Assessing Private Use Of Non-Taxable Property



John Tuteur Assessor

Assessing private use of non-taxable property

When someone rents a hangar at the Napa County Airport, occupies employee housing at Napa State Hospital or at the California Veterans Home, leases grazing land from the Federal Bureau of Land Management, holds a concession agreement at Lake Berryessa, or holds regular events at one of the fairgrounds, a taxable property right is created known as a possessory interest. The term possessory interest comes from the right to “possess” the property for the term allowed. Because the government agency that owns the property is not subject to property tax, the California Constitution requires the local assessor to assess the tenant for their possessory interest on the theory that the tenant is enjoying a right that has value.

When possessory interest holders receive their tax bills, they often call to ask why they are paying taxes on land and/or improvements that they do not own. We explain that they are being taxed only on their “right to possess” the property and that the value is based on the term of possession. Thus, while a person who builds a hangar on property they own is assessed for the full value of the land and improvements, the possessory interest holder’s assessment for a comparable hangar is discounted since they only possess the property for a limited time.

Possessory interests are considered under the law to be real property and are subject to supplemental assessments. If someone occupies a home at the Napa State Hospital on Nov. 1, 2007, they will receive a supplemental bill for the period Dec. 1, 2007, through June 30, 2008, (the last seven months of the 2007-2008 tax year, which runs from July 1, 2007, through June 30, 2008). Assuming they are still occupying the house on Jan. 1, 2008, (the lien date when taxes become an obligation for the following tax year), they will receive a bill in July payable before Aug. 31 in one installment. This regular bill covers the 2008-2009 tax year, including July 1, 2008, through June 30, 2009.

Because the assessment is on the “right to possess” the property, not the property itself, possessory interest assessments are not pro-rated. Thus, if a tenant voluntarily relinquishes a leasehold interest on July 3, 2013, they are still liable for the taxes through the end of that tax year, June 30, 2014, because they held the right to possess on the lien date of Jan. 1, 2013.  The theory is that they could have continued to exercise their right to possess through at least the end of the tax year. The new tenant who takes over the leasehold interest on July 3, 2013, has a brand new and different “right to possess,” which will generate a supplemental assessment for the same period of time.

Want to know more? Contact Napa County Assessor-Recorder-County Clerk John Tuteur at (707) 253-4459 or at

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