Don't Let a Sneaky Tax Bill Surprise You Down the Road
When you purchase a new home, everyone seems to be throwing numbers at you. There are closing costs from your loan, additional fees for inspections and appraisals, and much more. It can become overwhelming, and really hard to keep track of. While I try my best to help you keep all these costs in mind, there is one hidden fee that tends to slip through the cracks, your Supplemental Tax Bill. It's technically not a closing cost, as you will likely receive the bill 3-6 months after your purchase is completed. For some new homeowners, it may be a small bill of a couple of hundred dollars, but for others it can be in the $5,000 range. I don't know about you, but if I got hit with a big bill, it could really ruin my monthly or quarterly budget. This is why I want to explain the supplemental tax bill, and help you prepare for it after closing.
The San Diego County Treasure-Tax Collector has put together a quick video to help describe the bill, take a quick 3 minute break and watch it here.
Here's Some of the Fine Print
A supplemental or negative supplemental tax bill will arrive separately from all other property tax bills. Anytime a property is sold to a new owner or new construction is completed, state law says it must be reassessed by the County. That reassessment will most likely change the assessed value of your property. When your assessed value changes, the County must recalculate your property taxes, and when those change, we will send you a supplemental tax bill. The supplemental bill shows your home’s change in value from the day you closed escrow, or reported the new construction, through the end of the fiscal year, which is June 30th. To calculate your supplemental tax bill, subtract your home’s old value from the new market value based on the reassessment. You are taxed on that difference. Next, we prorate what you owe based on the number of months left in the fiscal year. Finally, the 1% tax rate is applied to that amount to get your supplemental tax total.
If you don't pay your supplemental tax bill by its delinquent date, you will be charged a 10% penalty. A $10 charge is added if you are late on the second installment. If you do not pay either installment by June 30th, your property will go into "tax default," and you will be charged a 1.5% penalty per month (18% penalty per year). A $33 redemption fee will also be added to your bill. If you have questions about property valuations, visit the County Assessor’s website.
Negative Supplemental Bills
You will receive a negative supplemental tax bill if your new assessment is lower than your prior-assessed value, if you get a senior citizen’s transfer of Proposition 13 values, or if you have another downward assessment. The negative supplemental will include a refund check, which can be applied to any other open bills you may have on your parcel. A negative supplemental bill does not change your responsibility to pay all other property tax bills.
Here's What Some of Our Past Clients Are Saying
Knowledgeable and professional through all phases of the process
Ken was knowledgeable and professional through all phases of the process. He helped us understand the market situation and adjust the price of our home while it was on the market. He seemed good at sensing our emotional state - a difficult skill that is probably important for all real estate agents. All in all, we are very happy with Ken and would recommend him to anyone buying or selling a home.
I hardly felt stressed through the process
Ken made my home buying process as easy as possible. I hardly felt stressed through the process. Ken was always a phone call or text away and promptly responded to my questions. I am very happy I let him represent me for my condo purchase. Thank you Ken!
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I really liked working with Ken. He was considerably patient since we initially didn't know what area of San Diego we were looking for. He showed us a list of MLS homes that met our criteria. We picked homes ALL over San Diego county, and he created an itinerary to view all the homes. Set up appts in ones we needed to view. Made the home searching very efficient.