There is a provision in California law which allows builders and land developers to avoid some supplemental property tax bills if they own property and are building for resale. Typically, builders and developers avoid the bills by simply selling the property immediately after completing construction. Another way to avoid supplemental tax bills is to file an application for a Builder's Exclusion, or BX.
You should apply for a BX no more than 30 days after the start of construction. Usually it is beneficial to apply right after acquisition and before construction so that it can be applied to all phases of construction. The BX can be applied to street work, buildings, or both, so long as the construction is intended for resale and not for rent, lease, or use by the owner. If you are granted a BX and then rent, lease, or otherwise use the property instead of selling it, you are required to notify the assessor within 45 days. The property then loses its exclusion from supplemental property taxes. To apply for a BX in Fresno County, contact our office.
Partial Complete Construction
Proposition 13 allows for reappraisal of property upon change in ownership and new construction. The most frequent question asked is, “If I build a new home or add on to my existing home, will the whole property be reappraised?” Proposition 13 says that only the “new construction or addition” gets a new base year value which is added to the old base year of the rest of the property.
Construction projects, whether a new structure, an addition, or a major renovation, can take an extended period from start to finish. If the construction period extends over January 1st (known as the lien date), the Assessor must value the project as of that date in its unfinished state. The value is then enrolled as partial complete (PC) for the coming tax year. The method of arriving at a PC value can depend on the steps of completion of the project.
When the project is finally completed, the appraiser can then make a final determination of the quality class of the structure based on details such as floor covering, kitchen and bath amenities, etc. At this point the final value is enrolled as of the date of completion and a supplemental assessment is created.