How Construction Affects Taxable Value


How Construction Affects Taxable Value

The Assessor is required to reassess new construction such as an addition or new structure. The Assessor will determine the market value (not necessarily the cost) of the construction, and add that value to the existing property assessment.

New construction adds incremental value to an existing property and will generate a supplemental assessment. The existing property, however, is not reappraised; its assessed value will not change except for the annual inflation adjustment of up to two percent. Land is not re-assessed when construction occurs except for the annual inflation adjustment.

Maintenance and Renovation

Maintenance items generally do not result in re-assessment except when the Assessor determines that a combination of maintenance items make the structure partially equivalent to new, or wholly equivalent to new.  In those instances, a portion of the existing improvement value is retained, and a portion is enrolled at market value. Because every case is different, it is impossible to tell in advance how much taxable value will change due to rehabilitation. This determination is generally made by comparing renovated to non-renovated properties to determine what value the market puts on renovation.

According to the State Board of Equalization (BOE):

Because rehabilitation work is more structural in nature, it usually is assessable. Reassessable rehabilitation work may involve substantial changes to the plumbing system, electrical system, framing or foundation, and can extend the usable life of a building. The county assessor is responsible for determining, on a case-by-case basis, whether such work involves substantial changes constituting a reassessable event.

For more information, see the BOE’s New Construction – Frequently Asked Questions.