What Home Improvements Increase Property Taxes in California?

When investing in home improvements, it’s important to understand how they might affect your property taxes. In California, property tax assessments are generally based on your purchase price under Proposition 13, but certain improvements can trigger reassessment or increase your tax basis.

How Property Taxes Work in California

California’s Proposition 13 limits property tax increases to 2% annually, based on the assessed value at purchase or last reassessment. However, when you add significant new construction or improvements, the county assessor may reassess the value of your property, which could lead to higher taxes.

Which Improvements Trigger Reassessment?

Typical improvements that may increase your property taxes include:

• Adding new living space, such as an ADU or room addition

• Major remodels that expand the square footage or change the property’s use

• Installing pools, garages, or extensive landscaping structures

• Upgrading HVAC or solar energy systems can sometimes trigger reassessment depending on scope

Cosmetic improvements like painting, flooring replacement, or minor kitchen and bathroom upgrades usually don’t cause reassessment.

How Much Can Taxes Increase?

The increase depends on the value added by your improvement, as assessed by the county. For instance, if an ADU adds $100,000 in assessed value, your annual property tax (roughly 1.1% of assessed value in most counties) could increase by about $1,100.

Strategies to Manage Tax Impacts

• Work with your contractor and tax advisor to understand potential reassessment triggers.

• Keep documentation of your improvement costs and permits.

• Check with your county assessor before starting major projects.

At KIND Construction, we advise clients on the potential tax impacts of various improvements. Our transparent project estimates help you plan financially for both construction and future property tax obligations.

Make it stand out

Whatever it is, the way you tell your story online can make all the difference.