When rental units are converted to private ownership, which of the following is a potential consequence?

• A. Potential increase in real property taxes
• B. Immediate decrease in property taxes
• C. No relocation required
• D. Rental priority is maintained

Answer: (A)

When rental units become privately owned, tax consequences often arise because ownership and assessment structure change. Real property taxes are calculated based on assessed values, and a rental building that is converted to private ownership is typically reassessed to reflect market value on a per-unit basis. That shift from a single rental property assessment to multiple individually valued units can raise the total tax burden for the new owners, especially if the units’ market values are higher than their previous assessed value as a single rental property. So, a potential increase in real property taxes is a realistic outcome of this conversion.

The other options don’t fit as well. A decrease in property taxes is not typically expected after revaluation and conversion to private ownership. No relocation is not guaranteed, since tenants may have relocation rights or other protections under tenancy law during a conversion. And rental priority is not maintained once units become privately owned; ownership changes the framework for tenancy rights and ongoing leasing.