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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.
Example of how a supplemental tax assessment works:
$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.
$150,750
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
July 1
Beginning of Fiscal Year
Properties with delinquent taxes sold to the state
September
Tax rates set
October
Property tax bills mailed
November 1st
First installment due
December 10th
First installment delinquent
February 1st
Second installment due
March 1st
Assessment date for next years property taxes
April 10th
Second installment delinquent
June 30th
End of fiscal year
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