Question: Can you explain supplemental taxes--what they are and why Iím being charged for them since I thought we paid all the taxes back when we bought our home? Our realtor wasnít much help in explaining them.
Answer: The Supplemental Real Property Tax law was enacted in 1983
to aid Californiaís schools. It comes into play when buying property or
undertaking new construction. If you do either, you will be required to pay a
supplemental property tax which will become a lien against your property as
of the date of ownership change or the date of completion of new
Itís perhaps more easily understood using a real world
example. Letís say you purchase a property for $500,000, that prior to your
purchase had a $400,000 assessed value.
At the close of sale, Title and Escrow will pro rate the
property taxes between the seller and the buyer on the $400,000 assessed
value. The tax accounts between seller and buyer are effectively balanced at
But remember, you now own a $500,000 property and the tax assessor hasnít entered
your property on the tax rolls, as such, because the legislature has decreed that property
taxes can only be reassessed every January 1st. But property taxes are on a fiscal year
running from July 1-June 30, not a calendar year. Consequently, there will be a
discrepancy between the period of time (month) that title changes hands at the old
valuation and the time of the newly assessed valuation for the fiscal year. In short, the
supplemental assessment will be pro-rated, based on the number of months remaining
until the end of the tax year, June 30.
For example, if the change of ownership or completion of new construction occurred on
October 1, you would be responsible for 9 months of the year at the new $500,000
valuation since the taxes canít be reassessed until Jan 1 and the fiscal tax year doesnít
end until June 30th of the following year. So, if the change between the old and new tax
bills were $1000 per year, your pro-ration factor would be .75, or in this case $750. The
pro-ration factor is simply 1/12 or .0833 per month. When the new fiscal year begins on
July 1 your tax bill would naturally reflect the $500,000 sales price. I hope this clarifies it
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