Supplemental Tax Bill?!
It is a perfect day. The sun is shining, and the birds are singing. You walk to the mailbox of your new home thinking about how wonderful it is to have everything unpacked. You open your mailbox, and to your horror discover that you owe a substantial amount of money in property taxes. How did this happen? Surely this must be a mistake! Unfortunately, there is no mistake. You owe the money, and here’s why.
On July 1, 1983, California state property tax law was modified to generate more revenue for public schools. The result was the supplemental tax bill. After the sale (or completion of construction) of a property, a tax assessor is required to reassess the value of the home. If the assessed value is higher than the value prior to the sale, a supplemental tax bill is issued. This results in the owner being saddled with a hefty tax bill they may not have been prepared for.
When buying a home there is an inordinate amount of paperwork. In theory, you will read every single paper and ask questions if you don’t understand something. The reality is there are too many documents, timelines, and legal jargon to understand everything on your first transaction. Buyers are required to sign documentation stating they had been notified about the supplemental tax bill, but often times the tax bill goes by unnoticed. Some Realtors make a point to explain this tax prior to closing. We do this to help the buyers plan and save for this eventual expense. It is important to note the tax bill can be split up into two payments. One should also be aware that if you bought your home between January 1st and May 31st you will be getting TWO separate supplemental tax bills. The first bill will be for the first fiscal year and the second supplemental bill will be for the fiscal year that follows.
Paying taxes can be frustrating. Paying SURPRISE taxes can be infuriating. When buying a home make sure you budget for supplemental taxes. This way, when the bill arrives in the mail your perfect day won’t be ruined.
John Jennings, III
John Jennings, III is a licensed Realtor® who works for Mid State Realty in Coalinga, CA. For more articles like this one go to johnjenningsrealtor.com. John can be reached at email@example.com and (559) 970–4312.