Everyone knows that somewhere, some way, the government always gets their “cut”. From income taxes to sales tax it seems that nothing is untouchable anymore. So, it stands to reason that anyone considering Home Improvements will wonder what those improvements will do to their property value and, eventually, their property taxes.
Seeing as how this type of information is often hard to find, and even more often hard to understand, we have decided to do the dirty work for you. We’ve researched what types of Home Improvements are considered “taxable” and which are not. The information below comes directly from the Orange County, CA Office of the Assessor and is a handy homeowner’s guide to how remodeling may or may not affect your property value:
New Construction is Taxable – Typical Maintenance & Repairs Are Not!
- New construction is taxable, but does not trigger a reassessment of the entire property.
- Only the market value of new constructions is added to the existing Proposition 13 value.
- New construction is subject to a one-time supplemental assessment.
- Maintenance or replacement of existing items is not taxable.
Examples of Taxable New Construction:
- New buildings or significant enhancements that change the size, condition or usability of a property.
- New additions to real property including room additions, swimming pools, spas, patio covers, central heating/air conditioning, fireplaces, decks, fences or flatwork.
Examples of NON-Taxable Maintenance or Replacement:
- Maintenance or replacement of existing improvements including roofs, garage doors, kitchen cabinets, counters, bathroom fixtures, heating/air conditioning units, flatwork or fences
- Certain types of new construction are specifically excluded from assessment. These may include alterations to make a building more accessible to, or more usable by, a disabled person; active solar energy systems; seismic rehabilitation or retrofitting or a fire sprinkler or detection system.
So, if you’ve been putting off that Kitchen, Bathroom, or other interior remodel for fear that it will affect your property value, remove Proposition 13 protection, and raise your property taxes, rest easy. Simple things like new cabinets, counters, and more will not trigger a new assessment or affect your taxes.
For more information regarding how to reduce property taxes, what is and isn’t taxable and how to request a new appraisal – visit the Assessor’s website at www.ocgov.com/assessor.