Change in ownership is the property tax trigger that resets assessed value to current market value. Includes sales, gifts, and many entity-level transfers; some exclusions apply.
Triggers a full reassessment to current fair market value (a new base year). Exceptions include: spousal transfers, parent-child transfers for primary residences (under Prop 19, narrower than pre-2021), and specific entity transfers. The reassessment typically produces substantial property tax increase for the new owner.
For LA multifamily, every standard sale triggers change in ownership and full reassessment. Buyers factor the reassessed property tax into their NOI underwriting — this is one reason long-held sellers often see "low" cap rate bids (buyers adjust for the step-up). Certain entity-level transactions can avoid reassessment; these are specialized.
From the Sterman LA Multifamily Glossary — defined the way a broker with $1.41 billion across 254 closed transactions actually uses these terms.
Michael Sterman, Senior Managing Director Investments, Marcus & Millichap.
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