In this post we answer the question, “what is a supplemental tax bill?”
If you purchased a home in LA County you should expect to receive Supplemental Tax Bill, in addition to your property tax. Basically, new homeowners must pay the County for the difference between the last assessed home value and the new assessed value. Also, even if you use an impound account to pay your property taxes, please know, this supplemental tax bill will come directly from the county assessors office and NOT be paid from your impound account. You must pay the supplemental tax directly! In some instances this can be a very nasty and expensive surprise! On a positive note, if the amount of the new assessed value of the home is less than the old value, the new owners would receive a refund!
One Time Prorated Amount
The supplemental tax bill requires a one time prorated amount starting from the time your escrow closes until the time the Assessor learns that there is a new owner and sends a new, updated tax bill, based on the new assessed value. Unfortunately, this process can take 6 to 9 months and even if the new homeowner was informed of this, it’s often forgotten because it takes so darn long for the assessor to catch up. Keep in mind, even though this is a one time payment, depending on the date of purchase you could receive two separate bills equaling the full, one time payment.
Avoid Costly Surprises After Escrow Closes
As responsible local realtors, we are relentless in informing our home buying clients of property taxes, supplemental taxes and other costs they should expect after moving in. Sure, everyone expects to pay their property taxes and this is often accounted for using impound accounts. Unfortunately, not every agent is as diligent as they should be and some fail to share this important information with their buyers.
PRO TIP: Discover how you might save money on your property taxes.
Supplemental Tax Bill Amount
Of course new homeowners want to know what this supplemental tax will cost them and the answer is, it depends! If there is a large difference between previously assessed value and the new assessed value, you will owe more. If the value difference is small, you will owe much less. It also depends on the date the transaction closed escrow and the number of months left in the fiscal year. If escrow closed between January 1st and May 31st, you’ll get two bills, one for the remainder of the fiscal year, and the second for the fiscal year that follows.
We’ve seen supplemental tax bills vary dramatically, from $200 to over $8,000 or more! The county offers an online Supplemental Tax Calculator which will provide you with the amount.
Example of Supplemental Tax Bill for Home Buyer in Santa Clarita
We recently represented a buyer who was the original owner for a home they purchased in the early 60’s. We sold their home for a little over $495,000. The previous assessed value of this home was based on a much lower assessed value and the new value was much higher. Then because the close of escrow date did not work out in the buyer’s favor, the new homeowner will receive two supplemental tax bills totaling more than $6,000! That’s a very NASTY surprise, especially if they forgot about it because it took so long to receive the bill. Even worse, perhaps their realtor FORGOT to mention this little tidbit.
More Special Taxes
Unfortunately, additional tax assessments are not only limited to the supplemental tax. There are also bond assessments such as Mello Roos taxes or other hidden bond assessments. Then, depending on your community are additional special assessments, also referred to as direct assessments, usually resulting from voter approved bond measures. Special assessments are not based on the value of the property, but instead, each property owner’s fair share of the paying for the bonds. This is recurring for the life of the bond.
One way to find out more about each of your tax assessments you can go to the Los Angeles County Assessor to find out more. You’ll need your tax bill to enter the first few letters of the description and it should show you additional information.