Under Proposition 13, real property is reappraised only when a change-in-ownership occurs, or after new construction is completed. Generally, a change in ownership is a sale or transfer of property, while new construction is an improvement to property which requires a building permit. Except for these two instances, property assessments cannot be increased by more than 2% annually.
Concerning new construction, the Assessor’s Office receives copies of all building permits issued by the cities as well as the County. We then divide these permits into two categories: (1) permits for repair, replacement and maintenance, and (2) permits for actual new construction.
Normally, permits for repair, replacement and maintenance do not cause a reassessment for property tax purposes. Examples of these include a new roof, replumbing, rewiring, replacing an old fence or decking, etc. On the other hand, if a homeowner takes out a building permit to do an addition to his or her home, this will cause a reassessment for the new square footage added.
In appraising new construction, the market value of the addition is determined and added to the value of the existing property. The value of the existing property does not change. For example, a homeowner currently has a 2,000 square foot home and builds a new 500 square foot family room. Under Proposition 13, we can only reassess the new family room, and not the existing 2,000 square foot home. The family room will be reassessed based on the "value added" which is usually the full construction cost.
There are two times, however, when the "value added" may be different from the construction costs. The first is when there is an "over improvement for the area" in which the cost of construction exceeds the market value added. The other is when an owner has built the improvement himself for substantially less cost than the resulting increase in value.
After the reassessment for new construction has been completed by the Assessor’s Office, the property owner is then notified in writing of our new assessment along with the right to appeal this value. For further information concerning this assessment process, please call the Assessor’s Office at (858) 505-6262.