A transfer of more than 50 percent of the ownership interests in a California legal entity that holds real estate sets off the California controlling interest transfer tax consequences: the real property gets reassessed to current fair market value under Proposition 13, documentary transfer tax usually applies at the county and often city level even without a recorded deed, a Statement of Change in Control (Form BOE-100-B) must be filed within 90 days, and nonresident sellers face Franchise Tax Board withholding. The combined bill can run into seven figures on a single property, and almost all of it is automatic once the threshold is crossed.
When the Threshold Is Crossed
California Revenue and Taxation Code Section 64 defines two separate triggers, and they work differently.
Change in Control Under Section 64(c)
A change in control occurs when any one person or entity acquires more than 50 percent of the voting stock of a corporation, or more than 50 percent of the total interest in capital and profits of a partnership or LLC. The acquisition can be direct or indirect. Buying a parent company that owns a subsidiary holding California real estate counts the same as buying the subsidiary. Once the threshold is crossed, every piece of California real property owned by the acquired entity is reassessed to current fair market value as of the transfer date.1California Legislative Information. California Revenue and Taxation Code 64
Exactly 50 percent does not trigger anything. You need more than 50 percent. But the statute reaches through tiered structures, so controlling a holding company that controls a real-estate-owning subsidiary can reassess properties several layers down.2California State Board of Equalization. Legal Entities Change in Ownership
The Original Co-Owner Rule Under Section 64(d)
Section 64(d) tracks a different pattern. When co-owners originally contribute property to an entity using the proportional interest exclusion (below), the state watches those ownership interests over time. If the original co-owners cumulatively transfer more than 50 percent of their interests in the entity through one or more transactions, the property that was previously shielded is reappraised to current market value.1California Legislative Information. California Revenue and Taxation Code 64
Without this rule, owners could contribute property to an LLC at proportional interests and then gradually sell those interests to third parties without ever triggering reassessment. The cumulative 50 percent threshold catches the shift eventually.
Transfers That Do Not Trigger the Tax
Not every entity transfer is a taxable event. Two exclusions matter most.
Proportional Interest Transfers
Under Section 62(a)(2), transferring real property between individuals and a legal entity is not a change in ownership if the transfer only changes the method of holding title and every transferor’s proportional ownership interest in each property remains identical afterward. Two people who each own 50 percent of a building as tenants in common can contribute it to an LLC where each holds a 50 percent membership interest without triggering reassessment.3California Legislative Information. California Revenue and Taxation Code RTC 62
The proportions have to match exactly. Three partners who own property 40/30/30 and form an LLC at 50/25/25 will trigger reassessment on the mismatch. And using the Section 62(a)(2) exclusion starts the Section 64(d) clock on cumulative transfers by those original owners.
Affiliated Group Reorganizations
Transfers among corporations in an affiliated group, or reorganizations qualifying under Internal Revenue Code Section 368, are excluded under Section 64(b). The affiliated-group definition is narrow: the parent must directly own 100 percent of the voting stock of at least one subsidiary, and 100 percent of each subsidiary’s voting stock (other than directors’ qualifying shares) must be owned within the chain.1California Legislative Information. California Revenue and Taxation Code 64 A parent that owns 95 percent of a subsidiary does not qualify. Proof must be furnished to the county assessor under penalty of perjury.
What Reassessment Actually Costs
Proposition 13 caps annual assessment increases at 2 percent. Property held by the same entity for years can sit well below market value, and reassessment eliminates that gap in one step. The county assessor resets the property’s value to current fair market value as of the date ownership changed, and that becomes the new baseline.4California Board of Equalization. Change in Ownership – Frequently Asked Questions
The numbers are the point. A commercial property purchased in 1990 for $2 million might carry an assessed value of around $4 million after decades of capped increases, with a current market value of $20 million. Reassessment at $20 million can push the annual property tax from roughly $40,000 to $200,000. A buyer who ignores this when pricing the deal absorbs the increased carrying cost from day one.
Documentary Transfer Tax on the Same Transaction
Documentary transfer tax is a separate tax from the property tax reassessment, and it can apply to the same controlling interest transfer. The base statewide rate under Section 11911 is $0.55 per $500 of value, or $1.10 per $1,000.5California Legislative Information. California Revenue and Taxation Code RTC 11911 – Authorization for Tax
For years it was unclear whether this tax applied when no deed was recorded. The California Supreme Court resolved that in 926 North Ardmore Avenue LLC v. County of Los Angeles, holding that localities may impose documentary transfer tax on entity interest transfers that qualify as a change in ownership under Section 64(c) or (d), even without a recorded deed. A written instrument memorializing the transfer, consideration paid, and a qualifying change in ownership are enough. In practice, nearly every controlling interest transfer in an entity holding California real estate is subject to documentary transfer tax.
