Under Proposition 13, property must be reassessed upon the completion of new construction, and prior to completion every January 1 in the case of construction that is ongoing and partially completed. Generally, new construction includes any addition to existing land and improvements, as well as any alteration or rehabilitation that converts the property to a different use, or substantially improves the condition of the home in the case of a major rehabilitation. Structural repairs and/or replacement of existing components, however, generally do not constitute new construction that is reassessable.
The Assessor is notified or otherwise made aware of the completion of new construction through several sources: copies of building permits provided to the Assessor by local agencies, field inspections conducted by the Assessor’s appraisal staff, and information provided by the property owner, by completing the Property Owner’s Statement – New Construction form.
Upon receipt of information that new construction is completed, the Assessor appraises the newly-constructed improvements and adds this value to the existing assessed value of the land and/or improvements. The addition of the new construction value results in the creation of new base year value – the figure upon which property taxes are based. Thereafter, the base year value of the property will only increase by the annual inflation adjustment of up to 2% - absent a new base year event such as a subsequent change in ownership or additional new construction.
As with all newly assessed values, the property owner has the right to appeal the base year value resulting from the new construction reassessment through the Assessor’s Office or before the Assessment Appeals Board.