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New Construction on Your Home May Increase Property Taxes

Under California state law, property tax may increase due to new construction activity, according to Alameda County Assessor Phong La. “New construction” refers to any improvements to your home other than normal maintenance or repair. When construction is performed, the changed or new portion of your home may be reassessed at market value, thus increasing your property’s assessment value.

Alameda Post - A room with its walls stripped bare ready for renovation

Common questions regarding new construction and property tax assessments are answered below.

How does the Assessor’s Office determine market value of your new construction?

If the new construction project is only partially completed on the January 1 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.

For example, if a building permit is issued on August 15 and construction is only 30% complete on the subsequent January 1, the Assessor will estimate the value of the “30% portion” and add that value to the next assessment roll. After construction is complete, the Assessor’s Office will assess the improvement at market value and add this value to your existing value. (Market value may differ from the cost of construction)

How will I know what the updated assessment value is once construction is complete?

A Notice of Supplemental Assessment will be mailed to you, notifying you of the updated assessed value. The new assessed value is then submitted to the Office of the Treasurer and Tax Collector. Those offices are responsible for mailing and collecting your tax bill.

Are there any exclusions from reassessment?

Alameda Post - a graphic with construction equipment that says, "Value change due to new construction"

Not all construction activities lead to reassessment. If a project is part of normal maintenance, such as replacing a leaky window, it is not likely to be considered reassessable.

Additionally, there are exemptions from reassessment for certain kinds of construction. For example, solar energy installations, seismic retrofitting improvements, disabled access modifications, and fire sprinkler and detection system improvements will not trigger reassessment. For more information, visit the New Construction Exclusions page on the County Assessor’s Office website.

To receive the exclusion, a claim form must be filed prior to, or within thirty (30) days of, the commencement of construction activity. The form may be downloaded online at Builder’s Claim for New Construction Exclusion from Supplemental Assessment.

For questions or more information, call the Alameda County Assessor’s Office at 510-272-3787.

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