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News & Press: Sacramento Report

New Construction Acquires Base Year Value Only When Completed per AB 652

Tuesday, October 17, 2017  
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The Governor recently signed Assembly Bill 652 (Flora) to provide that new construction acquires a base year value only when completed. The law supports the Board of Equalization's longstanding guidance that the value of construction in progress on lien dates are not base year values. AB 652 addressed the decision in Jon Virgil Ellis v. County of Calaveras (2016) 245 Cal.App.4th 64. Neither Ellis nor AB 652 made any change to the valuation procedures for construction-in-progress annual assessments. Rather, both address whether the construction value becomes a base year value. Basically, new construction in progress is assessed at its market value on the lien date and on each successive lien date until it is completed. Upon completion, the entire portion of the property that is newly constructed is reappraised at its market value and acquires its own base year value. AB 652 also adds section 82 to the Revenue and Taxation Code to detail the appeals filing period for construction in progress annual assessments and completion of new construction assessments. AB 652 clarifies that appeals relating to the January 1 lien date assessment of construction in progress must be filed during the regular filing period of the same year.

A copy of new section 82 and the amended versions of sections 50, 71, and 110.1 can be found here.

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