Property Tax Planning Lawyers in EncinoPlanning to Minimize Higher Real Estate Property Taxes for Your Family
In California, property taxes are, in general, based on the purchase price of the property with a small increase each year. Over time, the value of a real estate can increase significantly more than the property tax basis. The result is that when ownership in the property finally changes and the property is reassessed to its current fair market value, the property taxes go up dramatically.
The transfer of real property, as a gift or sale during life, or as inheritance upon death is considered a change of ownership, subject to exceptions described below. Without proper planning, these increased taxes can make it difficult for your beneficiaries and/or family members to afford to keep the property.
If you own a home, multiple homes, or other real estate property in California, it is important that you speak with a probate and estate planning attorney who can help you take the necessary measures to reduce increases in property taxes.
Contact Tisser Law Group, APC to speak with one of our Encino property tax planning attorney. Call (818) 226-9125 to get started.
Avoiding Property Tax Reassessment in California
The property tax laws changed in California on February 15, 2021, effectively eliminating many of the exceptions we were able to use in the past to avoid a property tax reassessment on a transfer of real estate to a child. While there a several exceptions still available, they must be carefully planned for or the transfer will result in a property tax reassessment, and higher property taxes for your child.
It is important to seek guidance from an experienced estate planning lawyer in Encino.
Reach out to our real estate property tax planning firm at (818) 226-9125 to find out how our attorney can assist you.
Use and Dangers of LLCs and other Business Entities
Real property owned in business entities, such as LLCs, presents unique problems and advanced strategies for dealing with property tax reassessments. Generally, when the ownership of the LLC changes, any real property within that entity should be reassessed since it effectively has a new owner.
If a parent transfers an interest in an LLC to a child, the property in the LLC will generally be reassessed. Proper planning can avoid this reassessment when an LLC interest in transferred to the child.
Also, because the real property deed never changes (it is simply owned by the LLC), the new individual owners of the LLC may have to file paperwork with the California Board of Equalization to report the change of ownership. New owners often fail to do this and may have significant taxes, interest, and penalties later when the change of ownership is finally reported.
Depending on how the LLC acquired the property, a reassessment of the real estate in the LLC will only occur when there is either a change of control or a change of ownership of the LLC, as defined in the Revenue and Taxation Code. As long as a transfer of the LLC interest is structured to not trigger one of these rules, there is no reassessment and significant amounts of real estate can be transferred without higher property taxes.
Call us now at (818) 226-9125 to make an appointment with a property tax planning attorney in Encino.