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TAXES (cont’d)
CHICAGO TITLE CALIFORNIA BUYER & SELLER GUIDE
Change of Ownership Filings
When property changes hands, local government agencies require notice of change of ownership. At the local level, this would be any county office that assesses or collects taxes. Reporting a change in the ownership of the property allows the local jurisdiction to assess the tax liability
for each property as the title is transferred from seller to buyer.
The reporting document is recorded along with documents evidencing a change in ownership. In California, the document is called a Preliminary Change of Ownership (PCOR), and it assists the local agency in identifying situations in which
a property reassessment is allowed under Proposition 13.
Penalties of fines may be assessed from the governing body for failure to file the document
as required by state or local laws. The escrow officer will generally assist the client in completing the document and ensuring that it reaches the recorder’s office along with the other documents pertinent to the change of ownership.
Transfer Taxes
Transfer tax, often called real property transfer tax, is a tax collected by the county recorder when an interest in real property is conveyed. It is paid at the time of recording, and is computed using the actual sales price. An amount, legislated
by the state or county, is charged per $500 or $1,000 of the sales price.
Many cities have levied an additional tax within their jurisdictions. In some counties, these taxes are collected by the County Recorder along with county transfer tax, but in other areas a separate check will be mailed to the city. Your escrow officer is familiar with the taxes required and will coordinate payment of the appropriate amount.
Property Taxes (See tax calendar example on next page)
Homeowners pay property taxes to their appropriate assessment, collection or franchise tax department in each county. A change in ownership or the completion of new construction could result in a change in the assessed value of the property and may result in the issuance of a supplemental property tax bill. Taxes are due on predesignated dates and become delinquent when not paid. Penalties are assessed for delinquent taxes. The yearly “tax calendar” varies by state.
In addition to standard property taxes, many jurisdictions also contain special assessment districts, which may have been formed as a means of financing infrastructure. The ultimate property owner continues to make payments on the principal and interest on the bond. The bond issues vary in size and term. Other special city and county districts may be assessed for a variety of purposes, including street lights and traffic signals, street maintenance, certain educational purposes, etc.
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