What is a Supplemental Tax Assessment & What it Means for You?
State Law requires the Assessor’s office to re-assess property immediately upon change of ownership.
The assessor’s office will then issue a supplemental assessment which will reflect the difference between the prior assessed value and the new assessment of value. This value is prorated based on the number of months remaining in the fiscal year, ending June 30th.
The supplemental property tax bill is in addition to the regular property tax bill.
It covers the period of the change of ownership to the following June 30th. The supplemental bill is normally issued about 6 months after the close of escrow. You may get a 2nd supplemental tax bill the following tax year if the assessor has not updated the tax rolls to reflect your purchase price. Supplemental tax assessments also apply to any new construction – If you add on a room, put in a new pool or have extensive remodeling done, the value of your home will change and trigger a supplemental tax. If you disagree with the supplemental tax there is an appeals process.
$575,000 Purchase price of property
$350,000 Current assessed value of property (what the seller paid for the home)
$225,000 Is the difference in value
Lets say that the sale of this home occurred in October, which leaves 8 months in the fiscal year (Nov – June)
$225,000 x 8/12 (Prorating # of months left in fiscal year) = $150,750
$150,750 is the prorated amount of increased value for the property.
x 1% (Tax Rate, which will vary depending on property location)
$1,507 is the supplemental amount you will owe and will be billed for by the County.
Mello-Roos Taxes – How it works
Not all homes have a Mello-Roos tax. However, this tax is becoming very common on homes built 1990 and after. This tax is in addition to the standard property tax.
1) A Mello-Roos Community Facilities District (CFD) is formed.
Mello-Roos is a method of financing government entities (school districts being the most common, however there are other special districts) to fund the cost of public improvements. Before government entities can form a CFD, they must either obtain permission from area landowners or hold an election of registered voters within the CFD.
2) The municipality sells bonds on behalf of the CFD
These bonds are sold to private investors who purchase them for tax-free interest income. The money raised through the bond sale becomes the debt obligation of the CFD.
3) Bond proceeds are used to pay for public improvements with in the CFD
The types of improvements, which can be funded by a CFD, are much broader then those types of improvements which can be funded by traditional assessment districts. For example: schools, police stations, fire stations and libraries can be constructed with CFD bond proceeds as well as roadways, water lines and other traditional types of public improvements. CFD’s can also be formed for purposes of public facility maintenance.
4) Money is repaid to bondholders through the Mello-Roos tax
The service for the bonds is repaid by the levy of a special tax on property within the CFD. The amount for the special tax is determined by each CFD’s special tax formula, and may vary between property types. The special tax revenue is used to pay back the investment, repay principal and interest to bondholders. Taxation and repayment continues each year for the life of the bond issue, usually 20 to 40 years.
You may also see a “Special Assessment District” bond on your property tax bill. These work very similar to the Mello Roos bonds and typically are used for infrastructure improvement to the subdivision.
Tax Calendar Year
The state of California runs its fiscal year from July 1st to the following June 30th
Beginning of Fiscal Year
Properties with delinquent taxes sold to the state
Tax rates set
Property tax bills mailed
First installment due
First installment delinquent
Second installment due
Assessment date for next years property taxes
Second installment delinquent
End of fiscal year
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