Explore Properties at Southern California: Property Taxable New Construction vs. Non-Taxable Property Repairs at Orange County, CA

Some homeowners here at Orange County, California, are making decisions to improve and renovate their homes.

A primary financial consideration is whether there will be PROPERTY TAXABLE REASSESSMENT OF VALUE for new construction vs. non-taxable maintenance or repairs.

New construction is taxable under California law but does not trigger reassessment of the entire property.
Market value of new construction is added to existing Proposition 13 value.
New construction is subject to one-time supplemental assessment upon completion of construction.
Maintenance or replacement of existing items is not taxable.

Example: If you bought your home during 2001 and paid $300,000, your property taxes would be limited by Proposition 13 to one percent of assessed value, which can only be increased as much as two percent per year. If value of your property is now $600k, reassessed value could be no more than $320,000. And your annual property tax would be $3,200 (one percent of assessed value). So you would want to be careful and protect that assessed value and not cause your home repairs, improvement or renovation to trigger a property reassessment.

Property taxable new construction would include:

New buildings or structures, or significant remodeling that changes the utility or effective age of the property.
New additions to real property including room additions, living space, garages, other structures, swimming pools, spas, patio covers, enclosed patios, sunrooms, porches, central heating/air conditioning, fireplaces, decks, fences or flatwork.
Land development (grading, infrastructure, foundations).

Non-taxable maintenance or replacement would include:

Maintenance or replacement of existing improvements including roofs.
See County of Orange Assessor web site for other elements and information.

Be careful and review the Orange County Assessor office web site - click here - for guidelines on assessment of homes and property after new construction.

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This is for information only about California property and is not the providing of tax or legal services. If you are in Orange County, you should consult with the Orange County Assessor office or a lawyer about your own situation and whether any repair or improvement to your property would be property taxable.

For information on seller and buyer opportunities for homes and real estate at Orange County, California, Newport Beach, Irvine, Laguna Beach, Corona del Mar, Newport Coast, Huntington Beach, or Costa Mesa, please contact us. Thanks.