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Business Owner Real Property Tax in California

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Business Owner Real Property Tax in California

California Real Estate Tax

Proposition 13 allows California properties to be reassessed to current market value only in instances of a change in ownership or the completion of new construction (called the base year value). In addition, Proposition 13 generally limits annual increases in the base year value of real property to no more than 2 percent, except when property has changed ownership or undergone new construction.

Certain improvements do not fall under the definition of new construction and so are excluded from taxation including water conservation equipment for agricultural use, fire detection and extinguishing systems, modifications made to accommodate disabled persons, seismic retrofitting and even normal maintenance and repair.

Beware, business owners purchasing real estate are liable for the previous owner’s unpaid taxes.

Change in Ownership Exclusions: When there is a change in business ownership, some tax exclusions apply:

  • Acquisition of property to replace property taken by eminent domain actions
  • Replacement of property destroyed in a disaster which is acquired within 3 years of the disaster
  • Transfer of principal residence to children for the first million dollars if the offspring file for an exclusion within 3 years
  • Persons who are over 55 and/or are disabled may transfer the base year value of their home to a replacement property
  • Transfer of real property to a spouse or to a partnership.

Due Dates

Each year, half of a property’s annual real estate tax is due on November 1st and is payable without penalty until December 10th. The other half is due on February 1st and is payable without penalty until April 10th.

Appeals Process

The Morgan Property Taxpayers’ Bill of Rights allows the property owner to inspect and copy documents related to their property’s assessment. If the property owner disagrees with the assessment made, the property owner can inform the assessor of any facts affecting the value of the property. Most disagreements are settled this way, however, if an agreement cannot be reached an appeal should be considered.

In most counties an appeal is heard at an administrative hearing before the Board of Equalization. The property owner has the burden of proving that the assessor has improperly valued the property and can have representation at the hearing.

Paramount Property Tax Appeal specializes in San Diego property tax. When needed, we know how to file and effectively win an appeal in any county. We represent our clients throughout the filing and appeals processes.

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