So if you have a good idea of what it will cost to build an ADU, what about the property tax assessment?
My neighbor built an ADU in his rear yard and was a bit apprehensive about how much his property tax would increase after the construction was completed (April 2019).
He received a Supplemental Assessment notice from the County Assessor's office regarding the appraisal of his ADU. Note, the assessment is just for the ADU, you do not get reassessed on your house.
He called the Assessor's office and mentioned he had a hard time finding folks who could tell him how much more his property tax would be with his new ADU.
Here's what he learned as taken verbatim from an email he sent out to his Naglee Park neighbors:
"I learned a few things which I'll share with you if you didn't already know it. CAVEAT - I am not an expert - this is my understanding/recap of my phone conversation with the assessor's office - your mileage may vary - especially if you have different construction (mine was a standalone ADU/garage - separate building from my primary house).
- Assessment value - since they can't assess it based on the sales price, they use a California construction document called Residential Building Costs:
It's updated every year, so make sure you get the latest one when you are figuring this out.
You can read the whole thing (I didn't) - this is how they classified my ADU:
- Single-family residential
- Modern
- Post-1990
- D Construction (standard wood-frame construction)
- B Shape (page 14 tells you what shape to use - I have an L shaped building so it's B shape)
- Class D-6 (reflects materials used and amenities - roughly speaking)
- Used the lowest sq ft number (700 sq ft = $139.08)
- Santa Clara County (Page 24) has a 1.5 multiplier for cost so 139.08*1.5 = $208.62 per sq ft
You're ADU will *probably* use the same value - but check Shape. It sounds like we could also be classified as a D-6.5 (higher cost), but since we're downtown, they gave me a break and used D-6.
So - taking my ADU square footage (~300 sq ft x 206.82) gives me an additional assessed value of $62,586. Plus about $14k for the garage gives me a total supplemental assessment of $76k. At a tax rate of .75% - that comes out to $570 additional property tax/year.
Supplemental assessment notice
It took me a little while to figure out, but the supplemental assessment isn't the supplemental tax. The assessment fiscal year is July 1 - June 30. Even if your ADU is finished as late as June 29th - your supplemental assessment will be for the full value as of June 30th. But this just shows you how much your assessed value is - not your tax. So it makes sense that your property as of June 30th has an assessed value equal to the main house + addition.
-Supplemental tax
They will pro-rate your additional property tax (on top of what they told you would pay already). This is based on the ADU completion date to June 30th."
So there you have it. Now start reading the 2020 Assessor's Handbook Section 531 Residential Building Codes to figure out how much your ADU is going to cost in property taxes per year.
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