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Robin D.
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Category: Tax
Satisfied Customers: 7252
Experience:  15years with H & R Block. Divisional leader, Instructor
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I have just received an escape assessment on my TIC in San

Resolved Question:

I have just received an escape assessment on my TIC in San Francisco, California. The reassessment was triggered by the change of ownership when I bought my TIC. I am trying to figure out if I, as the new purchaser who triggered the reassessment, am solely responsible for paying the supplemental tax bill that reflects the increased value from my purchase, or if it is to be split amongst all TIC owners. If the basis for the adjustment is solely due to my purchase, who pays the taxes on the increased value of the TIC property, the new purchaser or all TIC owners?
Submitted: 4 years ago.
Category: Tax
Expert:  Robin D. replied 4 years ago.

Hello and thank you for using Just Answer.

When one unit is sold, the new owner becomes responsible for whatever increase in property taxes arise. If one owner makes a renovation that triggers a reassessment, that owner bears the burden of the tax increase.

Unlike a condominium, a TIC is not legally divided into separate units. TIC owners receive one property tax bill for the entire building. Although the owners typically agree to pay their share of the tax based on the price they paid for their unit, each owner is legally obligated for the whole bill. If one defaults on his share, the others have to pay it.

Over time, as units change hands and owners improve their units, each owner's percentage of the tax bill changes.

For TIC owners who request it - separate assessments for individual units are available. Separate assessments will not change the fact that each owner is still responsible for the whole building's property tax.

 

In short the tenant that causes the new tax is responsible for paying the new amount and then their share increases since their unit is higher in value (when improvements are made) or appraised higher than the others when new purchase happens.

 

I sincerely XXXXX XXXXX information is helpful,

 

Customer: replied 4 years ago.
Thanks so much!
Just a quick clarification before I accept...
So even if the new purchaser is responsible for back taxes owed based on the escape assessment that finally brings the value up to reflect the purchase price, if the assessor's office is also adding 2% inflation on the TOTAL VALUE of the property (all units) as reassessed, rather than just 2% on the increase, then shouldn't the 2% inflation be split amongst owners (according to their purchase price)?
Expert:  Robin D. replied 4 years ago.
It is possible but to make sure all pay their fair share a separate assessment should be requested. If all units have increased then the total would be split according to percentages of original prices.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 7252
Experience: 15years with H & R Block. Divisional leader, Instructor
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