Most people believe that when you have your home reassessed, it is only when you sell your home. This is exactly why many people are blindsided when their home is reassessed as a result of a refinance, title change, or estate transfer—even when nothing really changed. This is no longer true in California, thanks to Proposition 19. This change can be costly, and many people make mistakes when selling their home that can be costly. Here is the one mistake that people make over and over and how you can avoid making it.

The Hidden Trigger: “Administrative” Changes That Aren’t Purely Administrative

In Proposition 19, counties are now reviewing changes of ownership, not sale prices. This means that actions people believe are no big deal can trigger reassessment, including:

– Refinancing and changing title
– Adding someone to title or removing someone from title
– Moving a home into or out of an LLC
– Changing a trust following a death
– Purchasing a sibling’s interest following inheritance

These are actions that people believe are no big deal. However, to the county, these actions can be interpreted as a change of beneficial ownership.

Why Prop 19 Made This Worse

In Proposition 19, counties have less discretion and flexibility when making determinations of beneficial ownership. This means that if beneficial ownership is proportional, counties can now reassess and force you to appeal. This is because counties can no longer use discretion and make a determination of beneficial ownership. This means that if beneficial ownership does not change exactly, counties can reassess and force you to appeal.

The Most Common (and Costly) Scenario I See

The following is a real-life pattern that continues to happen over and over again:

* Property is transferred to multiple heirs
* One of those heirs buys out the other heirs
* Title is amended to reflect new ownership
* County re-assesses that portion of the property that has been transferred
* Tax bill goes up by tens of thousands of dollars each year

The reality is that most people have no idea that if even partial interest is transferred, partial re-assessment can happen.

“But Nothing Changed Economically…”

That may be true, but if it is not documented properly, it does not matter.

The county does not care about your intent. The county cares about what is documented.

If deeds, trust documents, operating agreements, or loan documents are inconsistent, they assume value has been changed.

That is why people lose Prop 13 protections without ever having sold the property.

The Fix Is Simple—And That’s the Point

The solution to re-assessment is not complicated.

It is boringly simple.

Execution is key.

* Ownership percentages before and after
* Proper vesting
* No unnecessary title changes in financing
* Coordination of lender, escrow, CPA, attorney
* Planning before signing documents, not after

The truth is that most re-assessment problems are avoidable.

They just require that we slow down at exactly the time we most want to speed up.

Final Thought: Prop 19 Punishes Assumptions

If you are refinancing, inheriting, re-working your family trust, or trying to help aging parents with real estate, assumptions can be very, very costly.

Prop 19 does not care that:

* You never sold
* You were just “cleaning things up”
* Your lender said it was fine
* Your agent has “done this a hundred times”

They are only interested in what the papers show. Once the assessment is done, it is an uphill battle to change it.

Bottom Line:
In matters of title, ownership, and estate planning, take a 10-minute timeout now and save yourself from a six-figure mistake later.