The recent wildfires and windstorm conditions in Southern California, including the Palisades, Eaton, and Sunset fires, have left a trail of destruction, burning tens of thousands of acres and devastating homes, businesses, and entire communities. Reports indicate that more than 12,000 structures have been damaged or destroyed which marks this disaster as one of the most severe in California’s history.
In response to the extensive damage, Governor Gavin Newsom declared a state of emergency on January 7, 2025, for Los Angeles and Ventura Counties due to the Palisades Fire and windstorm conditions. This declaration enables property owners to access various property tax relief measures to mitigate financial burdens stemming from property damage.
Available Property Tax Relief Options
Affected property owners may qualify for several tax relief measures, including reassessment of damaged property, property tax payment deferral, and base year value transfer for replacement properties. Additionally, Executive Order N-10-25 provides temporary relief from penalties, costs, and interest for failure to pay property taxes or file a personal property tax statement.
Misfortune or Calamity Reassessment & Property Tax Deferral
Property owners whose properties have suffered damage due to a declared disaster may be eligible for reassessment relief, which reduces the taxable value of the property while it remains in a damaged state. This relief applies to taxable properties, including real property, business equipment and fixtures, aircraft, boats, and locally taxed manufactured homes but excludes state-licensed manufactured homes and household furnishings. Damage must be at least $10,000 in fair market value to qualify.
If the property is in a region declared a disaster area by the governor, damage may include a reduction in property value caused by restricted access to the property due to the disaster. Additionally, possessory interests in state or federally owned land may qualify for reassessment if the disaster suspends or restricts the permit or other right to access the property.
Claim Form Filing Requirement
A claim form must be filed with the county assessor within 12 months of the disaster. In Los Angeles County, the form ADS-820 (Reassessment of Property Damaged or Destroyed by Misfortune or Calamity) is available on the county assessor’s website. Each county has its own form, which can be downloaded from the respective county assessor’s website.
Reassessment Process
Once a reassessment claim is approved, the county assessor will reassess the property downward to reflect its damaged condition and notify the applicant in writing of the proposed reassessment. The reassessment remains in effect until the property is fully repaired or rebuilt. If the property is partially repaired or rebuilt by January 1 of any year, the taxable value will be adjusted accordingly. When the property is rebuilt in a substantially similar manner, the original assessed value will be restored.
Property Tax Payment Deferral
Property owners with substantial damage in a governor-declared disaster area who have filed for reassessment may also qualify for deferral of their next property tax installment. The deferred payment will be due once the county assessor reassesses the property and issues a corrected tax bill. To qualify, homeowners must demonstrate damages of at least $10,000 or 10% of the property’s fair market value, while all other property types must show at least 20% damage relative to pre-disaster fair market value. Tax deferral is unavailable for properties where taxes are paid through an impound account.
The deferral claim must be filed before the next property tax delinquency date. For property damage occurring in January 2025, the deadline is April 10, 2025. Los Angeles County uses form ADS-820.3 (Property Tax Installment Deferral Application), available on the county assessor’s website.
Executive Order N-10-25: Penalty and Interest Suspension
On January 16, 2025, Governor Newsom issued Executive Order N-10-25, temporarily suspending penalties, costs, and interest for failure to pay property taxes or file a personal property tax statement. This suspension is effective immediately and lasts until April 10, 2026.
The suspension applies to properties located in the following ZIP codes: 90019, 90041, 90049, 90066, 90265, 90272, 90290, 90402, 91001, 91040, 91104, 91106, 91107, 93535, and 93536. However, it does not apply to taxes that were delinquent before January 6, 2025, or properties where taxes are paid through an impound account.
Additionally, property owners in these ZIP codes are exempt from penalties for failing to file a personal property tax statement, provided the required statement is submitted by April 1, 2026.
Base Year Value Transfer to Replacement Property
Property owners whose properties were damaged or destroyed in a governor-declared disaster may qualify for a base year value transfer to a replacement property. This transfer prevents the replacement property from being reassessed at its fair market value, preserving the original, lower tax base.
Same County Base Year Value Transfers
Under Section 69 of the Revenue and Taxation Code, property owners may transfer the base year value of a damaged property to a comparable replacement property within the same county. To qualify, the damaged property must have lost more than 50% of its fair market value, and the replacement property must be acquired or constructed within five years of the disaster. If the replacement property’s market value does not exceed 120% of the original property’s value, the existing base year value may be transferred. If the new property exceeds this threshold, the excess is added to the base year value.
Intercounty Base Year Value Transfers
Under Proposition 19, the previous limitations on intercounty transfers have been removed. Eligible homeowners can now transfer their property’s base year value to a replacement residence in any of California’s 58 counties, without the need for county-specific ordinances. This change provides homeowners with the freedom to move to any county within the state while maintaining their existing property tax base.
Key Provisions:
- Transfer Limitations: Eligible homeowners can transfer their taxable value up to three times in their lifetime. However, there is no limit on transfers for victims of wildfires or natural disasters.
- Replacement Property Value: The replacement residence can be of equal or lesser value to the original property to maintain the same taxable value. If the replacement property is of greater value, the difference will be added to the original taxable value, resulting in a higher assessment.
- Time Frame: The replacement property must be purchased or newly constructed within two years of the sale of the original property.
Additional Considerations
Property owners must be aware of strict filing deadlines for property tax relief. Reassessment claims must be filed within 12 months, deferral applications must be submitted before the next delinquency date, and base year value transfers must be completed within two to five years, depending on the type of transfer.
Governor Newsom’s executive order provides financial relief for property owners in designated ZIP codes, but property owners should consult a tax professional or the appropriate county assessor’s office to ensure compliance with all requirements. Taking advantage of these programs can significantly reduce financial burdens and aid in the recovery process for homeowners and businesses affected by these natural disasters. Consulting with a property damage attorney can help you understand your legal options and maximize the relief available to you. An attorney can guide you through the application process, appeal reassessments if necessary, and ensure compliance with all filing deadlines. To learn more about how a property damage attorney can assist you, schedule a free consultation to discuss your options.
