Many taxpayers in the construction industry are unaware that under Section 75.12 of the Revenue and Taxation Code they can be legally exempted from payment of supplemental tax bills resulting from the completion of new construction, simply by requesting a "Builder's Exclusion."
Effective January 1, 2006, developers of single-family subdivisions of five lots or more are granted an automatic builder’s exclusion upon recording the subdivision map. To be granted the Builder’s Exclusion on fewer than five single-family lots or on other types of property, you must submit a letter requesting the exclusion prior to or within 30 days of the start of new construction on land development and/or improvements. The parcels for which you are requesting an exclusion must be intended for resale, and for no other purpose than that incidental to resale, such as a model home. In short, this means that builders should submit a request for an exclusion as soon as they buy raw land intended for development.
Recommendations: Apply for the exclusion as soon as the land is purchased. Apply for the whole tract. If builder's exclusion is granted on the parent parcel and the parcel splits there is no need to reapply. Builders should be aware that after the exclusion is granted they are still responsible for payment of supplemental tax bills based upon the purchase of land for development, and for payment of annual secured tax bills based on the value of land and new construction complete or incomplete on January 1 of each year. Builders owning parcels protected by a builder's Exclusion are also cautioned that should they begin using these parcels for a purpose other than resale, such as rentals, they are required to notify the Assessor's Office of this fact within 45 days after such non-resale use begins.
Requests for Builder's Exclusions should be addressed to: Gus S. Kramer, Assessor ASR Division 2530 Arnold Drive, Suite 400 Martinez, CA 94553 For further information call (925)313-7400.