William Johnson Real Estate Agent San Diego, CA (858) 487-6975 Contact Profile
I suppose I could have named this series "Everything you ever wanted to know about property taxes" but then the series would have to be many posts longer. But a few things I do know will help you, the San Diego County homeowners, to better understand about how your property taxes are determined, when they are due and when they are considered delinquent. I will answer questions like what is a Supplemental Tax Bill? Can a homeowner appeal the assessed value of their property? What is Prop 13? What if I don't get a bill, is the tax still due and past due if not paid on time or are there other special circumstances where the tax can be paid late without penalty?
These are some of the more typical questions I will answer for you. One caveat you must remember. Never take anyone's answer other than the assessors office answer as gospel. If you have serious questions that affect your tax bill, call the county tax assessors office and they promise to help you. And I have heard from numerous clients that have been delighted with this service that helped them through many property tax issues that were quickly resolved. Our San Diego County Tax Assessors Office is a great model for how all government should work.
Let's start with one of the most often asked questions. What is a Supplemental Tax Bill? The reason this is asked so often is that it affects every new buyer of real estate in the county. For the answer, I am taking this next bit of text directly for the Assessors office. Answer: The Assessor is required to reappraise property on change of ownership or completion of new construction. The supplemental assessment reflects the difference between the prior assessed value and the new assessed value. The supplemental assessment is prorated on the number of months remaining in the fiscal year ending Jun 30th. A Supplemental Tax bill is in addition to the Annual Secured* Tax Bill. * In the next post I will explain what Secured means.
Here is an example that explains this in more practical use terms. A Buyer buys a home for $250,000 in the year 1990 and sells the home to a new Buyer in 2010 for $500,000 and closes escrow in late February. In escrow, the escrow office can only prorate the tax due based on the previous owners property tax on their purchase of $250,000. Let's say that the next tax bill will not be out for 4 months. The Tax Assessor will
send the new owner the correct tax bill due on their purchase of $500,000 when the new Annual Secured Tax bill comes out. The Buyer however only paid the prorated tax due as a credit to the Seller on the Seller's assessed value of $250,000. That means for the 4 months until the new tax bill, the Buyer owes the tax on the additional 4 months remaining on the old tax bill of the extra 250,000 that the Buyer paid above the Seller's purchase price of $250,000, which is what the Seller's tax was based on.
So how much are we talking here? The tax rate in San Diego County is 1% of the acquired property price ( Prop 13, covered in the new Post) plus any voter approved assessments that are added on. On average the total is about 1.124%. 1.124% is the tax amount for a year. The $250,000 is the additional amount over what the prorated tax was ( already reconciled in escrow). The quick calculation shows that the Supplemental Tax bill amount will be approximately $1033. ( based on the average tax rate of 1.124%, some areas of the county are higher because of voter approved assessments or bond levies)
$250,000 x 1.124% ( .0124) = $3100 divided by 12 months = $253.00 x 4 ( months remaining on old tax bill ) = Approximately $1033
Now, just for fun, I am going to throw you curve. Here is another example of the same scenario where the close of escrow is in August, one month into the new fiscal tax year. I think you know what's coming, yep, your Supplemental Tax bill will be approximately 11 months worth of tax. $253.00 x11 months = $2783. In the previous example the close of escrow was February ( 4 months and a few days before the June 30th Fiscal year end ).
There is a technical aspect of these calculations that I didn't express which is why I am using the term approximate. The explanation is that the Assessors office will use actual close dates ( month and day of both the original calculation of the Seller's tax and the month and day of the Buyers close of escrow /recordation date - actual ownership). The days difference between the Seller's prorated tax and Buyer's purchase date (ownership) are also included in the calculation of the Supplemental Tax bill. For purposes of understanding the process, one could just use the number of months for the approximate Supplemental Tax bill.
By William Johnson Real Estate Agent with RE/MAX Associates CA BRE# 01048160
Posted on June 21, 2012 03:42 PM