Good news: Prop 13 protects you
California's Proposition 13 limits property tax reassessment to only the new value added — not your entire property. Building an ADU does not reassess your existing home.
How the math works
Adding an ADU triggers a "supplemental assessment" of just the ADU's added value. Your existing home keeps its Prop 13 protected base.
Example:
- Existing home assessed value: $400,000 (Prop 13 protected)
- New ADU added value: $250,000
- New total assessed value: $650,000
- Annual property tax increase: ~$2,800 in most California counties (1.1% rate)
What "added value" means
The county assessor estimates the market value of the ADU at completion — not what you spent to build it. Often these align, but luxury builds may be assessed at less than cost.
Timeline
- ADU completes
- Assessor notified via building permit final
- Supplemental tax bill arrives 6–18 months after completion
- Annual tax adjusted starting next fiscal year
How to reduce your assessment
- Provide actual construction costs to assessor (sometimes lower than market estimate)
- Note any soft costs that did not add market value
- Appeal if assessment seems high (3% of California ADU owners successfully appeal)
When taxes can go up MORE than expected
- AB 1033 condo conversion (sells separately) — buyer triggers full reassessment
- Selling the main property after ADU — full reassessment
Frequently Asked Questions
Does building an ADU trigger reassessment of my whole property?
No — California Prop 13 limits reassessment to just the new ADU value.
How much will my property taxes increase after an ADU?
Typically $2,000–$4,500/year for a $200k–$400k ADU at California's standard 1.1% rate.
Can I appeal my ADU assessment?
Yes — file with your county assessor within 60 days of receiving the supplemental bill.
Are there any tax credits for ADU construction?
California has had limited ADU-specific tax credits in recent years; check current programs at calhfa.ca.gov.
How does ADU income affect my taxes?
ADU rental income is taxable as rental income on Schedule E (federal) and California state return. Depreciation and expenses are deductible.
Related Vision ADU Resources
- How to Build an ADU, Day 2: Structural Engineering
- How to Build an ADU, Day 3: Title 24 Energy Compliance
- How to Build an ADU, Day 4: City Submittal & Permits
- How to Build an ADU, Day 5: Start of Construction
- ADU Contractor in Pasadena
- ADU Contractor in Santa Monica
- Los Angeles County ADU Builder
- Orange County ADU Builder
- Inland Empire ADU Builder
- 2026 ADU Cost Calculator
- All Vision ADU Service Areas