New Construction


Under California property tax law, "new construction" is defined in four general categories:

  • Any substantial addition to land or improvements, including fixtures.
  • Any physical alteration of any improvement, or a portion thereof, to a "like-new" condition, or to extend its economic life, or to change the way in which the improvement, or portion thereof, is used.
  • Any substantial physical alteration of land which constitutes a major rehabilitation of the land or changes the manner in which it is used.
  • Any substantial physical rehabilitation, renovation or modernization of any fixture that converts it to the substantial equivalent of a new fixture or any substitution of a new fixture.

Additionally, removing improvements or fixtures may also be considered new construction.

Examples of what is or is not considered new construction

  Considered new construction Not considered new construction
Alterations in land Adding land fill; development of rural land into residential subdivision or other extensive site preparation prior to building; land leveling; terracing of a hillside; clearing of a brush-covered parcel; irrigation ditches and roads; installing curbs, gutters, and underground storm drains and sewer lines. Releveling of existing row crop land; removing orchard trees for replanting; rebuilding of levees or ditches; minor site preparation prior to building.
Alterations in improvements A residence converted to a retail store by physically altering walls, installing counters, etc.; conversion of a garage into a living area; complete renovation of an older structure or portion thereof to make it the substantial equivalent of a new building; conversion of a single-family residence to a residence of two or more units; conversion of a portion of a warehouse to office space; conversion of an existing room to a bathroom. Maintenance and repairs:
  • Replacement of existing kitchen or bathroom cabinets
  • Replacement of air conditioner unit
  • Replacement of roof
The renovation of a commercial office building to suit a new tenant by moving partitions, painting, re-carpeting and relocating electrical and telephone jacks or lines would not meet the requirements for new construction because the usefulness of the structure has not changed. While the alterations may suit the particular tenant, it is also very likely that these changes would attract another equally desirable tenant at a comparable rent with no outlay for any further expensive remodeling.
Alterations in fixtures A wine bottling line that previously corked and labeled 500 bottles per hour that is updated with new parts so that it now generates 800 bottles per hour. (Fixtures, for purposes of new construction, is defined as an improvement whose use or purpose directly applies to, or augments the process or function of, a trade, industry, or profession; the term fixture is limited to a business fixture and does not encompass household fixtures). Any cosmetic refacing that does not raise the quality class or extends the economic life of the fixture or materially increases the usefulness of the structure; repairs and maintenance to a fixture, such as replacing belts, cylinders or rollers on a printing press, or the water pump on a wind machine.
Other alterations
  • Additions to existing improvements;
  • Converting an unfinished basement or attic into a living area;
  • Adding a garage, sunroom, enclosed patio, or elevator;
  • Adding a swimming pool, spa, or sauna; or a patio or deck;
  • Increasing the square footage of a home;
  • Demolition of an existing structure;
  • Bathroom – the addition of one, or structural changes, upgrading of plumbing and/or electrical systems, changing the floor plan, increasing the size, replacing cabinets, countertops, flooring or fixtures with upgraded material and finishes;
  • Kitchen – structural changes, upgrading of plumbing and/or electrical systems, changing the floor plan, increasing the size, replacing cabinets, countertops, flooring or built-in appliances with upgraded material and finishes;
  • Taking an entire house or a portion of the house down to studs;
  • A change in use (for example, converting from industrial to residential use or converting storage space to habitable space);
  • Upgrading the capacity of plumbing or electrical systems (for example, increasing electrical capacity from 110 volts to 220 volts)
Replacement of:
  • Central heating and cooling system, or replacement of wall or floor heating with baseboard heaters;
  • Galvanized waterlines with copper or plastic waterlines;
  • Old bathroom and kitchen fixtures with modern fixtures;
  • Wood-framed windows with energy efficient metal or aluminum frames;
  • Dry rot or termite damaged joists, studs, rafters, stairway, and/or exterior siding;
  • Molding strips, plaster, drywall, and wall paneling with similar substitute materials;
  • Wall or floor coverings;
  • Kitchen or bathroom cabinets, countertops, flooring or fixtures, built-in appliances with items of similar quality;
  • An electrical fuse box with circuit breakers; or;
  • Doors, windows, stairs, fences or decks or repairing thereof.


Generally, new construction is an assessable event unless it is specifically excluded from reassessment. A new construction exclusion generally means the property owner who installs the improvement will not be assessed for it. The improvement that was initially excluded will become assessable when the property undergoes a change in ownership and a new base year value is established.

