California Code of Regulations › Title 18 - Public Revenues › Division 1 - State Board of Equalization-Property Tax (California Department of Tax and Fee Administration - Timber Yield Tax, See Chapter 11) › Chapter 4 - Equalization by State Board › Article 4 - Change in Ownership and New Construction › Section 463 - Newly Constructed Property

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
(a)
				  When real property, or a portion thereof, is newly constructed after the 1975
				  lien date, the assessor shall ascertain the full value of such "newly
				  constructed property" as of the date of completion. This will establish a new
				  base year full value for
only
that portion of the property
				  which is newly constructed, whether it is an addition or alteration. The
				  taxable value on the total property shall be determined by adding the full
				  value of new construction to the taxable value of preexisting property reduced
				  to account for the taxable value of property removed during construction. The
				  full value of new construction is only that value resulting from the new
				  construction and does not include value increases not associated with the new
				  construction.
(b) "Newly
				  constructed" or "new construction" means and includes:
(1) Any substantial addition to land or
				  improvements, including fixtures, such as adding land fill, retaining walls,
				  curbs, gutters or sewers to land or constructing a new building or swimming
				  pool or changing an existing improvement so as to add horizontally or
				  vertically to its square footage or to incorporate an additional fixture, as
				  that term is defined in this section.
(2) Any substantial physical alteration of
				  land which constitutes a major rehabilitation of the land or results in a
				  change in the way the property is used. Examples of alterations to land to be
				  considered new construction are: site development of rural land for the purpose
				  of establishing a residential subdivision; altering rolling, dry grazing land
				  to level irrigated crop land; or preparing a vacant lot for use as a parking
				  facility.
(A) In any instance in which an
				  alteration is substantial enough to require reappraisal, only the value of the
				  alteration shall be added to the base year value of the pre-existing land or
				  improvements. Increases in land value caused by appreciation or a zoning change
				  rather than new construction shall not be enrolled, for example:
1.
Land value
							 1975..................................................
=
							 $10,000
2.
Land value
							 1978..................................................
=
							 $20,000
3.
Value of alteration
							 1978.....................................
= $5,000
4.
Value of structure added
							 1978..........................
= $75,000
1979 roll value
							 (1+3+4).......................................
= $90,000
(must
							 be adjusted to reflect appropriate indexing)
(B)
				  Alterations to land which do not constitute a major rehabilitation or which do
				  not result in a change in the way the property is used shall not result in
				  reappraisal.
(3) Any
				  physical alteration of any improvement which converts the improvement or any
				  portion thereof to the substantial equivalent of a new structure or portion
				  thereof or changes the way in which the portion of the structure that had been
				  altered is used, e.g., physical alterations to an old structure to make it the
				  substantial equivalent of a new building without any change in the way it is
				  used or alterations to a warehouse that makes it usable as a retail store or a
				  restaurant. Only the value, not necessarily the cost, of the alteration shall
				  be added to the appropriately indexed base year value of the pre-existing
				  structure.
(4) Excluded from
				  alterations that qualify as "newly constructed" is construction or
				  reconstruction performed for the purpose of normal maintenance and repair,
				  e.g., routine annual preparation of agricultural land or interior or exterior
				  painting, replacement of roof coverings or the addition of aluminum siding to
				  improvements or the replacement of worn machine parts.
(5) Any substantial physical rehabilitation,
				  renovation or modernization of any fixture which converts it to the substantial
				  equivalent of a new fixture or any substitution of a new fixture. Substantial
				  equivalency shall be ascertained by comparing the productive capacity, normally
				  expressed in units per hour, of the rehabilitated fixture to its original
				  productive capacity.