Summer is the season of home renovations, and Assessor Prang wants you to know what impact remodeling or construction may have on your property tax bill. Here are the answers to some of the most frequently asked questions:
How does the Assessor know when there is construction on a property?The Assessor periodically receives copies of building permits issued by city and county agencies. To a lesser extent, the Assessor may be notified by another governmental entity, an appraiser from the Assessor’s Office who is out in the field, a neighbor, or directly by the property owner. When the Assessor has knowledge of new construction on a property, whether or not it is permitted, the Assessor has a legal duty to appraise it for assessment purposes. In general, what is considered assessable (taxable) new construction?
Assessable new construction may be any of the following:
Area (square footage) added to existing structures;
New items added to existing structures, such as bathrooms, fireplaces, or central heating/air conditioning;
Physical alterations resulting in a change in use;
Rehabilitation, renovation, or modernization that converts an improvement to the substantial equivalent of a new improvement;
Land development (grading, engineered building pad, infrastructure).
Some examples include new homes, room additions, patio covers, pools, spas, and decks. If I add square footage to my home, will the increase in my property’s assessed value be based on the new square footage of the addition, or will it cause a reappraisal of the entire property, including the land?
This is one of the most commonly asked questions about new construction. Under Proposition 13, which governs California’s property tax process, the entire property (land and improvements) will only be completely reappraised when real estate transfers ownership. The Assessor will typically only add value for assessable new construction. Will the remodel of my kitchen or bathroom trigger reassessment?
Assuming you are remodeling or replacing what already exists, this would typically be excluded from reassessment. Remodeling is primarily cosmetic. And while it usually improves a building’s appearance, it does not extend to a building’s usable life (effective age). However, if you replace a half-bath with a full bath, the difference in value between could be added to the assessment of your property. Will my assessment increase when I replace flooring, windows, or a roof?
No. This type of work is considered routine maintenance and will not cause your assessment to change. How does the added value for new construction affect my taxes?
New construction will trigger a supplemental tax bill based on the assessed value of the new improvements. In the following year, the additional assessment for new construction is combined with the existing assessment and becomes part of the annual tax bill due in December and April. How does the Assessor arrive at the added value for new construction?
The Assessor is obligated to enroll the market value of assessable new construction. The most utilized method by our appraisers in determining the market value of new construction is the cost approach. Appraisers typically utilize standardized cost tables based on annual surveys of construction professionals. These costs vary by the size of the addition and the quality of the new construction.
Assessment Appeal Questions
What is the tax appeal process? How long will it take? What is RPC’s role in the process? What do you need from me? Why use RPC for the appeals work?