What if you didn’t have a mortgage payment on your next house? It may sound a little unrealistic. But for a number of homeowners, it’s actually doable.
Nearly 3 in 10 homes purchased toda...
Published February 5, 2020
What is a Supplemental Tax Bill?
When I sell a home, I often receive a panic call from my clients asking about a random tax bill that arrives in the mail a few months after moving into their home. “Escrow didn’t pay my taxes,” they exclaim. “What’s this, and do I have to pay this every year?”
These are common questions asked by many homeowners. So, what exactly is a supplemental tax bill, and why do you have to pay it?
Understanding Your Supplemental Tax Bill
Anytime a property is sold to a new owner, the state will reassess the new value of a home whether it’s a new or resale home.
This new assessed value will be at a higher rate than the previous value. When that value changes, the property taxes are recalculated and you receive a bill for the difference. Yes, I know it stinks, but the state is not likely to miss out on that collection.
The good news is that it’s only a one-time bill. You are responsible for the day you own the property to the end of the tax cycle. That means you don’t pay for the time you did not own the home.
To calculate your supplemental bill, you can subtract your old value from the new market value (based on the new assessment). You will be taxed on the difference. Then you can prorate the amount you owe by the number of months left in the fiscal year (June 30th is the end of that fiscal year). Multiply this number by 1% and you arrive at your supplemental tax amount that’s due.
What If it’s Worth Less in Value?
Occasionally, you can receive a negative supplemental tax bill. YEAH!
If the new assessed value is lower than the previous value or you are a senior and you use a Prop 13 transfer value, the negative supplemental bill will include a refund check for the period you have owned the home. You can apply this refund to your taxes, too.
Your Source For Expert Assistance
Owning a home for the first time can be a bit scary. Your real estate advisor will be there to help with information about property taxes, special assessments, supplement tax bills, and typical homeowner expenses.
For more information about these and other investment tips, contact Liz at JonesRealtySoCal.com or send an email to liz@jonesrealtysocal.com.
