ADU property tax in California: what gets reassessed

Does an ADU increase property taxes?

Yes, but only by the value of what you build. Under Proposition 13, a property is reassessed to market value only when it changes hands or when new construction is completed. For an addition, the State Board of Equalization says, only the new construction is assessed at market value as of the date it's finished, and that value is added to your existing assessment. “The entire property, including the land, is not reassessed.”

The statute is just as clear. Revenue and Taxation Code section 71 gives a new base year value only to the part of the property that was newly built; the rest of the property's base year value “shall not be changed.” The San Diego County Assessor uses the same example homeowners ask about: build a 500 square foot room on a 2,000 square foot house, and only the new room is reassessed.

So your bill ends up with two layers. Your existing home and land keep their old base year value, rising no more than 2% a year. The ADU gets its own base year value at today's market, which then also rises no more than 2% a year.

How ADU reassessment works for California property tax

You don't have to report the ADU yourself. State law requires every city and county to send the assessor a copy of each building permit “as soon as possible” after it's issued. From there:

1. Permit sorting. The county assessor splits permits into repair and maintenance, which normally don't trigger reassessment, and new construction, which does. An ADU is new construction.
2. A questionnaire. The assessor mails you a form asking for the cost of construction and the size of what you built. Keep your contract, change orders and invoices handy.
3. January 1, if you're still building. Construction in progress on the January 1 lien date is appraised at its value that day and goes on the next regular tax bill. The county values unfinished work mainly from construction costs, including architectural, financing and permit costs, and mails you a notice of the new value. That doesn't produce a supplemental bill.
4. Completion. The ADU is valued again when it's finished, and that becomes its base year value. Under the state's completion rule, that's the date the unit is available for use, and the Board's rules point to the date of the final inspection.
5. Supplemental bill. The difference between the new value and what's already on the roll is billed for the rest of the fiscal year. See the supplemental tax bill below.

What value will they use? The county says the “value added” is usually the full construction cost. It names two exceptions: an over-improvement for the area, where cost exceeds the market value added, and an owner who built for much less than the resulting increase in value. For typical costs, see what an ADU costs in San Diego.

What to keep for the assessor's questionnaire

• The signed contract and every change order, so the cost you report matches what you paid.
• Architectural, financing and permit costs, which the county counts when it values unfinished construction.
• The final square footage from your approved plans.
• The date of the final inspection, which the state's rules use to mark completion.

ADU reassessment for conversions, additions and rebuilds

California defines new construction as any addition to land or improvements since the last lien date, plus any alteration that's a major rehabilitation or converts the property to a different use. That covers every kind of ADU, but what gets valued differs.

A conversion often adds less to your tax than a new unit, because the garage walls, slab and roof were already on the roll. The Board's rule says it's the value of the alteration that's added, “not necessarily the cost.” Compare the build options in the garage conversion ADU guide and the junior ADU guide.

How much property tax will an ADU add?

Multiply the ADU's assessed value by your tax rate. The rate is 1% plus local voter-approved bonds, and it depends on your tax rate area. In San Diego County's 2025-26 Tax Rate Book, the countywide average was 1.16729%, and 1.25114% was the most common rate across City of San Diego tax rate areas (including area 08001).

These are ad valorem taxes only. Your bill may also carry special assessments and direct charges that aren't based on assessed value; each lists a phone number to call if you're unsure whether an ADU changes it. Find your rate on your current bill or in the county's Tax Rate Book. After the first year, the ADU's assessed value can rise no more than 2% a year while you own it.

The supplemental tax bill for an ADU

Because your regular bill is based on the January 1 roll, the county sends a separate bill for the months between completion and the end of the fiscal year on June 30. The assessor bills the difference between the prior assessed value and the new one, prorated by the months left in the fiscal year.

• Finished June through December: one supplemental assessment. After that, the ADU is on your regular bill.
• Finished January through May: two supplemental assessments, one for the rest of the current year and one for the full next year, because the next roll was already set on January 1.
• Proration starts on the first day of the month after completion.

Example. A $375,000 ADU in the City of San Diego passes final inspection in March. The first supplemental bill is about $375,000 × 1.25114% × 0.25 = $1,173. A second bill of about $4,692 covers the next fiscal year. If the January 1 appraisal already caught part of the unit under construction, the supplemental bills cover only the value above what was enrolled.

Finish the same ADU in September instead and there's one supplemental bill of about $375,000 × 1.25114% × 0.75 = $3,519. The unit is then on the January 1 roll, so it shows up on your next regular bill in full.

The assessor's tax bill page links a supplemental tax estimator, so you can set the money aside before the bill arrives.

Exclusions and appeals

California doesn't have a property tax exclusion just for ADUs. A 2024 bill that would have excluded new ADUs from reassessment, SB 1164, died in committee. A few general exclusions can still lower what's assessed:

• Solar panels. The active solar exclusion keeps a qualifying system's value off the roll. It's scheduled to stop applying to new systems on January 1, 2027; a system that qualifies before then stays excluded until the property changes ownership. If your ADU's solar is finished near year-end, ask the assessor how the timing applies.
• Fire sprinklers in an existing building. Sprinklers, fire detection and fire-related exits added to an existing building aren't new construction. That can help a garage conversion; it doesn't apply to a new detached ADU.
• Other remodels. The county lists work for earthquake safety, fire protection and soundproofing, and work to accommodate a permanently disabled owner, as not raising your taxes.

If you think the value is wrong, call the assessor's office and talk to an appraiser first. To appeal formally, the county says you must file with the Assessment Appeals Board within 60 days of the supplemental bill's mailing; appeals of the regular roll value are filed July 2 to November 30. Your construction records are your best evidence.

When the property changes hands

Your two-layer assessment lasts only while you own the property. A sale is a change in ownership, so the buyer's whole property, house, land and ADU, is reassessed to market value. The San Diego County Assessor notes most transfers are reassessed, with exceptions such as transfers between spouses and some parent-child transfers. Refinancing doesn't trigger reassessment, so a cash-out refinance to fund the ADU only affects the tax through the ADU itself.

How buyers and appraisers value the unit is a separate question, covered in does an ADU increase property value and what an ADU means in real estate. When you're ready to price a build, check a contractor's license or compare verified ADU builders in San Diego.

Common questions