New Construction Reappraisal

Image of ongoing construction of a new home located in Newark.

The Assessor receives copies of building permits from all fourteen (14) city building departments in Alameda County and the county’s Public Works Agency (for unincorporated areas) on a continuous basis. These permits are reviewed carefully to determine if a reappraisal is required under State law. If it is required, an appraisal is made to determine the fair market value of the newly constructed portion as of the date the construction is completed.

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.

The legal definition of “new construction” for property tax purposes is provided in section 70 of the Revenue and Taxation Code and encompasses more than just the construction of new buildings.

Examples of “new construction” which may require reappraisal:

Any improvement to real property, such as adding a room, pool or garage;
Any alteration which restores a building or other improvement to the “substantial equivalent of new” (such as completely renovating a building);
An alteration that changes the way a property is used (e.g. a residence is converted to a retail store, or a garage is converted to living area);
Physical alteration to land such as retaining walls or land grading for purposes of development
Tenant improvements added in previously unfinished commercial property

Only the portion of the property which was newly constructed is subject to reassessment at market value. For example, if a family room is added to an existing home, only that portion is reassessed and the existing home will retain its previously established Proposition 13 base year value.

It should be noted that certain construction activities are not subject to reassessment. Some exceptions include:

Normal building maintenance and repair
Replacement of worn out items such as a roof or plumbing fixtures
Reconstruction after a misfortune or calamity if valid claim was filed. Click here for more information.

Exclusions to New Construction Reassessment

Certain exclusions to new construction reassessment are available in certain situations. For more detailed information regarding new construction exclusions and how to apply for them, click here.