New Construction

Under Revenue and Taxation Code section 70, "new construction" includes:

  • Any addition to land or improvements, including fixtures
  • Any alteration of land or improvements that constitutes a major rehabilitation or converts the property to a different use

A major rehabilitation of an improvement or fixture occurs upon any rehabilitation, renovation, or modernization that converts the improvement or fixture to the substantial equivalent of a new improvement or fixture.

New construction is generally assessable and may increase the taxable value of a property. The impact on a property tax assessment varies depending on the work being performed. Upon completion of the new construction, the assessor determines its fair market value and a base year value is established.

If the new construction is only partially completed on the lien date (January 1), the assessor is required to estimate the fair market value of the new construction in its state of completion on that date. This continues each successive lien date until the new construction is completed. Upon completion, the entire portion of the property which is newly constructed is reappraised at its fair market value and a base year value is established.

The removal of improvements or fixtures may also be considered new construction. A fixture, 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.

Normal maintenance and repairs are typically not considered new construction and not subject to assessment.

Assessors typically discover new construction through several sources, including:

  • Building permits provided by county or city agencies;
  • Information furnished on Business Property Statements;
  • Documents evidencing required governmental inspections or approvals;
  • Aerial photographs and satellite imagery; and
  • Field inspections

What is or is not considered new construction
Type Considered new construction Not considered new construction
  • 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.
  • Additions to existing improvements;
  • Increasing the square footage of a residence;
  • Rebuilding after taking an entire house or a portion of the house down to its foundation and studs;
  • Adding a garage, swimming pool, spa, patio, or deck;
  • Demolition of an existing structure;
  • Upgrading the capacity of plumbing or electrical systems;
  • Complete renovation of an older structure or portion thereof to make it the substantial equivalent of a new building;
  • Conversion of a garage, unfinished basement, or attic into a living area;
  • Conversion of a single-family residence to a residence of two or more units;
  • Conversion of a portion of a warehouse to office space or conversion of a residence to a retail store (change in use);
  • Kitchen and Bathroom – structural changes, upgrading plumbing and/or electrical systems, changing the floor plan, increasing the size, replacing cabinets, countertops, flooring or fixtures with upgraded material and finishes.
  • Normal maintenance and repairs;
  • Renovating a commercial office building by moving partitions to suit a new tenant;
  • Painting, re-carpeting and relocating electrical and telephone jacks or lines.

Replacement of:

  • Central heating and cooling systems, or wall or floor heating with baseboard heaters;
  • Galvanized waterlines with copper or plastic;
  • Old bathroom or kitchen fixtures with modern fixtures;
  • Wood-framed windows with energy efficient metal or aluminum frames;
  • Dry rot or termite damaged joists, studs, rafters, stairways, and/or exterior siding;
  • Molding strips, plaster, drywall, and wall paneling with similar substitute materials;
  • Wall or floor coverings.
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.
  • Cosmetic refacing that does not raise the quality class or extend the economic life of the fixture or materially increase the usefulness of the structure;
  • Repairs and maintenance.

Generally, the completion of 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. In general, an improvement that was initially excluded will affect the property's assessed value only after the property undergoes a change in ownership and a new base year value is consequently established.

New construction exclusions
Code Description Form Required 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

The following resources provide information and guidance on New Construction.

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.

Letters To Assessors
Title Letter to Assessor
Attorney General Opinion 80/74
Builder's Exclusion 83/132, 2014/005
Construction in Progress 80/77, 81/95, 2017/042
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 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

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.

Property Tax Rules
Title Rule
Fruit and Nut Tree and Grapevine Exemption 131
Newly Constructed Property 463
Date of Completion of New Construction – Supplemental Assessments 463.500

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 Opinions
Title Annotated Legal Opinion
Newly Constructed Property 610.0000

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.

The following sections of the Assessors' Handbook provide information on new construction.

  • AH 410, Assessment of Newly Constructed Property
  • AH 513, Assessment of Shopping Centers
  • AH 515, Assessment of Golf Courses
  • AH 516, Assessment of Cemeteries
  • AH 531, Residential Building Costs
  • AH 534, Rural Building Costs

These sample forms are for informational purposes only. To obtain a form, please visit Cal Assessor e-Forms or contact your local county assessor's office

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

Valuation of New Construction

Absent an applicable exclusion, the completion of new construction will trigger a reassessment. The new base year value of the new construction is the increment of market value, if any, that the assessor estimates has been added to the overall property. The value of the existing property is not affected.

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 added by the new construction and will not necessarily be the cost of the new construction. Replacing a shake roof with a tile roof, however, would not be considered new construction since that type of improvement is considered routine maintenance; thus, any resulting increase in market value would not be assessable.

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 – the new house would be considered new construction in its entirety. 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). Therefore, it is advisable to review other laws or ordinances in your county that may affect you.

Construction in Progress

New construction in progress on the lien date is 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 is 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 completed improvement value is enrolled. Assessments of unfinished new construction are not base year values; rather, they are temporary assessments until the construction is completed.

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 are 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.

New Construction Exclusions

If you are severely and permanently disabled, the new construction may be excluded; however, you must file the appropriate claim form., BOE-63, Disabled Persons Claim for Exclusion of New Construction (Revenue and Taxation Code section 74.3). To obtain this form, please visit Cal Assessor e-Forms or contact your local county assessor's office.

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 principal place of residence, and the property must qualify for the homeowners' exemption.

No. Unlike the homeowner's disabled person's accessibility exclusion under 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.

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.

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 child, for example, by adding wider doorways, enlarging bathroom facilities, or installing special railings or ramps, the value added by of any of these features that were specially installed to adapt the home for use by your child would be excluded from assessment as 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 child, such new additions would be excluded from assessment as new construction.


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. 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.

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