Dennis

Following plaintiffs’ purchase of real property in San Jose, the Assessor of Santa Clara County revalued the property for tax purposes in an amount substantially higher than the purchase price. After the assessment appeals board denied plaintiffs’ application for changed assessment, plaintiffs filed this action to nullify the board’s decision. The superior court set aside the board’s decision, finding that the full value of the property was the amount of plaintiffs’ purchase price, and entered judgment accordingly. The County of Santa Clara and City of San Jose appeal. Plaintiffs cross-appeal with respect to attorney fees.

We conclude for the reasons stated below that the judgment must be reversed.

Factual and Procedural Background

In May 1982, plaintiffs purchased commercial real property at 3100 Alum Rock Avenue, San Jose, for $215,418 in cash. At the time, plaintiffs had an ownership interest in the corporation that was the major tenant on the property.

In June 1983, using the market data and income methods of appraisal, the assessor revalued the property for tax purposes at $334,600. (Rev. & Tax. Code, § 50.) Plaintiffs paid the tax on the newly assessed value,…