If the market value of the replacement is within 120 percent of the market value of the property substantially damaged or destroyed, the factored base year value of the damaged or destroyed property will be transferred to the replacement. Ref. California Revenue & Taxation 69(b)(1) Example:
Market value of damaged or destroyed property = $220,000
Market value of replacement property = $253,000
Percentage above value of damaged or destroyed property = 15 percent
Base year value of replacement = $220,000
If the market value of the replacement is more than 120 percent of the market value of the property substantially damaged or destroyed, the base year value of the replacement will be the factored base year value of the damaged or destroyed property plus the amount by which the value of the replacement exceeds 120 percent of the value of the property that was damaged or destroyed. Ref. California Revenue & Taxation Code 69(b) (2)
Example: Market value of damaged or destroyed property = $220,000
Market value of replacement property = $275,000
Percentage above value of damaged or destroyed property = 25 percent
Base year value of replacement = $220,000 + (275,000 - (220,000 x 120%)) = $231,000