Tips for Homeowners

Taxable New Construction vs. Non-Taxable Maintenance & Replacement

“Newly Constructed” or “New Construction” - Definition

Any addition to real property, whether land or improvements (including fixtures), since the last lien date; and
Any alteration of land or of any improvement (including fixtures) since the last lien date (January 1st) that constitutes a major rehabilitation thereof or that converts the property to a different use.

General Information

The market value of new construction is taxable, and is added to the existing Prop. 13 taxable value. New construction will not trigger a reassessment of the entire property.
New construction is subject to a one-time supplemental assessment upon completion of construction.
Maintenance or replacement of existing items is not taxable.

Examples of Taxable New Construction

New buildings.
Land development (grading, infrastructure, foundations).
Additions to real property including new room additions, living space, garages, other structures, swimming pools, spas, patio covers, enclosed patios, sunrooms, solariums, porches, central heating/air-conditioning, fireplaces, decks, fences or flatwork.

Examples of Non-Taxable Maintenance & Replacement

Replacement or repair of existing improvements including roofs, garage doors, kitchen cabinets or counters, flooring, patio covers, central heating or air-conditioning equipment, windows, doors, decks, flatwork, fences.
Replacement item(s) must be of similar size to those being replaced.
Loans and refinancing will not increase the taxable value, regardless of the loan amount.
Certain types of new construction are specifically excluded from assessment, including:
- Active solar energy systems
- Construction or installation of fire sprinkler or detection system
- Structural improvements to make an existing building or structure more accessible to, or more usable by, a disabled person
- Seismic rehabilitation and retrofitting improvements