Statutory claims below are from the leginfo text of Rev. & Tax. Code §73 and California State Board of Equalization (BOE) guidance, checked 1 November 2026. This post covers the solar portion only; the ADU structure itself is reassessed under the normal new-construction rule explained in our Prop 13 post.
The rule, in one paragraph
California law excludes an active solar energy system from new-construction reassessment. Rev. & Tax. Code §73(a) provides that the term “newly constructed” does not include the construction or addition of an active solar energy system. In plain terms: adding solar does not, by itself, add assessed value for the solar portion. The BOE states the point explicitly — this is a new-construction exclusion, not an exemption. And it ends: §73 applies to lien dates from the 1999–2000 fiscal year through the 2025–26 fiscal year (§73(g)), and §73(i)(1) keeps the section in effect only until January 1, 2027.
What counts as an active solar energy system
§73(b)(1) defines it as a system that, on completion as part of a new property or as an addition to an existing property, uses solar devices — thermally isolated from living space or any other area where the energy is used — to collect, store, or distribute solar energy. The permitted uses in §73(b)(3) are domestic, recreational, therapeutic, or service water heating; space conditioning; production of electricity; process heat; and solar mechanical energy.
Two limits matter for ADU owners:
- Pool and hot tub heaters are out. §73(b)(2) expressly excludes solar swimming pool heaters and hot tub heaters. The BOE overview adds passive solar systems and wind systems to its not-included list.
- Dual-use equipment counts at 75 percent. For electricity systems, §73(d) includes storage, power conditioning, and transfer equipment up to — but not including — the stage where electricity is conveyed or used. Pipes, ducts, and equipment shared by solar and auxiliary (non-solar) equipment count only to 75 percent of full cash value.
There is no capacity cap and no residential-only restriction in the text of §73. It speaks of a new property and an addition to an existing property generally.
The sunset — and the grandfathering that survives it
The January 1, 2027 sunset bars new qualifying systems, but it does not strip the exclusion from a system that already qualified. §73(i)(2) preserves active solar energy systems that qualified before January 1, 2027: they “shall continue to be excluded on and after January 1, 2027, until there is a subsequent change in ownership.” §73(f) states the same endpoint for the exclusion generally — it remains in effect only until a subsequent change in ownership.
So the sunset has two edges, and they cut in opposite directions:
- A solar system completed before January 1, 2027 keeps its exclusion after the sunset — until you sell the property.
- A solar system first qualifying on or after January 1, 2027 gets no exclusion. Its value becomes assessable new construction.
- A sale ends the exclusion either way. A change in ownership resets the property’s base year value under Proposition 13, and the solar exclusion does not survive it.
The 2026 trap: BOE’s construction-in-progress rule
The statute’s grandfathering sounds simple — qualify before January 1, 2027 — but the BOE’s guidance to assessors narrows what “in progress” means, and this is the part that can cost a 2026 installer. BOE Letter to Assessors No. 2024/031 (August 26, 2024), which supersedes the earlier sunset advice in Assessors’ Handbook Section 410 (May 2014), holds the same January 1, 2027 rule and adds a construction-in-progress refinement:
- Only construction in progress in place as of 12:01 a.m. on January 1, 2026 qualifies on that basis.
- Construction added between January 1, 2026, and December 31, 2026 is not excluded unless it is completed — and thus subject to assessment — before January 1, 2027.
- Phases completed before January 1, 2027 remain excluded until a subsequent change in ownership or change in control. Phases completed after that date are assessable new construction.
This refinement is BOE interpretation for assessors, not verbatim statute text — but assessors follow it. The practical consequence: starting solar work in 2026 is not enough. Unless your construction was already in progress at the start of 2026, the system must be completed before January 1, 2027 to keep the exclusion. A project that straddles the deadline keeps the exclusion only for the phases completed before it.
The earlier BOE letter (No. 2022/054, November 18, 2022) states the general test the same way: the exclusion applies to any active solar energy system new construction in process or completed before January 1, 2027, and a previously excluded system remains excluded until the property changes ownership.
What this means for an ADU with solar
An ADU’s solar array is an addition to an existing property, so the exclusion applies to the solar portion of the project — not to the ADU itself. The structure is still reassessed as new construction under the rule in our Prop 13 post: only the added value is assessed, and your original base year value stays protected. The solar exclusion removes the solar portion from that added value, while it lasts.
Three consequences follow:
- Timing beats size. A system completed in December 2026 keeps the exclusion (until a sale). The same system completed in January 2027 does not, and its value joins the ADU’s assessed value.
- Document the completion date. The assessor’s test turns on when phases were completed. Keep the final inspection sign-off and the installer’s completion certificate.
- Confirm with your county assessor. Assessors apply the BOE letters, but the completion-date facts are parcel-specific. A short call before you start a late-2026 install is cheaper than a supplemental bill dispute after it.
Sources
- Rev. & Tax. Code §73, California Legislative Information, checked 1 November 2026: https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=RTC§ionNum=73
- §73 as amended by Stats. 2025, Ch. 328 (SB 710), effective January 1, 2026; section inoperative January 1, 2027, by its own provisions.
- California State Board of Equalization, “Active Solar Energy System Exclusion” overview: https://www.boe.ca.gov/proptaxes/active-solar-energy-system/
- BOE Letter to Assessors No. 2022/054 (November 18, 2022), “Active Solar Energy System New Construction Exclusion: Sunset Date Extension”: https://boe.ca.gov/proptaxes/pdf/lta22054.pdf
- BOE Letter to Assessors No. 2024/031 (August 26, 2024), “Active Solar Energy System New Construction Exclusion: Clarification of Sunset Date Extension”: https://boe.ca.gov/proptaxes/pdf/lta24031.pdf
Verify the current statute and your assessor’s application before relying on the exclusion. Changes are logged in Corrections.