The Supplemental Property Tax Assessment — Understanding one of the most confusing parts of purchasing a new home
Many new and prospective homeowners are surprised when they learn about supplemental assessments and supplemental tax bills. Figuring out the amount of property taxes that a new homeowner is required to pay after escrow closes is a confusing process and it often leaves many people frustrated when they receive an additional tax bill.
To help reduce the confusion, the Office of the County Assessor has released a new video on its website called “Property Tax Avenger”. This lighthearted video provides an oversight on how supplemental assessments work. It’s targeted towards individuals who just acquired or have plans to buy a home.
Although supplemental assessments have been part of California property tax law since 1983, new buyers often overlook the financial impact that generally falls within their first year of ownership. Supplemental assessments and taxes are in addition to the annual assessments and property taxes which are generally prorated during escrow, so that the seller and buyer each pay the portion of taxes attributed to their time of ownership. However, the proration is based on the assessed value prior to the purchase transaction. The supplemental assessment is based on the difference between the prior assessed value and the new assessed value. This value is multiplied by the tax rate, and the resultant tax is prorated for the number of months remaining in the fiscal year from the date of acquisition by the new owner. The tax new homeowners pay is the amount between the regular tax bill prorated in escrow, and the supplemental tax bill, based upon the value of the property as of their date of purchase.
The Assessor’s website also includes a “Supplemental Estimator” that enables a new property owner to calculate the estimated taxes based upon the anticipated purchase price and month of acquisition. The “Estimator” assists taxpayers to better understand how supplemental assessments and taxes are calculated by the Assessor and the Tax Collector.
If you would like the Santa Clara County Assessor to speak at your business, neighborhood, or event, please fill out this online form.