At a Glance
- Property owners impacted by the recent wildfires may qualify for tax relief, including temporary reductions in their property’s assessment, property tax payment deferrals, and the ability to transfer lower tax bases to rebuilt or relocated properties.
- In light of the upcoming April 10, 2025, deadline to pay the second installment of the 2024-25 annual property taxes, property owners impacted by the wildfires and eligible for property tax payment deferral should consider filing a Misfortune or Calamity Relief Claim as soon as possible.
Los Angeles and Ventura counties continue to reel from the devastating firestorm that led Governor Newsom to declare a state of emergency on January 7, 2025. The resulting fires, including the Palisades, Eaton, Hurst, Lidia, Sunset, Woodley and Hughes fires, have collectively burned over 47,900 acres and more than 16,250 structures.
Property owners may be eligible for property tax relief such as temporary reductions in their assessed values, property tax payment deferral, and the ability to transfer their lower tax bases to rebuilt properties or properties in new locations.
Misfortune or Calamity Property Tax Relief
Reduced Assessment
Property damaged or destroyed due to a misfortune or calamity — including the recent fires — may be eligible for relief under Revenue and Taxation Code section 170, commonly referred to as a “Misfortune or Calamity Claim.” The type of property eligible for a Misfortune or Calamity Claim includes real property, business equipment and fixtures, agricultural property, aircraft, boats, and manufactured homes. Personal effects and household furnishings are not eligible for relief because they are not assessable (i.e., taxable) property. To qualify for a Misfortune or Calamity Claim, the damage to the taxable property must be at least $10,000 of its market value immediately before the disaster.
Typically, owners must apply for relief within 12 months of the date of loss using their specific county’s reassessment claim form:
- In Los Angeles County, that form is called the “Application for Reassessment: Property Damaged or Destroyed by Misfortune or Calamity.” Information about the LA County Assessor’s property tax disaster relief, including links to the form, can be found here.
- In Ventura County, the form is called the “Application for Reassessment Property Damaged by Misfortune or Calamity.” Information about the Ventura County Assessor’s property tax disaster relief, including a link to this form, can be found here.
Once the claim is timely filed, the county assessor reassesses the property downward to reflect its damaged condition as of the date of the loss. The assessor will send a notice with the proposed reassessed taxable value. The property taxes due will be adjusted on a prorated basis (from the date of the loss) and, if applicable, owners will a receive a refund for property taxes already paid that exceed the amount that would be due based on the value of the damaged property. From the month that the loss occurred, the property’s assessment will remain reduced until the property is rebuilt or repaired. However, if property is partially rebuilt as of any January 1 lien date, its taxable value will factor in the percentage of repairs completed on that lien date.
Importantly, property owners who disagree with the assessor’s proposed reassessment may appeal that value to their county’s Assessment Appeals Board within six months of the date of mailing of the notice.
Tax Payment Deferral
Impacted property owners who file Misfortune or Calamity Claims may be able to defer their next property tax installment following the disaster.
To qualify for payment deferral, damage on residences and qualifying manufactured homes eligible for the homeowners’ or disabled veterans’ exemption must be at least $10,000 or 10% of its pre-damaged fair market value, whichever is lower. Damage for all other property types must be at least 20% of its pre-damaged fair market value. (See, e.g., Revenue and Taxation Code Sections 194, 194.1 and 194.9). The deferment postpones the next regular property tax installment until the assessor reassesses the property due to the damage and the county issues a corrected property tax bill. Tax payment deferral is not available for property taxes paid through an impound account.
Because the second installment for the 2024-25 annual property taxes is due April 10, 2025, property owners may want to consider filing a Misfortune or Calamity Claim form and a tax deferral claim form as soon as possible.
Executive Order N-10-25: Tax Payment Deferral for Los Angeles Firestorm Communities
On January 16, 2025, Governor Newsom issued Executive Order N-10-25 to suspend penalties, costs and any interest accrued on late property tax payments until April 10, 2026, for properties affected by the firestorm.
The executive order provides relief to properties located in the areas encompassed by the following U.S. postal ZIP codes: 90019, 90041, 90049, 90066, 90265, 90272, 90290, 90402, 91001, 91040, 91104, 91106, 91107, 93535 and 93536. Any property taxes that were delinquent as of January 6, 2025, or any taxes paid through an impound account, are not eligible for deferment under this executive order.
Additionally, for properties located within the U.S. postal ZIP codes listed above, the executive order suspends certain state tax laws relating to the filing of various property tax statements. Essentially, this provision prohibits the imposition of a late-filing penalty upon a taxpayer if the taxpayer files a personal property tax statement as required by Revenue and Taxation Code section 441(a) on or before April 1, 2026.
Property Tax Relief in the Longer Term
Eligible property owners should prioritize submitting a Misfortune or Calamity Claim in the short-term aftermath of these catastrophic fires. However, additional relief is available in the longer-term.
One important principle about California property taxes is that, typically, the longer a property owner has resided in or owned their property, the lower their property tax base is. This is because under California’s Proposition 13, a “base year value” for a property is established as of the date of change of ownership or date of completion of new construction. Each year, the base year is adjusted by an annual inflation factor limited to 2%, commonly referred to as a “trended base year value” or “factored base year value.”
