Blended Property Tax Bills Complicate Co-Ownership in California
In California’s high-stakes real estate market, co-ownership arrangements, especially among friends, unmarried partners, or investor groups, have become increasingly common. But while sharing a deed may ease the financial burden of homeownership, it also introduces a thorny issue: how to fairly divide a single, blended property tax bill.
Under California law, most co-owned properties receive just one property tax bill per parcel, regardless of how many individuals share ownership. This is true whether the property is held as joint tenancy, tenancy in common (TIC), or another form of shared title. The county assessor assigns a single assessed value to the entire parcel, and the tax bill—typically around 1.1% to 1.3% of that value—is sent to one address. From there, it’s up to the co-owners to figure out who owes what.
This arrangement can be deceptively simple. In practice, it often leads to confusion, disputes, and even legal action.
The Legacy of Proposition 13
The complexity begins with Proposition 13, the 1978 ballot initiative that capped property tax increases at 2% annually unless a property changes ownership. That means long-term owners may pay taxes based on decades-old valuations, while new buyers pay taxes on current market prices. When a new co-owner is added—say, through a partial sale or inheritance—the property may be partially reassessed, creating a “blended” tax basis.
For example, if one co-owner purchased their share in 1990 and another bought in 2025, the tax bill reflects a mix of both valuations. This blended assessment can be difficult to parse, especially when the bill doesn’t break down how much of the tax is attributable to each owner’s share.
No Official Formula
California law does not mandate how co-owners should split the tax bill. In TIC arrangements, where each owner holds a fractional interest, many groups use internal agreements to allocate taxes proportionally based on ownership percentage. But even this can be complicated by improvements made by individual owners, changes in occupancy, or disputes over who benefits most from shared amenities.
In joint tenancy, where each owner has an equal interest regardless of contribution, the default assumption is an even split. But this can feel unfair if one party paid significantly more toward the purchase or improvement of the property.
Legal Gray Areas
Disagreements over tax payments can escalate. While paying another co-owner’s taxes doesn’t grant ownership rights under California law, it may be used as evidence in partition actions or claims of adverse possession if done over a long period.
Some co-owners attempt to avoid reassessment altogether by using exclusions under Proposition 19 or the lesser-known “co-tenants exclusion,” which can apply when one co-owner dies and the survivor had lived in the home continuously. But these exclusions are narrow and often misunderstood.
A Need for Clarity
As co-ownership becomes more prevalent, legal experts and property tax professionals are calling for clearer guidance from county assessors and the state. Until then, co-owners are advised to draft detailed agreements outlining how taxes will be divided—and to revisit those agreements whenever ownership changes.
In a state where a modest bungalow can carry a seven-figure price tag, the stakes are high. And when the tax bill arrives, it’s not just the amount that matters—it’s who pays what.