List of new construction exclusions

Code Description Filing Filing Period Time Period of Exclusion
69.4 Transfer of base year value; environmentally contaminated property Yes Submit federal or state proof of contamination with assessor Until establishment of new base year value
70(c) Disaster Relief No   Until establishment of new base year value
70(d) Underground storage tank No   Until establishment of new base year value
73 Active solar energy systems No   Until establishment of new base year value
74 Fire systems No   Until establishment of new base year value
74.3 Disabled persons accessibility – single and multiple family dwellings Yes No stated period; file statement of disability and construction with assessor Until establishment of new base year value
74.5 Seismic safety retrofitting improvements Yes Notify assessor of intention to claim exclusion within 30 days of completion; documents must be filed within six months of completion Until establishment of new base year value
74.6 Disabled persons accessibility – other buildings or structures Yes Notify assessor of intention to claim exclusion within 30 days of completion; claim and supporting documents must be filed within six months of completion Until establishment of new base year value
74.7 Environmentally contaminated property Yes Notify assessor in writing of intention to claim exclusion prior to or within 30 days of completion of a project. All documents necessary to support the exclusion must be filed by the property owner with the assessor no later than six months after completion Until establishment of new base year value
75.12 Builder's exclusion (supplemental assessment) Yes Notify assessor within 30 days of commencement of project that owner will not occupy or use property Until new base year value is enrolled on next lien date
170 Disaster Relief Yes File application within one year of disaster Until establishment of new base year value
5825(c) Disaster relief for manufactured homes No   Until establishment of new base year value
5825(d) Manufactured homes taken by eminent domain No   Until establishment of new base year value


Letters To Assessors (LTAs)

LTAs provide an ongoing advisory service for county assessors and others interested in the property tax system in California. The letters present Board staff's interpretation of rules, laws, and court decisions on property tax assessment. The following LTAs pertain to assessment or procedural issues involving new construction in California.

Title Letter to Assessor
Attorney General Opinion 80/74
Base Year Value, Construction in Progress 2016/042
Builder's Exclusion 83/132, 2014/005
Construction in Progress 80/77, 81/95, 2016/042
Contaminated Property Exclusion (Proposition 1) 99/23, 2003/078, 2007/047
Decline in Value Determination 2009/024
Disabled Persons Exclusion (Propositions 110 and 117) 91/34, 93/05, 94/47
Disaster Relief 79/39, 79/207, 81/123, 82/12, 82/49
Exemption 95/55
Fire Detection Systems 99/45
Non-Residential (Gann Limit, Proposition 111) 91/03
Portion of a Structure 2014/039
Property-Assessed Clean Energy Program (PACE) Improvements 2017/016
Questions and Answers 78/145, 78/190, 79/204
Relocated Improvements 80/26, 94/14
Removal of Property 86/09
Reporting 2004/071
Seismic Safety Exclusion 2001/089, 2010/036
Self-Declaration of 82/120
Soundproofing 85/113
Tenant Improvements, Coordination Procedures 99/86
Underground Storage Tanks 99/62, 2007/050
Valuation Procedures 78/145, 78/188, 78/190, 79/204, 80/77
Water Service 91/37
Wells under Construction on Lien Date 81/95

Property Tax Rules

The BOE is mandated to prescribe rules and regulations to govern local boards of equalization when equalizing and county assessors when assessing in compliance with the rulemaking procedures adopted by the California Office of Administrative Law. Pursuant to that mandate, the BOE has adopted various Property Tax Rules which are contained in Title 18 of the California Code of Regulations.

Rule Title Description
131 Fruit and Nut Tree and Grapevine Exemption Trees planted in orchard form are exempt until four years after the season of planting, while grapevines planted in vineyard form are exempt until three years after the season of planting. Date palms are exempt until eight years after planting. Grafting creates a new exemption period for trees or vines.
463 Newly Constructed Property When real property or a portion of the real property is newly constructed after the 1975 lien date, the assessor shall determine the full value of newly constructed property as of the date of completion. A new base year full value is established for newly constructed property. Total taxable property value will be the full value for newly constructed property plus taxable value of preexisting property less taxable value of property removed during construction. New construction means any substantial addition to land and improvements or changing as existing improvement so as to add horizontally or vertically to its square footage, and any substantial physical alteration of land that changes the properties use or results in major rehabilitation.
463.500 Date of Completion of New Construction – Supplemental Assessments Provides guidelines to interpret sections 75.10, 75.11, and 75.12. Establishes "date of completion" for purposes of supplemental assessments.

