performed by our
specialist to tax
|San Francisco TIC Financial Services
TIC Property Tax Information for California
TIC Property Tax Information:
We have noticed quite a number of issues where property
taxes are concerned. TIC owners calculating property taxes
based on ownership percentage, on square footage or worse.
We have noticed building assessed values which were
incorrectly assessed by the Assessor's Office, resulting in
over-payments made by the TIC.
We will work with the Assessor to eliminate mistakes made
and reach an agreement where assessed values and tax
refunds are concerned.
Property Taxes are based on assessed values, and the San
Francisco Assessor’s Office computes assessed values the same
way for all real properties including TIC’s, condo’s and single
They are based on purchase prices (assuming the purchase was
an arms-length transaction) and other ‘assessable events’ such
as new construction and Proposition 60 assessed value transfers
for senior citizens. The total of these values is annually indexed by
a Consumer Price Index not to exceed 2%.
However, TIC assessments can be complicated. Because a TIC
usually shares just one tax lot, it gets a single property tax bill
reflecting the total of all the units’ assessed values. In addition,
San Francisco is generally running 2+ years behind in processing
new TIC purchases, which trigger Supplemental and Escape tax
If the TIC follows their standard TIC Agreement, which specifies
how each co-tenant’s monthly property tax contribution is to be
calculated, then it should have no problem paying all tax bills as
However figuring out how much property tax was paid on each co-
tenant’s behalf during the year for income tax deduction purposes
may be complex. The TIC will need to determine each co-tenant’s
value percent to allocate the Secured tax bills and whose
purchases triggered any Supplemental and Escape tax bills paid
during the year.
To complicate matters, sometimes the appraisers make errors
when they determine new assessed values. In our experience,
they get everything right much of the time but the values are
manually computed and errors are made. When problems occur
there is no apparent pattern of over- or under-assessment. We
have found that when issues are brought to their attention, the
Assessor’s Office is genuinely interested in making sure
assessed values are computed correctly.
Examples of errors we’ve found are:
• New purchases are processed incorrectly resulting in
Supplemental bills being issued for the wrong amount. This can
happen for a variety of reasons – the purchase may be processed
for the wrong unit, or the assessed value for the previous owner
may have been incorrect, or new construction may have taken
place and its value increase was misapplied.
• When a building is remodeled to be sold as TIC’s,
Supplemental bills may be issued in error for both the new
construction and the new purchase price which included the
• Specifically, we found a more than $1.8M over-assessment
related to new construction over a number of years for a very large
project, resulting in a tax bill more than $21k too high.
• We also found a $500,000 over-assessment related to a
Proposition 60 assessed value transfer. This would have resulted
in a 2013/14 tax bill that was $5940 too high and every successive
year would have been worse.
In order to review a building’s property tax situation, we compute
each unit’s assessed value using the County Records’ purchase
date and price and determine if any applicable building permits
have been issued. Next we map that data forward to the present
applying each year’s Consumer Price Index, multiplying the
resulting assessed value by the year’s tax rate and adding each
unit’s share of the Special Assessments part of the tax bill. Finally
we check our total building’s assessed value and property taxes
year-by-year against the property tax bills.
While property taxes for TIC’s can be complicated, we’ve been
successful in applying our knowledge of the process and working
with the Assessor’s office to the benefit of our clients.
Call us now to talk to our Property Tax Specialist or make an
appointment to review your building property tax situation.
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