Homeowners rebuilding after wildfires or other disasters remains protected by Proposition 13.
As Californians grapple with the aftermath of the severe wildfires in Southern California, there is some good news for homeowners whose property was damaged or destroyed: They can rebuild their homes without any change to the taxable value.
All property in California is protected by Proposition 13, regardless of when it was purchased. The taxable value, or base-year assessment, is set at the time of purchase and thereafter it can increase by no more than 2% per year, regardless of increases in market value. As HJTA Members know well, this protects property owners from being taxed out of their property by rising real estate values.
TAX RELIEF
When a property is damaged or destroyed, property owners can request a “misfortune or calamity” reassessment by filing a form with the County Assessor within 12 months of the date of loss. The county will reduce the assessed value, and the property taxes owed, until the home is rebuilt. (In the case of a mass disaster like the Los Angeles County wildfires, the Assessor’s office is adjusting assessments automatically.)
REBUILDING
After a home is rebuilt, property owners get their previous “Prop. 13” tax assessment back again. The property is not reassessed as if the home is new construction. Property owners who rebuild a substantially equivalent home will pay the same tax bill they would have paid if the disaster had not occurred. If the home is rebuilt with additional square footage beyond a certain limit, that portion of the home would be assessed at market value and added to the previous assessment, but the entire home would not be reassessed.
Homes that were not destroyed but have experienced a decline in value because of the surrounding conditions are eligible for a decline-in-value reassessment that will reduce the property tax bill, if the assessed value is higher than the current market value. When the value of the property rises in the future, the assessed value will be adjusted up again, but not above what it would have been under Proposition 13 if the decline in value had not occurred.
MOVING TO A NEW HOME
Homeowners who have lost their homes in the fires and wish to move to a new area may take their Prop. 13–protected assessment with them to a new home. Disaster victims may transfer their base-year assessed value anywhere in the state.
Forms and more information are available on the website of the County Assessor in each of California’s 58 counties. For L.A. County residents, that website is assessor.lacounty.gov. It is not necessary for property owners to pay any fees to any party to file these forms for them. It’s completely free, and the staff at the Assessor’s office is ready to help.