Small Business & Property Ownership · Owning property
Holding real estate in an LLC or other entity
In this guide
- Moving property into an entity requires a recorded deed and can raise property tax, lender, and insurance questions.
- Transfers into an entity with the same proportional ownership are generally excluded from reassessment, but later ownership changes can trigger it.
- California entities have ongoing costs, including the $800 annual tax for most LLCs.
How title moves
Real property is moved into or out of an entity by signing and recording a deed with the county recorder. Documentary transfer tax, recording fees, and a Preliminary Change of Ownership Report generally accompany the recording.
Property tax
A transfer to an entity is a change in ownership for property tax purposes unless an exclusion applies. Transfers where the owners hold the same proportional interests before and after are generally excluded. Later changes in who controls the entity, such as a transfer of more than 50% of its interests, can trigger reassessment and require filing form BOE-100-B with the Board of Equalization within set time limits.
Loans and insurance
Many mortgages include a due-on-sale clause, and lenders have their own policies on transfers to entities. Title insurance and property insurance policies may need to be updated to reflect the new owner.
Ongoing costs and records
An LLC or corporation that owns property generally has state filing requirements and the annual minimum tax described in Forming and maintaining a California entity, plus separate bank accounts and records.
Official sources for this guide
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