A California homeowner sells a property in 2025 for $1,200,000. The property was purchased in 1995 and has been assessed under Proposition 13 since then. What happens to the property's assessed value when the new buyer takes ownership?
Correct Answer
C) The assessed value is reassessed to $1,200,000, establishing a new base year value
Under Proposition 13 (Cal. Const. Art. XIII A) and Revenue and Taxation Code §110.1, a change in ownership triggers a reassessment of the property to its current fair market value. The sale constitutes a change in ownership, so the county assessor establishes a new base year value equal to the purchase price of $1,200,000. The new owner's property taxes are calculated on this new assessed value, which may then increase by no more than 2% per year until the next change in ownership.
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Previous Question
A home in San Francisco sells for $1,500,000. Under San Francisco's current transfer tax ordinance, the applicable city transfer tax rate for properties valued between $1,000,000 and $4,999,999 is $6.80 per $1,000 of value, and the California county documentary transfer tax rate is $1.10 per $1,000. What is the total combined transfer tax due at closing?
Next Question
Under Proposition 13, certain transfers are exempt from reassessment. Which of the following transfers is NOT exempt and WOULD trigger a full reassessment of the property's value?