By Richard Page | CPA/RETIRED IRS AGENT
As many of you will recall, Proposition 13 generally “froze” the reassessment of residential income properties. Simply stated, the County Assessor did not, from year to year, generally reassess the Properties. Proposition 13 does allow for a modest increase.
When a property is sold, the County Assessor may, at that time, reassess the Value based upon the new sales price.
Additionally, Proposition 13 does permit the County Assessor to re-evaluate the Value if a Homeowner or Apartment Owner does substantial “new construction” to the property. However, Proposition 13 prohibits the Tax Assessor from “ re-evaluating new construction for property tax purposes when the purpose of the ‘new construction’ is to seismically retrofit an Existing building”. In 2010, the California Constitution was amended to memorialize this arrangement.
Simply stated, if you are required to undertake Earthquake retrofit, and you spend substantial sums of money for that purpose, the California Constitution will protect you, provided:
A specialized Form is being enacted at the present time. Nonetheless you may contact the Assessor’s Office, Robert Lippson, (213) 974-7736, or email@example.com for this information.
Of course, all of these governmental “exemptions are always time-sensitive. Owners must submit the “form” prior to or within 30 days of the completion of the seismic-retrofit work. They must submit documents supporting the claim no later than six months after the completion of the seismic-retrofit project. The Property Owner, his contractor, architect or civil structural engineer may complete the claim forms and providing the supporting documents.
Once the taxpayer/ Apartment Owner has submitted the claim form and the supporting documents, the City Building Department may be required to identify the portion of the project that was the seismic-retrofitting component. That will determine whether the property is “exempt” from the new assessment, or has undergone new construction … unrelated to the seismic-retrofit that may trigger a new assessment.
As always, it’s important and essential that you attend the ACTION monthly Membership meetings. Tax consultations and matters involving property assessments are highly complex and incredibly difficult to address.
It is essential and important that you consult your Certified Public Accountant, Public Accountant, and others in preparing these forms so that you can benefit from the exemption.
Richard Page has a tax controversy practice in Santa Monica. His phone number is (310) 450-8875, and his email is firstname.lastname@example.org