Annotated Legal Opinions

Annotated legal opinions are summaries of the conclusions reached in selected legal rulings of California State Board of Equalization counsel. The following legal opinions pertain to questions involving newly constructed property

Annotated Legal Opinion Title
610.0000 Newly Constructed Property

Assessors' Handbook

The Assessors' Handbook is a series of manuals developed by the staff of the Board of Equalization in an open process. The objective of the Assessors' Handbook is to give county assessors, their staff, and other interested parties an understanding of the principles of property assessment and real and personal property appraisal for property tax purposes. The Assessors' Handbook is intended to serve as a guide for the appraisal and assessment of real and personal property. Additionally, the Assessors' Handbook presents the Board staff's interpretation of rules, laws, and court decisions on property assessment.

AH 410, Assessment of Newly Constructed Property, (05-14)

AH 513, Assessment of Shopping Centers, (01-83)

AH 515, Assessment of Golf Courses, (01-83)

AH 516, Assessment of Cemeteries, (01-83)

AH 531, Residential Building Costs, (Revised Annually)

AH 534, Rural Building Costs, (Revised Annually)


This is for information only. Please contact your local county assessor's office for a copy of the applicable form.

Form Title
BOE-63 Disabled Persons Claim for Exclusion of New Construction
BOE-63-A Disabled Accessibility Construction Exclusion from Assessment (Claim for)
BOE-64 Seismic Safety Construction Exclusion from Assessment (Claim for)


What happens to the assessed value of my property when there is new construction?

Reassessment of a property is required any time new construction occurs (section 71). Thus, new construction, when not considered normal maintenance or repair, is assessable if it adds value to the property. The market value (not necessarily the cost) of the addition or other "new construction" is determined by the assessor and added to the existing property assessment. The value of the existing property is not affected.

New construction that adds value to the property represents the incremental value added to the 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.

I just completed a new master bedroom and bath addition to my home. How did the county assessor become aware of my new construction?

The county assessor becomes aware of such new construction because copies of all building permits issued by a county or city are required to be sent to the county assessor. However, not every building permit for new construction results in reassessment. In general, the county assessor's office processes thousands of building permits annually, yet perhaps less than half result in additional assessments.

Additionally, the county assessor, by law, is required to value all new construction, even if a building permit has not been issued. Discovery of new construction occurs in a variety of ways, such as that reported at the time a property transfers ownership, information volunteered by the public, or personal observation by county assessor's staff performing routine field checks.

How would my property taxes change if I enlarge the square footage of my family room and kitchen, add a patio, and replace my shake roof with a tile roof?

Any addition to your existing home, including outdoor additions, such as patio covers, pools, spas, decks, sunrooms and flatwork, would cause a reassessment of the portion of the property that was newly constructed. The assessed value of any existing portion of your property, whether land or improvements, would not be affected by the addition, and thus, would not be reappraised. The increased tax amount based upon the new construction will be determined by the estimated market value of the new construction and will not necessarily be the cost of the new construction. Replacing your shake roof with a tile roof, however, would not be considered new construction since this type of improvement is considered routine maintenance; thus, any increase in value due to this factor would not be reassessable.

How would my property taxes change if I tore down my existing home and built a new house in its place? Would it make a difference if I tore everything down and left one wall up?

If you built a new house, the entire structure will be considered new construction and will be fully reassessed at current market value. The value added by the new house, less the assessed value of the home torn down, would determine your additional tax burden. To leave one wall standing would make no difference for property tax purposes–essentially, the improvements would be considered all new construction. Only the assessed value of the land would not change.

Depending upon the county in which you live, there may be other laws, however, that require you to leave part of the structure standing for various reasons (i.e. a wall or other defining improvement for zoning or permitting purposes). Thus, it is advisable to review other laws or ordinances in your county that may affect you.

Does rehabilitation work on my home count as new construction?

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.

If a kitchen is extensively altered by adding built-ins, extending countertops, adding new cabinets and removing or adding portions of walls, is this considered new construction?

If, in the opinion of the county assessor, the kitchen is now the equivalent of a new kitchen, it can be considered newly constructed. If, however, the work is considered remodeling or maintenance, it would not qualify as new construction. The decision whether the work is considered new construction or not is determined by the county assessor on a case-by-case basis.

How do you value a new building that is under construction during a period encompassing several lien dates?

