Scribd
Upload
24 views1 page

Property Tax Rule 2: Value Concept

This document summarizes California property tax rules regarding the definition of fair market value for property tax assessment purposes. It states that fair market value means the price a property would sell for on the open market between knowledgeable, willing parties seeking to maximize profit, uninfluenced by special circumstances. For property involved in a change of ownership, there is a rebuttable presumption that the sale price represents fair market value, though parties can provide evidence of a value more than 5% above or below the sale price. Certain transfers are excluded from this presumption, such as those involving ownership interests rather than real property.

Uploaded by

gcodori
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
24 views1 page

Property Tax Rule 2: Value Concept

This document summarizes California property tax rules regarding the definition of fair market value for property tax assessment purposes. It states that fair market value means the price a property would sell for on the open market between knowledgeable, willing parties seeking to maximize profit, uninfluenced by special circumstances. For property involved in a change of ownership, there is a rebuttable presumption that the sale price represents fair market value, though parties can provide evidence of a value more than 5% above or below the sale price. Certain transfers are excluded from this presumption, such as those involving ownership interests rather than real property.

Uploaded by

gcodori
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

State of California

BOARD OF EQUALIZATION

PROPERTY TAX RULES

Chapter 1. State Board of Equalization — Property Tax


Subchapter 1. Valuation Principles and Procedures

Rule 2. THE VALUE CONCEPT.

References: Sections 110, 110.1, 401, Revenue and Taxation Code; Carlson v. Assessment Appeals Board No. 1 (1985) 167 Cal. App.
3d 1004; Dennis v. County of Santa Clara (1989) 215 Cal. App. 3d 1019.

(a) In addition to the meaning ascribed to them in the Revenue and Taxation Code, the words “full value”, “full
cash value”, “cash value”, “actual value”, and “fair market value” mean the price at which a property, if exposed
for sale in the open market with a reasonable time for the seller to find a purchaser, would transfer for cash or its
equivalent under prevailing market conditions between parties who have knowledge of the uses to which the
property may be put, both seeking to maximize their gains and neither being in a position to take advantage of the
exigencies of the other.

When applied to real property, the words “full value”, “full cash value”, cash value”, “actual value” and “fair market
value” mean the price at which the unencumbered or unrestricted fee simple interest in the real property (subject
to any legally enforceable governmental restrictions) would transfer for cash or its equivalent under the conditions
set forth in the preceding sentence.

(b) When valuing real property (as described in paragraph (a) as the result of a change in ownership (as defined
in Revenue and Taxation Code, Section 60, et seq.) for consideration, it shall be rebuttably presumed that the
consideration valued in money, whether paid in money or otherwise, is the full cash value of the property. The
presumption shall shift the burden of proving value by a preponderance of the evidence to the party seeking to
overcome the presumption. The presumption may be rebutted by evidence that the full cash value of the property
is significantly more or less than the total cash equivalent of the consideration paid for the property. A significant
deviation means a deviation of more than 5% of the total consideration.

(c) The presumption provided in this section shall not apply to:

(1) The transfer of any taxable possessory interest.

(2) The transfer of real property when the consideration is in whole, or in part, in the form of ownership
interests in a legal entity (e.g., shares of stock) or the change in ownership occurs as the result of the acquisition
of ownership interests in a legal entity.

(3) The transfer of real property when the information prescribed in the change in ownership statement is not
timely provided.

(d) If a single transaction results in a change in ownership of more than one parcel of real property, the purchase
price shall be allocated among those parcels and other assets, if any, transferred based on the relative fair market
value of each.

History: Adopted June 21, 1967, effective July 23, 1967.


Amended December 17, 1975, effective January 25, 1976.
Amended October 9, 1984, effective September 20, 1985.
Amended July 24, 1991, effective September 25, 1991.

You might also like