News
Articles: Information about new construction and property taxes… what you may want to know.
NEW CONSTRUCTION AND PROPERTY TAXES: What Effect Does New Construction, Altering an Existing Building or Changing the use of a Property Have on Property Taxes? Taken from the Santa Clara Office of the County Assessor, Real Property Division
“New construction” is one of the most common reasons a property is reassessed and the assessed value increased beyond the Proposition 13 protected 2% annual increase. Normally “ new construction” is thought of as building a new structure, or adding on to an existing structure. Under California property tax law,, “new construction” can also mean renovating a structure to change its use, rehabilitating a structure to a “like new” condition or even removing a structure. Not every building permit for new construction results in reassessment.
Generally, value is added for a new construction under the following circumstances:
- New building(s) constructed on vacant land.
- Additional buildings or amenities added to a property. For example, a garage, swimming pool or bathroom.
- Additional square footage added to an existing building.
- Physical alteration converting a building or any portion thereof, to the substantial equivalent of a new structure, or changing the manner in which a building is use.
How and when will “new construction” be assessed?
Only the value of the improvement being added is considered. The assessed value of the new construction will be added to the base year land value. The assessed value is determined as of the date of completion of construction. When construction is complete, the base year assessed value is determined and a supplemental assessment is issued for the difference between the value as of the date construction is completed, and the value that existed on the assessment roll.
What if I am just remodeling?
Remodeling that does not involve adding to the size of the structure or to the amenities provided within the structure(such as adding a bathroom) is generally not considered new construction and is not subject to reassessment. The exception is those situations where the remodeling is so extensive as to constitute the “substantial equivalent” of a new structure.
How does the Assessor know that new construction has occurred?
Santa Clara County and all 15 cities within the county, are required to provide the Assessor with copies of building permits. The Assessor is by law required to value all new construction whether or not a building permit has been issued.
What if I plan to live in the house I am building?
A homeowners exemption is available for property owned and occupied by the owner as the principal place of residence. Information about this exemption is automatically mailed to new property owners several months after acquisition. Please consult the Santa Clara Co. Assessor’s office. 408-299-6460.
What if I don’t agree with the assessed value placed on the new construction?
After the notice of assessment, you may request an informal review of the assessment from the Assessor’s Office. If you believe the review does not result in a satisfactory conclusion, you may pursue an assessment appeal. Any assessment appeal must be filed within the time specified on the notice Information regarding assessment appeals if available from the Clear of the Board.
All information above provided by:
Office of the County Assessor Real Property Division, Santa Clara County
County Government Center, East Wing
70 West Hedding Street
San Jose, California 95110-1771
Phone: (408)-299-5300
