Understanding Supplemental Property Taxes

WHAT ARE SUPPLEMENTAL PROPERTY TAXES?
If you purchase new property or build new construction, you will receive a supplemental property tax bill from the County Assessor after close of escrow. California law enacted under Proposition 13 requires the county tax assessor to adjust the taxable value of a property when the ownership of the property changes or when the property undergoes new construction. In the instance of the purchase of a new home, the supplemental assessment represents the difference between the seller's current tax assessed value before close of escrow and the new value the County Assessor will establish once you take ownership. Purchases that occur between January 1 and May 31 result in two supplemental bills: the first bill is for the balance of the current fiscal year, and the second bill is for all of the upcoming fiscal year.  Purchases that occur in June will result in NO supplemental tax bill.

WHEN WILL I BE BILLED?
You will receive a supplemental tax bill in the mail as early as a few weeks or it could take more than six months after you take ownership of your new home. Every property is different and it will depend on the County Assessor's workload. The assessor will appraise your property sometime after closing escrow, calculate the amount of the supplemental tax owed and will mail you a bill advising you of the new supplemental assessment amount.  The supplemental tax bill will advise you of the amount owed and the dates on which they are due and will be delinquent.  You can apply for a Homeowner’s Exemption if you haven't already done so, and also file an Assessment Appeal if you disagree with the value.

CAN I PAY MY SUPPLEMENTAL TAX BILL IN INSTALLMENTS?
All supplemental taxes are paid in two equal installments, and will state when each installment is due and delinquent by.  Delinquent dates are determined as follows:

1. If the bill is mailed July- October, the first installment is delinquent on December 10 of the same year. The second installment is delinquent on April 10 of the following year.
2. If the bill is mailed November – June, the first installment is delinquent on the last day of the month following the month in which the bill is mailed. The second installment is delinquent on the last day of the fourth calendar month following the date the first installment is delinquent.

HOW IS THE AMOUNT DETERMINED?
There is a formula used to determine your tax bill.  The supplemental tax is a one-time tax which dates from the date you take ownership of your property until the end of the tax year on June 30th.  It will be prorated based on the number of months remaining until the end of that tax year (June 30).

HOW DOES THE PRORATION FACTOR WORKS?
The supplemental tax becomes effective on the first day of the month following the month in which the change of ownership actually occurred.  If that date happens to fall on July 1st, then no supplemental taxes will be due and you will not receive a supplemental tax bill, only the next year property tax bill which will reflect the new assessed value.  If the effective date is not on July 1, then proration factor on the following chart is used to calculate the supplemental assessment amount on the current tax roll:

EXAMPLE:  The County Assessor calculates your new assessed value and finds that the supplemental property taxes owed on your new home will be $3,000 for a full year.  You purchased your new home on September 15th which makes the effective date according to the chart above October 1st.  Therefore the $3,000 supplemental property tax amount would be multiplied by the proration factor of .75 and your supplemental tax would be $2,250.

WILL MY LENDER PAY THE SUPPLEMENTAL PROPERTY TAX BILL?
NO, this will be your responsibility to pay.  Even though you may have an impound account set up with the lender to pay your property taxes, this is a one-time supplemental tax that is solely the owners responsibility to pay.  The lender will only pay the annual property taxes.