Cost and money

How an ADU affects your property taxes

Checked against state laws and official agency sources · Last reviewed October 9, 2026

Only the new part is reassessed

California's property tax system sets a "base year value" for property when it is bought, newly built or changes ownership, under Article XIII A of the state Constitution (Proposition 13). Adding an ADU is new construction.

State law tells the assessor to "determine the new base year value for the portion of any taxable real property which has been newly constructed." It also says "The base year value of the remainder of the property assessed, which did not undergo new construction, shall not be changed."

In practice, the assessor values the ADU and adds that amount to what you're already assessed. The San Mateo County Assessor gives an example: a property assessed at $346,500 adds an ADU with a market value of $100,000 on completion, and the new assessed value is $446,500. [1][2][4][5][6]

What counts as new construction

Under Revenue and Taxation Code section 70, new construction includes "any addition to real property" and any alteration that is a major rehabilitation or "converts the property to a different use."

The Board of Equalization (BOE) lists examples that cover most ADU projects:

• increasing the square footage of a residence
• conversion of a garage, unfinished basement or attic into a living area
• conversion of a single-family residence to a residence of two or more units
• additions to existing improvements

Normal maintenance and repairs are typically not new construction. Assessors find out about new construction from sources including building permits, aerial and satellite images, and field inspections. [1][3]

How the assessor values an ADU

The new construction is valued at its fair market value as of the date it is completed. BOE says that "Upon completion of the new construction, the assessor determines its fair market value and a base year value is established."

The San Mateo County Assessor says its appraisers "may look at cost, income, and sales comparison methods" to find the value an ADU or junior ADU adds.

For a conversion that adds no square footage, San Mateo assesses the market value the conversion adds. Its example: if 2,500-square-foot houses sell for $500,000 and 2,000-square-foot houses with a 500-square-foot ADU sell for $625,000, it would add $125,000. Methods can vary by county, so ask your county assessor how it values ADUs. [3][4]

When the higher tax shows up

During construction: If the ADU is only partly built on the January 1 lien date, the assessor estimates the value of the work done so far. That amount goes on that year's assessment and is updated each January 1 until the ADU is complete.

On completion: The whole newly built portion is reappraised at full value, and that becomes its base year value.

Supplemental bills: Completing new construction is a "supplemental event." The assessor sends a "Notice of Supplemental Assessment" showing the added value, and the county tax collector sends one or two supplemental tax bills on top of your regular annual bill.

• If the ADU is finished between June 1 and December 31, you get one supplemental bill, covering the rest of the fiscal year (July 1 to June 30).
• If it is finished between January 1 and May 31, you get two. The second one covers the full 12 months of the next fiscal year.

[2][3][4][6][7][8]

Junior ADUs and garage conversions

A junior ADU or a garage conversion can still be new construction, even with no new square footage. BOE lists "conversion of a garage, unfinished basement, or attic into a living area" as new construction. The San Mateo County Assessor says new construction "including ADU, JADU and patios, pools etc." is assessed at market value when completed, while existing land and structures not involved "will not be reassessed."

How much a conversion adds depends on how much value it creates, which the assessor determines. [3][4]

The "under 500 square feet" rule is about school fees

Since January 1, 2026, state ADU law says an ADU or junior ADU under 500 square feet of interior livable space doesn't "increase assessable space by 500 square feet." That wording comes from the rules for school impact fees (Education Code section 17620). HCD notes it matters for "the calculation and imposition of school fees."

This provision does not exempt a small ADU from property tax. The property tax rules above apply to an ADU of any size.

ADUs of 750 square feet or less, and junior ADUs of 500 square feet or less, are also exempt from local impact fees. That is a fee rule, not a property tax rule. See California ADU rules. [1][3][9][10]

Who to ask

Property taxes are assessed by your county assessor, not your city. BOE keeps a list of county assessors with phone numbers.

For the rules on building the ADU itself, see California ADU rules, junior ADUs and SB 9 lot splits. [3][11]

Questions people ask