Possessory Interests
A taxable possessory interest is most commonly defined as the private beneficial use of publicly-owned property.
Taxable possessory interests are subject to taxation pursuant to article XIII, section 1 of the California Constitution, which provides that all property is taxable unless otherwise provided by the California Constitution or federal law. While publicly owned real property is generally exempt from taxation, under certain conditions, the private, beneficial right to the possession of publicly owned real property is subject to separate assessment as a taxable possessory interest.
FAQs
There are many different types of possessory interests, all sharing in common that a private party enjoys the beneficial use of publicly-owned property. Some examples include:
- Moorings and boat slips at city- and county-owned marinas
- Graze lands on federal property
- Faculty housing on university-owned property
- Concession stands at public parks, stadiums, golf courses etc...
- Airplane hangars at the local airport
- Gift shops and restaurants on the boardwalk or the embarcadero
- Commercial office space in public buildings
- Specific to San Luis Obispo county, the world famous Heart Castle is, in fact, also a possessory interest property.
The California State Board of Equalization offers a wealth of information regarding taxable possessory interests.