Property Tax Reassessment Trends Landlords Should Watch

Three property tax trends matter to a landlord deciding whether to sell this year. First, the assessment caps in California, Florida and Michigan reset when title transfers, so a buyer’s tax bill is not your tax bill, and buyers price that in. Second, Texas’s temporary 20 percent cap on non-homestead property expires on December 31, 2026. Third, the relief being passed in 2025 and 2026 mostly goes to owner-occupied homes, and Montana now taxes second homes and short-term rentals at a flat 1.9 percent. Each of these changes the arithmetic of holding versus selling, and none of them is avoided by a 1031 exchange, which simply moves the reset to the property you buy.

Caps that reset when title transfers

California’s Proposition 13 limits the tax rate to 1 percent plus voter-approved debt and limits annual increases in a property’s base year value to no more than 2 percent. The base year value is set at market value when the property changes ownership or is newly built, and “the assessor must reassess real property to current market value whenever there is a change in ownership.” Sources: BOE Publication 29 and the BOE change in ownership FAQ. Two details catch landlords. Under Revenue and Taxation Code section 64, transferring interests in an LLC or partnership is not a change in ownership of its real property, until one person or entity obtains more than 50 percent control, or original co-owners cumulatively transfer more than 50 percent, at which point the entity’s real property is reappraised. And since February 16, 2021, Proposition 19 limits the parent-child exclusion to a family home used as the child’s principal residence, with a value limit of the current taxable value plus $1,000,000; rental and investment property passed to children is reassessed (BOE, Proposition 19).

Florida caps annual assessment increases on non-homestead property at 10 percent, except for school district levies, under section 193.1555. The property “shall be assessed at just value as of January 1 of the year following a qualifying improvement or change of ownership or control,” and change of ownership or control includes “the cumulative transfer of control or of more than 50 percent of the ownership of the legal entity” that owned the property.

Michigan’s MCL 211.27a limits taxable value growth to the lesser of 5 percent or the inflation rate, and on a transfer of ownership “the property’s taxable value for the calendar year following the year of the transfer is the property’s state equalized valuation for the calendar year following the transfer.” The buyer must notify the assessor within 45 days on the State Tax Commission’s form. The commission’s Transfer of Ownership Guidelines explain the partial and delayed uncapping situations.

A temporary cap that ends this year: Texas

Texas added a “circuit breaker” in Tax Code section 23.231 that limits annual appraisal increases to 20 percent for real property other than a residence homestead, if the property was valued at or below $5,000,000 for 2024, $5,160,000 for 2025 and $5,320,000 for 2026. The Comptroller’s page states that “the circuit breaker limitation expires Dec. 31, 2026.” The 10 percent homestead cap stays. An owner of a Texas rental or small commercial building should expect the 2027 notice of appraised value to carry no cap unless the Legislature acts first. Our Texas 1031 page covers the state side of a sale.

Relief aimed at homeowners, with one exception

Georgia’s House Bill 581 (2024) created a statewide floating homestead exemption that holds a homestead’s assessed value to a base year adjusted by an inflation index, with local governments allowed to opt out (Georgia DOR Informational Bulletin 2025-01). Senate Bill 33, signed in 2026, amends the law “to make the state-wide base year homestead exemption mandatory for all political subdivisions” (SB 33 as passed). Neither applies to a rental.

Montana’s 2025 laws, HB 231 and SB 542, split residential property for tax year 2026. A principal residence occupied at least seven months a year, or a long-term rental rented for 28 or more days at a time for at least seven months a year, gets tiered homestead rates from 0.76 percent up to 1.90 percent on the top slice of value. “The flat 1.90% tax rate applies to: Second homes, Short-term rentals (e.g., VRBOs, Airbnbs, cabins), Vacant residential lots.” Sources: Montana DOR, 2026 property tax information and the Legislative Fiscal Division brochure.

The exception is Florida. CS/HJR 1-F, on the November 3, 2026 ballot, “reduces the amount of annual growth that is allowed for assessments of non-homestead residential and non-residential real property from 10 percent to 5 percent,” alongside larger homestead exemptions of up to $150,000 in 2027 and $250,000 in 2028 for existing residents. It takes effect January 1, 2027 only if 60 percent of voters approve (Florida Senate bill summary). A Florida landlord deciding between a 2026 and 2027 sale has a reason to watch the result.

Worked example: the reset a buyer prices in

Hypothetical, round numbers. You bought a California fourplex in 2004 and your factored base year value today is $900,000, so the basic levy is about $9,000 a year. A buyer pays $2,400,000 and is reassessed at that price, so the buyer’s basic levy is about $24,000 before any voter-approved add-ons. Every underwriter on the buyer’s side runs that number, which is one reason a long-held building trades at a lower price than its current income suggests. Run your own numbers with your CPA.

The same reset applies to you as a buyer. If you exchange into another California building, your new base year value is your purchase price. If you exchange into a Delaware Statutory Trust, the trust’s property taxes are an operating expense of the trust disclosed in the offering document, and you hold no title that can be reassessed in your own name. The entity rules cut the other way for partners: buying out a co-owner can be a change of control in California or Florida, which is one more reason to model a partner buyout with 1031 proceeds before signing. Our keep versus sell model puts property tax next to the income tax that an exchange defers.

What to do now

1. Pull your current assessed value and the cap statute for your state, then compute the tax a buyer would pay at your asking price.
2. If you hold through an LLC or partnership, review any planned interest transfers against the more-than-50-percent rules with your attorney before they close.
3. Texas owners: model 2027 without the circuit breaker before deciding to hold; Florida owners: diary the November 3 result.
4. Request a proposal that shows replacement options and the state-by-state tax position for your sale.

Sources

• California State Board of Equalization, Publication 29, California Property Tax: An Overview
• California State Board of Equalization, Change in Ownership FAQ
• California Revenue and Taxation Code section 64
• California State Board of Equalization, Proposition 19
• Florida Statutes section 193.1555
• Florida Senate, 2026F bill summaries, CS/HJR 1-F
• Texas Comptroller, Valuing Property
• Michigan Compiled Laws section 211.27a
• Michigan State Tax Commission, Transfer of Ownership Guidelines
• Georgia Department of Revenue, Informational Bulletin 2025-01
• Georgia Senate Bill 33 (2026), as passed
• Montana Department of Revenue, 2026 Property Tax Information
• Montana Legislative Fiscal Division, Commercial and Residential Property Tax brochure (June 2025)