- California Senate and Assembly Vote to Extend Property Tax Exclusion for Solar
- June 30, 2014 | Authors: Jason N. Barglow; Justus J. Britt
- Law Firm: Foley & Lardner LLP - San Francisco Office
In furtherance of California’s commitment to renewable solar energy, the California Senate and Assembly recently passed Senate Bill 871 (SB 871) which, if signed, would extend the sunset date on the existing property tax exclusion for newly constructed solar energy systems from January 1, 2017, to January 1, 2025.
Generally, California’s Constitution limits ad valorem taxes on real property to 1% of the “full cash value” of that property. For purposes of this limitation, “full cash value” is defined as the assessor’s valuation of real property as shown on the 1975-76 tax bill under “full cash value” or, thereafter, the appraised value of that real property when purchased, newly constructed, or a change in ownership has occurred. As a result, much of the new solar construction California has seen would result in an increase to property taxes for the underlying real property.
Existing law, however, excludes from classification as “newly constructed” the construction or addition of an active solar energy system (as defined therein). If SB 871 is signed into law by Governor Brown, this exclusion, which was set to be automatically repealed on January 1, 2017, would extend through the 2023-24 fiscal year, and would be automatically repealed on January 1, 2025.