLC that is owned by a retirement system is not exempt from property tax. C 12/14/2010.

735.0010 Partnership. Real property transferred from the California Public Employees Retirement System (CalPERS) to a partnership in which CalPERS is the majority partner is not exempt from property taxation. The property tax exemption for property owned by the state extends only to property owned directly by CalPERS and not to property owned by a legal entity in which CalPERS holds an ownership interest. Thus, a transfer of real property from CalPERS to such a partnership would result in a change in ownership of the property and, absent an applicable exclusion, reassessment of the property. C 6/4/1999.

735.0015 Possessory Interests. While the purchase of investment real property by such nontaxable governmental entities as the Public Employees Retirement System requires that any pre-existing leases of the property be enrolled as taxable possessory interests, such acquisition does not, in and of itself, cause the creation of any taxable possessory interests within the meaning of Revenue and Taxation Code section 61(b). While such a purchase results in the separate assessment of any pre-existing leasehold interests as possessory interests, those interests were neither created nor transferred by the sale of the real investment property to the governmental entity. Only when such pre-existing leasehold interests are themselves renewed, extended, or assigned within the meaning of Revenue and Taxation Code section 61(b) does a change in ownership occur. C 4/29/1996.