Proposition 13 & Public Agencies
Proposition 13 & Public Agency Acquisitions of Private Property
Proposition 13 provides that the owner of property that is taken in whole or in part by a public agency for public purposes may be able to transfer the base-year value of the property that was taken to a similar property located anywhere in California. Buying replacement property would normally mean that the owners would have a new Proposition 13 base-year value based on their acquisition cost and/or the cost of new construction of the replacement property.
To qualify for the base-year transfer, the replacement property must meet the following conditions.
Cannot Transfer to a Property You Already Owned
First, the replacement property cannot qualify for tax relief unless it is acquired after the earliest of the following: “an initial written offer is made by the acquiring entity;” or “the date the acquiring entity takes final action to approve the project;” or “the date as declared by a court that the [original] property was taken.” In other words, an owner cannot transfer their base-year value to a property that they owned before the public agency begins the acquisition process.
Buy Replacement Property Within Four Years
Second, the replacement property must be acquired and a request for base-year transfer filed with the Assessor in the appropriate county no later than four years from the date of acquisition by the public agency. Higher taxes are payable on the replacement property until the original property goes into the name of the acquiring entity.
Property Must Be Comparable
The third condition is that the replacement property must be comparable in size, utility and function to the property acquired by the public agency. Comparable also means that the cost of the replacement property including any required construction does not exceed 120% of the purchase price paid by the public agency excluding any relocation assistance. To the extent a replacement property is larger and/or more expensive than 120% or has more uses than the acquired property, the non-comparable portion will be subject to reassessment.
Must Be Same Owner
The fourth condition is that the owner of the acquired property must be the buyer of the replacement property. Thus, an individual whose property was acquired could not buy a share in a partnership that owned, or was formed to purchase, a piece of comparable replacement property. By the same token, a partnership that held acquired property could not split the purchase price among the partners who would then buy replacement property as individuals.
Questions? Please contact Napa County Assessor-Recorder-County Clerk John Tuteur at 707-253-4459 or by email email John.