Value Change Due to New Construction

Under California state law, your property tax may increase due to “New Construction” activity. “New Construction” refers to any improvements to your home other than normal maintenance or repair. When construction is performed, the changed or new portion of your home may be reassessed at market value, thus increasing your property’s assessment value. 


How does our office determine market value of your new construction? 


If the new construction project is only partially completed on the January 1st lien date, the law requires the Assessor to estimate the fair market value in its current state of completion, until the project is 100% complete and the final assessment is determined. If, for example, a building permit is issued on August 15th and on the subsequent January 1st construction is only 30% completed, the Assessor will estimate the value of the "30% portion" and add that value to the next assessment roll. After construction is complete, the Assessor’s Office will assess the improvement at market value and add this value to your existing value. (Note: market value may differ from the cost of construction) 


How will I know what the updated assessment value is once construction is complete? 


A Notice of Supplemental Assessment is mailed to you to notify you of the updated assessed value. The new assessed value is then submitted to the Office of the Treasurer and Tax Collector. Those offices are responsible for mailing and collecting your tax bill. 


New Construction Exclusions from Reassessment 


Not all construction activities lead to reassessment. If the projects are part of normal maintenance such as replacing a leaky window, they are likely not considered reassessable. Additionally, there are exemptions from reassessment for certain kinds of construction. For example, solar energy installations, seismic retrofitting improvements, disabled access modifications, and fire sprinkler and detection system improvements will not trigger reassessment. For more information regarding new construction exclusions, check HERE.  


To receive the exclusion, a claim form must be filed prior to, or within thirty (30) days of, the commencement of construction activity. To download the Builder’s Claim for New Construction Exclusion from Supplemental Assessment, click here, or go to the Assessor’s forms page. If you have questions or require more information, please call (510) 272-3787.