As such, longer-term property tax relief for disasters preserves a property owner’s “trended base year value.” Please note that the requirements for obtaining longer-term property tax relief are different based on whether a property owner chooses to rebuild on the same site, chooses to move to another location within their same county, or chooses to move to another location in another county.
Rebuilding Damaged or Destroyed Property
For property owners who choose to rebuild on the same site as their damaged or destroyed property, they can retain their previous factored base year value if they meet specific qualifications depending on the type of disaster (e.g., whether it is a governor-proclaimed disaster or not). As noted above, the county assessor will reinstate a portion of the factored base year value of construction in progress as of each January 1 lien date until the construction has been completed.
Rebuilding, Restoration or Repair Following Any Calamity — The General “New Construction Exclusion” Rule
Once a property owner has received property tax relief under a Misfortune or Calamity Claim pursuant to Revenue and Taxation Code section 170, if a property owner timely rebuilds their damaged or destroyed real property on the same site and that property is substantially equivalent to the property prior to the damage or destruction, its factored base year value will be reinstated. This means that property owners will not have to pay an increase of property taxes based on the market value of their rebuilt property.
However, any rebuilt property that is not substantially equivalent to the original property — for example, a property that has greater square footage — will have the portion of the property exceeding the original structure assessed at market value and added to the existing factored base year value.
This relief is available to all property types.
The New Construction Exclusion Following a Governor-Proclaimed Disaster
Pursuant to Revenue and Taxation Code section 70.5, property rebuilt on the same site after being substantially damaged or destroyed by a governor-proclaimed disaster may have its factored base year value reinstated if the reconstructed property’s market value is comparable to the damaged property. “Substantially damaged or destroyed” means the improvements must have sustained physical damage amounting to more than 50% of the improvement’s full cash value immediately before the disaster.
In addition to the difference in eligibility requirements, the difference in relief between this provision and the more general relief under Revenue and Taxation Code section 170 (discussed above) is that the reconstructed property can exceed up to 120% of the market value of the original property prior its damage or destruction. If the rebuilt property exceeds 120%, the excess market value is added to the trended base year value.
The replacement property must be built within five years of the disaster. Only the owner of the damaged or destroyed property is eligible for relief — if the property is sold before the completion of new construction, the new owner is not eligible for relief upon completion of the construction.
This relief is only available for real property.
Base Year Value Transfers to Replacement Properties
Property owners can also choose to move — either to another property within the same county or to another county — and to transfer their trended base year value to preserve their lower tax base. Filing a Base Year Value Transfer Claim prevents the replacement property from being reassessed at its fair market value due to a change in ownership under the general rules of Proposition 13.
Base Year Value Transfers have different requirements based on the type of property, the type of calamity and/or disaster, and where the replacement property is located. Because there are many nuances to the different Base Year Value Transfer Claims, we recommend seeking professional advice to discuss your specific circumstances. Below is a very brief overview that broadly explains the basics of Base Year Value Transfer Claims.
Base Year Value Transfers Within the Same County
Property owners whose real property or manufactured home (that is subject to local property taxation) has been damaged by a governor-proclaimed disaster may transfer their trended base year value to a replacement property in the same county pursuant to Revenue and Taxation Code section 69. They must do so within five years of the governor-proclaimed disaster.
Physical damage must amount to more than 50% of the property’s market value immediately before the disaster. Moreover, the damaged property does not need to be sold for this type of base year value transfer, though the damaged property would not receive the new construction exclusion from reassessment (discussed above). So long as the replacement property does not exceed 120% of the fair cash value of the original property, the trended base year value will be preserved.
Base Year Value Transfers of Principal Place of Residence to Different County
Property owners can transfer the trended base year value of their principal place of residence to a different county within three years of the governor-proclaimed disaster date pursuant to Revenue and Taxation Code section 69.3 as long as the other county has adopted an ordinance accepting such base year value transfers. The original property must be substantially damaged or destroyed, which means that the physical damage must amount to more than 50% of their full cash value immediately before the disaster.
The fair cash value of the replacement residence in the different county must be equal or lesser than the original property. Essentially the replacement property’s fair market value cannot exceed a specific percentage of the original property’s fair market value — 105% of the original property’s fair market value within the first year, 110% the second year, and 115% the third year.
Base Year Value Transfers of Principal Place of Residence to Any County (Same or Different)
Revenue and Taxation Code section 69.6 allows homeowners whose primary residence was substantially damaged or destroyed by wildfire or governor-proclaimed natural disaster to transfer the base year value to a replacement principal place of residence located in any California county. The original property must be sold in its damaged state and the replacement property must be purchased or newly constructed within two years of the sale of the original property.
Property owners can purchase or newly construct a replacement property of any value. Like the Base Year Value Transfer of personal residences to a different county, this transfer (for a personal residence in any county), requires the fair cash value of the replacement residence to be equal or lesser value than the original property. So, the value cannot exceed 105% of the original property’s fair market value within the first year, 110% the second year, and 115% the third year. If the value exceeds these percentages, the excess value is added to the transferred factored base year value.
Conclusion
As discussed above, property tax relief may be available.
