News: Ask the Professional - Will the transfer of my LLC interest cause a reassessment of real property?

For Immediate Release:
April 09, 2010
Contact:
Larry Mar, Principal
510-893-6908
lmar@rina.com

Will the transfer of my LLC interest cause a reassessment of the real property my brother and I purchased and contributed to the LLC? Will the LLC retain the current assessed value for future transfers of ownership?

Changes in ownership of an entity may trigger reassessment of the underlying real property. Since you and your brother purchased the property originally, you are considered “original co-owners.” The LLC will retain the current assessed value (with the statutory annual increase of 2%) so long as you retain a 50% combined ownership. Rather than transferring an interest outright, you should consider having the LLC distribute the property to you and your brother, pro-rata, as tenants-in-common (TIC) first. Subsequent transfers of TIC interests, if properly executed, should avoid reassessment, as long as that transfer is less than 50% of your original TIC interest. The TIC interests could then be transferred to a new LLC.