Lake Oswego, OR asked in Tax Law, Estate Planning and Real Estate Law for California

Q: I own and live in a home w/ my sister. She wants to convert to a duplex and rent half. What are the tax implications?

The home has been equally owned by the sisters for 50 years. They both have family who would ultimately inherit the property. Would the tax basis change? Would the property taxes change?

1 Lawyer Answer
Howard E. Kane
Howard E. Kane
Answered
  • Estate Planning Lawyer
  • Oakland, CA
  • Licensed in California

A: Converting a single-family residence to a duplex will not necessarily increase the value of the home. However, if the value is increased, the property taxes will be reassessed to reflect the increased value of the home. Per the California Board of Equalization website, new construction or improvements are generally assessable and may increase the taxable value of a property. The impact on a property tax assessment varies depending on the work being performed. Upon completion of the new construction, the assessor determines its fair market value, and a base year value is established.

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