I own a house with my brother and I am thinking about buying his share so I own the house 100%. The house is free and clear. My brother and I get along, so we want to do this the most fair way possible.
1) How would you go about determining the price I buy his share for? Should we get an appraiser? Or should we go off of the property value from the property tax bill?
2) If I buy his portion of the share, would my property tax go up? If it does, is there anyway I can minimize it or not have the increase?
Thank you for your suggestions in advance.
Getting an appraiser is probably the best way to determine value when dealing with 2 owners. You'll spend $300 to get it done, but it will be worth it. The value from the tax bill is the "assessed value" and is not a true indication of the market value (what someone is willing to buy it for). It is just for tax assessment purposes.
Your property taxes won't go up just because you buy him out. It will get adjusted every few years whenever the city does a new tax assessment on the property, which they do automatically without contacting you. If you feel the tax assessed value is way too high compared to the market value (determined by the appraiser) then you can put in a tax appeal to try and get it lowered. Good luck!
Thanks for the reply Neil. I was told that the property tax would go up because the property will be reassessed. How would I proceed in a way so the tax doesn't go up as you stated? I understand the annual increases from the City.
This is an old house, so I don't want the property tax to jump dramatically where the percentage is being taken into account as today's market rate, when I own 50% of the house already.
@Robert Chaing Read this page from the Orange County Ca tax assessors office. You should be able to determine what your tax bill will be from the information on this site. http://www.ocgov.com/gov/assessor/realproperty/supplemental This is assuming the property is located where you live of course.
@Robert Chiang first of all be careful taking tax advise from someone that does not live in your state. Although well intentioned you are correct when you state that your property will be reassessed. When you sell your bothers half the assessor will reassess his half to the current market value, but not yours. If this were a parent to child or grandparent to grandchild transaction, then there would be NO reassessment as there is an exclusion for that. (
I would definitely get an appraisal on the home which will give you a neutral third party opinion on the price. That will hopefully avoid any arguments in the future.
How may you accomplish your goal? I can think of a few ways, but would really like to know all the circumstances to better point you in the right direction. You can place the entire property into a land trust making sure that you both still own it and the tax assessor does not reassess the property as they would like to do. You need to fill out the forms correctly. You can have your brother fill out the grant deed into your name, but NOT record it? How much of a tax increase are we talking about? How much did you and your brother purchase the home for? Your taxes will only increase from that purchase price to the current market rate. For example if you purchased the home for $400K and now are reassessed at $500K your tax bill would go up by 1% or $1000 a year and in your case only $500 since only half is being transferred. Sometimes its just not worth it.
Please check with a tax professional for additional advise.