California has primarily two causes for assessment: change in ownership (also called a transfer) and new construction. A change in ownership is when a deed or deeds are recorded at the Recorder who will then send the data to the Assessors’s Office. The Assessor will review the transfer to see if its assessable. If it isn’tassessable then it all stops there, but if it is an assessable change in ownership, the information is sent to the appropriate personnel to give or review the value and modify the base value appropriately. A transfer that isn’t assessable must have fallen within the parameters of an exemption offered by the State. An example of this is a transfer into a revocable trust or an inter-spousal transfer that are explained in our Inherited Property and Exemptions Guide as part of the California Little Black Book.
If a transfer in ownership is not assessable meaning it is exempt, the ONLY way the Office of the Assessor knows this is via forms that are recorded with the deed. If no exemption applies, the transfer in ownership is assessable based no Prop 13. If you do not apply for an exemption, submit a form or offer accepted documentation for an exemption, you will be re-assessed automatically. The Office of the Assessor is a mass assessment organization and if you don’t communicate with them through forms and documentation they won’t automatically know how to process your change in ownership.
The second trigger for assessment in California is new construction where the Office of the Assessor is notified from a completely different source. The city and county building and safety departments send data issued permits to the Assessors’ Office for assessment purposes. So when you apply for construction permits with your city or county even if you don’t end up building, which happens often, the permits are automatically sent to the Assessors’ Office. The permits are forwarded to the appraisers for several reasons: for a building record update and a valuation change if one applies. Normally, it takes the Office of the Assessor some time to process these because often field work is necessary to discover what construction was done and then the valuation process. The Assessor has to collect the construction data independently. If there is a demolition the taxable value will most likely be lowered and if there is an addition the taxable base value will likely increase. For example if you demo a pool your property taxes will decrease. If you add a pool, your property taxes will increase. However, new construction varies from home to home and it will be reviewed based on the value that was added or taken away. This is detailed in the California Little Black Book with examples and various scenarios. I assessed countless homes where various types of construction were taking place and would be happy to answer any questions you may have pertaining to this!
Similar to new construction there is re-assessment of a property if the use of it has changed. For example if a complex of co-ops is converted into condominiums the Assessor will review and reassess the value of each unit since the use change affects the market value of the property. Normally in California there are two events that trigger re-assessment based on Prop 13: change in ownership or new construction.
About the Author: Valerie Faltas, Property Tax Expert has been involved in all facets of real estate for over ten years including assessments, appraisals, estates and trusts, investing and much more. She is a Certified Property Tax Appraiser, Licensed Residential Appraiser and a member of the International Association of Assessment Officers. As a real estate investor and advisor she is well versed in all aspects of real estate. To contact Valerie Faltas go to her website: www.propertytaxlittleblackbook.com.