Insights
SB 684 and Property Taxes: How New Small-Lot Homes Are Assessed
Oliver Thornton · October 24, 2026
General information only. This article is educational and is not legal, tax, financial, lending or investment advice. Do your own due diligence and confirm everything with your own qualified professionals before relying on it. Read the full disclaimer.
Property taxes on an SB 684 project change as the project moves from one lot to several homes. Owners selling land, developers underwriting a project and buyers of the finished homes all run into the same few rules. Here is how they work in general terms.
The Basics: Proposition 13
In California, a property’s assessed value is generally set when it changes ownership and when new construction is completed, and then rises only modestly each year. The annual tax is a percentage of that assessed value plus local assessments. Those two triggers, a sale and new construction, drive almost everything on an SB 684 project.
How Taxes Change Through a Project
| Stage | What usually happens |
|---|---|
| Developer buys the lot | The purchase price sets a new base value for the single parcel |
| Final map records | The county creates new parcels and allocates value among them; each gets its own parcel number and bill |
| Homes are completed | The value of the new construction is added to each parcel’s assessed value |
| Each home sells | The buyer’s purchase price generally sets that home’s new base value |
Supplemental Tax Bills
When a property changes hands or new construction is completed partway through the tax year, the county issues a supplemental bill for the difference between the old and new values for the rest of that year. Buyers of new SB 684 homes should expect one after closing, and lenders and escrow officers usually flag it. It often arrives months later, so it is worth budgeting for.
What Each Party Should Know
- Owners selling a lot: the sale ends your Prop 13 base on that property; ask your tax advisor how it fits your situation.
- Developers: carry costs include property taxes on the land during entitlement and construction, rising as homes are completed.
- Buyers: budget for both the regular annual bill and a supplemental bill based on your purchase price.
Transfer Taxes Are Separate
Property tax is different from the transfer taxes charged at sale. Those vary by city: the City of Los Angeles has Measure ULA on higher-value sales, and neighboring cities have their own rules. Entry-level fee-simple homes generally sell below the steepest transfer-tax thresholds.
General information, not tax advice. Assessments and bills are set by the county assessor and tax collector; consult a tax professional about your situation.
Frequently Asked Questions
How are SB 684 homes taxed?
Each home, once on its own parcel, is taxed separately. Under Proposition 13, the base value generally resets on a change of ownership and new construction is added to the assessed value when completed.
What is a supplemental tax bill?
A separate bill issued after a change of ownership or completed new construction, covering the difference between the old and new assessed values for the rest of the tax year.
Do buyers of new SB 684 homes pay supplemental taxes?
Typically yes. Buyers of newly built homes should expect a supplemental bill after closing, in addition to the regular annual bill.
When do the new lots get their own tax bills?
After the final map records and the county assessor assigns new parcel numbers, which can take some time.
Important Disclaimer
This article is published by Assemble Capital for general informational and educational purposes only. It is not legal, tax, accounting, lending, appraisal, real estate brokerage or investment advice, and it is not an offer to sell or a solicitation of an offer to buy any security. Laws, regulations, government programs, lending practices, market conditions and local procedures change often and vary by jurisdiction and by property. The information here may be incomplete, out of date or not applicable to your situation, and we have no obligation to update it.
No one, including investors, lenders, property owners, buyers, sellers, agents, brokers, wholesalers or developers, should rely on this article in making any decision. Before acting on any topic discussed here, independently verify the information and conduct your own due diligence with qualified legal, tax, financial, lending, appraisal and real estate professionals and the applicable government agencies.
References to projects, timelines, approvals, appraisals, financing, prices or market conditions are illustrative, may change, and are not predictions, promises or guarantees of any result. Past performance is not indicative of future results.
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Or see how this plays out in practice: SB 684/1123 Fee Simple Subdivisions.
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