The tax is calculated on the full fair market value of the real property held by the entity, not on the percentage of interest that changed hands. On a $10 million property, the base county tax at $1.10 per $1,000 is $11,000. In many cities, that is the smallest piece of the bill.
Section 11925 provides narrow exemptions. Partnerships (and entities taxed as partnerships) that remain “continuing partnerships” under IRC Section 708 are exempt when ownership interests transfer, provided the partnership continues to hold the property. Proportional interest transfers that only change the method of holding title are also exempt, mirroring Section 62(a)(2) on the property tax side.6California Legislative Information. California Revenue and Taxation Code RTC 11925
Charter City Rates in Los Angeles and San Francisco
The $1.10-per-$1,000 base is the floor. Charter cities can set their own rates far above it. As of early 2025, at least 26 charter cities had their own transfer tax rates.7Legislative Analyst’s Office. A.G. File No. 2025-005
Los Angeles charges a base city transfer tax of $2.25 per $500 of value, an effective rate of 0.45 percent. Measure ULA adds a 4 percent tax on transfers above $5,300,000 and a 5.5 percent tax at or above $10,600,000. On a $12 million property, the combined effective rate reaches roughly 5.95 percent, producing a transfer tax bill above $700,000.8City of Los Angeles Office of Finance. Real Property Transfer Tax and Measure ULA FAQ
San Francisco uses a tiered structure ranging from $2.50 per $500 for properties up to $250,000 to $30.00 per $500 (6 percent) for properties at $25 million or more. Entities holding property in several California cities need to calculate the transfer tax for each location separately.
Withholding When the Seller Is a Nonresident
When the transferring party in a controlling interest transfer is a nonresident of California, Section 18662 requires the buyer to withhold 3⅓ percent of the sales price of the California real property interest conveyed, provided the sales price exceeds $100,000. The withholding goes to the Franchise Tax Board and is credited against the seller’s California income tax.9California Legislative Information. California Revenue and Taxation Code RTC 18662
No withholding is required when the seller certifies in writing that the property is a principal residence, is being exchanged for like-kind property, will result in a loss, or that the transferor is a corporation with a permanent California place of business. Foreign sellers also facing federal FIRPTA withholding of up to 15 percent can see combined state and federal withholding tie up nearly 20 percent of the sales price until returns are filed.
Filing Form BOE-100-B Within 90 Days
Every triggering event requires filing Form BOE-100-B, the Statement of Change in Control and Ownership of Legal Entities, with the Board of Equalization in Sacramento. Who files depends on which trigger applied. For a change in control under Section 64(c), the person or entity that acquired the controlling interest files. For a change in ownership under Section 64(d), the entity itself files.10California Board of Equalization. Statement of Change in Control and Ownership of Legal Entities
The deadline is 90 days from the date of the triggering event.11California Board of Equalization. Instructions for Completing BOE-100-B Statement of Change in Control and Ownership of Legal Entities The form asks for the entity’s identifying information, the exact date and percentage of the transfer, the identities of acquiring and transferring parties, and a listing of all California real property interests held by the acquired entity (including property held through controlled subsidiaries). The completed form goes to the Board of Equalization’s County-Assessed Properties Division, which coordinates with county assessors to put any reassessment on the local tax rolls.
Missing the deadline is expensive. Under Section 482, the penalty is 10 percent of the taxes based on the new assessed value if a reassessable event actually occurred. If the Board requested a filing and no change in control or ownership actually happened, the penalty is still 10 percent of the current year’s taxes on the property. The penalty is added to the property tax roll and collected like any other delinquent property tax, with additional late-payment penalties accruing on top if unpaid.12California Board of Equalization. Legal Entity Ownership Program (LEOP) – Filing Requirements and Penalties
On a property reassessed from $4 million to $20 million, the new annual tax at roughly 1 percent is about $200,000. A 10 percent late-filing penalty adds $20,000, purely for being late. The penalty also runs if the Board sends a written request to file and the request is ignored, whether or not a triggering event actually occurred.
Coordinating the Deadlines
A single controlling interest transfer sets off overlapping deadlines across agencies. The BOE-100-B is due within 90 days. Documentary transfer tax is typically due when the transfer is recorded or finalized with the county. Public companies face a four-business-day deadline to file a Form 8-K with the SEC disclosing a change in control.13Securities and Exchange Commission. Form 8-K Current Report Nonresident withholding has to be remitted at closing.
Run the reassessment and transfer tax numbers before signing a purchase agreement, not after. Once more than 50 percent of the ownership interest changes hands, the obligations are automatic, there is no grace period for discovering them late, and the documentary transfer tax in a charter city can add a seven-figure line item that was never in the original model.