Regular maintenance and repairs refer to routine actions to keep real property or fixtures in proper working condition without altering their purpose or efficiency. This type of maintenance is regular and standard, including tasks like reroofing, painting, or replacing rain gutters, and is not considered assessable new construction. Replacing old items with similar ones also falls under routine maintenance, as long as it does not make the property substantially equivalent to new.
New construction is assessable when it converts a property or improvement into a state that is substantially equivalent to new. For example, if a house is completely stripped and rebuilt from the foundation up, making it comparable to a new house, the added value from this conversion is considered assessable new construction. The value of the removed property is subtracted from the property's original base value. Major rehabilitation, renovation, or modernization that transforms a property into the equivalent of new is also deemed assessable under California Revenue and Taxation Code § 70(b).
Determining whether construction qualifies as substantially equivalent to new is a factual assessment made on a case-by-case basis. For instance, landlord or tenant improvements—whether structural or fixture-related—may involve significant renovations to give a space a new look. If these improvements replace existing ones or install new fixtures, and the result is a conversion to a state comparable to new, such work is considered assessable new construction.