Summer is the season of home renovations, and Assessor Rolf Kleinhans wants you to know what impact remodeling or construction may have on your property tax bill. Here are the answers to some of the most frequently asked questions:
How does the Assessor know when there is construction on a property?
The Assessor periodically receives copies of building permits issued by city and county agencies. To a lesser extent, the Assessor may be notified by another governmental entity, an appraiser from the Assessor’s Office who is out in the field, a neighbor, or directly by the property owner. When the Assessor has knowledge of new construction on a property, whether it is permitted or not, the Assessor has a legal duty to appraise it for assessment purposes.
In general, what is considered assessable (taxable) new construction?
Assessable new construction may be any of the following (some examples of assessable new construction include new residences, room additions, patio covers, pools, spas, and decks):
- New structures;
- Area (square footage) added to existing structures;
- New items added to existing structures, such as bathrooms, fireplaces, or central heating/air conditioning;
- Physical alterations resulting in a change in use;
- Rehabilitation, renovation, or modernization that converts an improvement (or any portion) to the substantial equivalent of a new improvement;
- Land development (grading, engineered building pad, infrastructure).
If I add square footage to my home, will the increase in my property's assessed value be based on the new square footage of the addition, or will it cause a reappraisal of the entire property, including the land?
This is one of the most asked questions about new construction. The Assessor will typically only add value for assessable new construction.
Will the remodel of my kitchen or bathroom trigger reassessment?
Assuming a minor remodel or replacing what already exists, this would typically be excluded from reassessment. Remodeling is primarily cosmetic. And while it usually improves a building’s appearance, it does not extend to a building's usable life (effective age). However, if you replace a half-bath with a full bath, or a major rehabilitation of a property (or any portion), the difference in value between could be added to the assessment of your property.
Will my assessment increase when I replace flooring, windows, or a roof?
No. This type of work is considered routine maintenance and will not cause your assessment to change.
When is new construction considered complete?
The date of completion is the date the property, or portion thereof, is available for use. "Available for use" means that:
- The property, or a portion thereof, has been inspected and approved for occupancy by the appropriate governmental official, or,
- In the absence of such approval, when the prime contractor has fulfilled all contractual obligations.
If both conditions are not met, then the newly constructed property is considered available for use when outward appearances clearly indicate that it is immediately useable for its intended use. New construction is not available for use if it cannot be functionally used or occupied.
If construction is in progress on the January 1 lien date, its value as of the lien date will appear on your regular tax bill for the ensuing fiscal year.
How does the added value for new construction affect my taxes?
New construction will trigger a supplemental tax bill based on the assessed value of the new improvements. In the following year, the additional assessment for new construction is combined with the existing assessment and becomes part of the annual tax bill due in December and April.
How does the Assessor arrive at the added value for new construction?
The Assessor is obligated to enroll fair market value of assessable new construction. For most minor additions or minor remodels, the most utilized method by our appraisers in determining the market value of new construction is the cost approach. Appraisers typically utilize standardized cost tables based on annual surveys of construction professionals. These costs vary by the size of the addition and the quality of the new construction. Whereas for larger projects such as constructing a new residence, fair market value is determined by utilizing comparable market sales to determine the value to add for the project.
Additional information can be found on our website at https://www.nevadacountyca.gov/Assessor. If you have any additional questions, you may contact our office at (530) 265-1232 or by email at assessor@nevadacountyca.gov.