New construction in progress on the lien date shall be appraised at its full cash value on such date and each lien date thereafter until the date of completion, at which time the entire portion of property which is newly constructed shall be reappraised at its full cash value. Annual inflation adjustment on the improvement value should not begin until the lien date following the lien date upon which the complete improvement value is enrolled. Assessments of unfinished new construction are not base year values; rather they are temporary assessments until the construction is completed.

When is new construction considered complete?

The date of completion is the date the property or portion thereof is available for use. If a project is to be constructed in distinct stages, with portions being completed and available for use before the other portions are constructed, base year values can be separately established for the completed portions without regard to the incomplete status of the total project. If, however, the project is to be constructed as a single facility and the entire improvement will become available for occupancy within a reasonably short period of time, the total project will be handled as construction in progress until all portions of the improvement is available for occupancy. The county assessor uses his or her judgment in determining whether portions of a project can be considered complete for purposes of base year valuation.

"Available for use" means that the property, or a portion thereof, has been inspected and approved for occupancy by the appropriate government official, or, in the absence of such approval, when the prime contractor has fulfilled all of the contractual obligations. If neither a government inspection nor a prime contractor is involved, then the newly constructed property is considered available for use when outward appearances clearly indicate that it is immediately useable for the purposes intended. Fixtures are available for use when all testing necessary for proper operation or safety is completed. However, new construction is not available for use if, on the date it is otherwise available for use, it cannot be functionally used or occupied.

I did some structural work to both the inside and outside of my home to accommodate wheelchair accessibility for my mother, who lives with us. Will this new construction be assessed? Does it matter that my mother does not own the home?

If your mother is severely and permanently disabled, the new construction may be excluded; however, you must file the appropriate claim form, BOE-63, Claim for Disabled Accessibility Construction Exclusion from Assessment (Revenue and Taxation Code section 74.3). Some county assessors provide the form via a link from their website.

Disabled persons do not need to own the home for the new construction to qualify for exclusion; however, they do need to occupy the property as their permanent place of residence, and the property must qualify for the homeowners' exemption.

Legally, I must have a bathroom that is accessible to the physically disabled in my small restaurant. If I were to renovate the two single bathrooms that I currently have, they would be unusable for a substantial period of time. Thus, it would be easier to add a new bathroom that would accommodate the disabled. Would the addition of a new bathroom qualify for the disabled persons' accessibility exclusion?

No. Unlike the homeowner's disabled person's accessibility exclusion of section 74.3, the exclusion provided in section 74.6 does not apply to entirely new additions to an existing building or structure, even though the addition may duplicate existing facilities.

My husband has recently become wheelchair-bound. We own a home with one small bathroom and no family room. In addition to installing a ramp, we would like to add a usable bathroom for him and a family room since the living room is very small and it is difficult for him to get around in it. Would both of these additions be excluded from new construction assessment under the disabled persons' accessibility exclusion?

The bathroom addition would clearly be within the disabled persons' accessibility exclusion. Any new additions may duplicate existing facilities if it makes a homeowner's dwelling more accessible to the physically disabled by providing for the "full use" of the dwelling. Although the addition of a family room does not duplicate an existing room, if the existing living room has limited space that makes it difficult for the disabled person to get around, the addition of a family room would essentially be a duplicate living room necessary to make the dwelling more accessible, and, thus, could be excluded from new construction. It is within the judgment of the appraiser who is inspecting the additions or modifications, however, to determine whether the new construction was, in fact, made with the intent to make the dwelling more accessible to a disabled resident.

We were renting a home but now it is not adequate for my young daughter, who is in a wheelchair. We are now ready to buy or build a new home with wheelchair accessibility. Are there disabled persons' exclusions available to us?

The disabled persons' accessibility exclusion of section 74.3 is only available for new construction work on an existing dwelling to make it more accessible to a disabled person who is a permanent resident in the home. The exclusion does not apply to the purchase of a new home (even with wheelchair accessibility already in place) or the construction of an entirely new dwelling.

However, if you decide to build a new home and must construct portions of the house to make it more accessible for your disabled daughter (such as add wider doorways, enlarge bathroom facilities, install special railings or ramps), the added value of any of these features that were specially installed to adapt the home for use by your daughter would be excluded from new construction.

Similarly, if you purchase a new home and renovate portions of the house necessary to make the dwelling more accessible to your disabled daughter, such new additions would be excluded from reassessment. Of course, in either situation, the exclusion would apply only to the extent of that portion specially constructed for your disabled daughter's accessibility.