Solar New Construction Exclusion- Frequently Asked Questions

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  1. I just installed solar heating panels on my roof to heat my swimming pool water. Is this excluded from new construction assessment because it is an active solar energy system?

    No. Revenue and Taxation Code section 73(b)(2) specifically states that "active solar energy system" does not include solar swimming pool heaters or hot tub heaters. An active solar energy system must be a system that uses solar devices to provide for the collection, storage, or distribution of solar energy (for example, produces electricity or heats a hot water heater).

  2. How does the new construction exclusion for solar energy systems work?

    Generally, when something of value is physically added to real property, the addition is assessed at current market value and this value is added to the existing base year value of the real property. When an active solar energy system is installed, it is not assessed, meaning that the existing assessment will not increase.

  3. Recently I added an active solar energy system to a home that I have owned for 10 years. Do I need to complete any form or notify the assessor that I have installed an active solar energy system to receive the exclusion?

    No. There is no form or filing required to receive the exclusion. The assessor usually discovers the installation of the active solar energy system by means of the building permit that was taken out. If you think you have been assessed for the installation of an active solar energy system, you should contact your county assessor. You may find your assessor's contact information by clicking on the name of your county at the following link: www.boe.ca.gov/proptaxes/assessors.htm.

  4. Last year I purchased a new home from a builder that included an active solar energy system. Now the developer has sent me a form called the "Initial Purchaser Claim for Solar Energy System New Construction Exclusion." What is the purpose of this form and where do I send it?

    The completed form should be mailed to your county assessor. A list of county assessors and their addresses is posted on our website at www.boe.ca.gov/proptaxes/assessors.htm. Under certain circumstances, as the initial purchaser of a new building, your new base year value may be reduced by the value of the active solar energy system, less any rebates or tax credits received. Your builder will be able to provide you with the value of the system and any rebates or tax credits that they received.

  5. There is a solar facility which is not operating and still in a construction phase when the developer sells the facility. Could the new buyer claim a new construction exclusion for those assets not yet incurred or placed into construction in progress or for all the assets once place in service?

    The "first buyer exclusion" allows the solar exclusion to be conveyed to the first buyer of a building incorporating an active solar energy system, so long as the owner-builder doesn't intend to occupy the property and hasn't received the solar exclusion, and so long as the buyer purchases the building prior to it becoming subject to assessment and files the appropriate claim form. The owner-builder may also receive an exclusion for construction in progress (CIP), which does not preclude the availability of the exclusion to the first buyer. To receive the "builder's exclusion" from the initial supplemental assessment for the completion of new construction, the builder must meet the requirements of Revenue and Taxation (R&T) Code section 75.12, including notifying the assessor, prior to or within 30 days of the commencement of construction, that she does not intend to occupy or use the property.

  6. What if, in the above scenario, the facility is owned by a legal entity and that legal entity sells its controlling interest?

    If a controlling interest of a legal entity owning solar property is sold prior to completion of construction, the buyer of the legal entity interests has control under R&T Code section 64(c), and thus the property owned by the entity changes ownership. As the property is still CIP, the buyer is eligible to claim the solar exclusion for CIP. Once construction is complete, the property is assessed at its fair market value, and the buyer is eligible to receive the solar exclusion.

  7. If a solar facility comes online in 7/2016 and the developer sells its controlling interest in 11/2016, can the new buyer claim a new construction exclusion for all the assets placed in service for the 1/1/2017 lien date?

    The solar exclusion would be available to the buyer who purchases the developer's controlling interest in a legal entity owning solar property, if the builder's exclusion is in place (if the developer notified the assessor timely that she doesn't intend to occupy/use the property or if the property meets the criteria applicable to the development of residential subdivisions.)